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


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  • 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


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  • 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


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  • 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


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  • 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





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