Daily FX Technical Trend Bias/Key Levels (Fri 24 May)

Risk of corrective rebound for GBP/USD while USD/JPY and AUD/USD remain below resistances with risk off remains in play.

EUR/USD – Mix elements, watch 1.1200 & 1.1120

click to enlarge chart

  • Inched down lower at the start of yesterday, 23 May U.S. session to hit the first target/support at 1.1120. It printed an intraday low of 1.1106 before a rebound of 78 pips that erased the yesterday’s losses on the back of a weaker than expected preliminary U.S. Markit manufacturing and services PMI data for May. Click here for a recap on our previous report.
  • Mix elements now as the pair floated up towards the 1.1200 short-term key pivotal resistance with a bullish reading seen in the hourly RSI oscillator. Prefer to turn neutral now between 1.1120 and 1.1200. Only an hourly close below 1.1120 revives the bearish tone for a further slide towards the next near-term support at 1.1060/1040 (Fibonacci retracement/expansion cluster).
  • On the flipside, a clearance above 1.1200 sees a corrective bounce towards 1.1245/1260 (range resistance in place since the recent FOMC meeting held on 01 May).

GBP/USD – Risk of corrective rebound

click to enlarge chart

  • Drifted down lower and hit the first target/support of 1.2600 as per highlighted in our previous report. Conviction for a further slide at this juncture has been dampened where the price action has formed a daily “Doji” candlestick pattern coupled with a bullish divergence seen in the hourly RSI oscillator.
  • In addition, Elliot Wave/fractal analysis has also pinpointed a potential end of this on-going minor degree impulsive downleg sequence from 03 May 2019 high of 1.3177 where the risk of a corrective rebound has increased.  Flip to a bullish bias with key short-term pivotal support at 1.2600 for a potential corrective rebound towards 1.2720 follow by 1.2790 next.
  • However, a break below 1.2600 sees an extension of the slide towards the major support at 1.2545/2530 (also the primary ascending range support in place since 07 Oct 2016 low).

USD/JPY – Further corrective rebound invalidated

click to enlarge chart

  • Broke below the 110.20 key short-term pivotal support as per highlighted in our previous report invalidated the extended corrective rebound scenario on the backdrop of a risk off environment seen in equities. Flip back to a bearish bias in any bounces below 110.15 key short-term pivotal resistance for a further potential slide to retest 13 May 2019 swing low of 109.00 in the first step.
  • However, a clearance with an hourly close above 110.15 revives the bulls for a squeeze up towards 110.95/111.10 resistance (the gapped down formed on 06 May 2019 & a Fibonacci retracement/expansion cluster).

AUD/USD – Rebound stalled at 0.6910 minor key support

click to enlarge chart

  • Inched up from last Fri, 18 May low of 0.6865 after a test on it yesterday, 23 May in the early U.S. session but failed to break above the 0.6910 key short-term pivotal resistance as per highlighted in our previous report. Maintain bearish bias for a further potential slide to target the significant support at 0.6830. A daily close below it opens up scope for a further decline to target the next near-term support at 0.6775 (1.236 Fibonacci expansion of the decline from 17 Apr 2019 high & lower boundary of the descending channel from 17 Apr 2019 high).
  • However, a break with an hourly close above 0.6910 invalidates the bearish tone to kickstart a corrective rebound sequence towards the next intermediate resistance zone at 0.6965/6985 in the first step.

Charts are from eSignal

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.