Daily Global Macro Technical Trend Bias/Key Levels (Fri 02 Nov)
Kelvin Wong November 2, 2018 5:51 AM
Further corrective decline in USD. Stock indices are testing key medium-term pivotal resistances after positive news flows on U.S/China trade deal.
FX – USD at risk of shaping a further minor corrective decline
- EUR/USD – Trend bias: Corrective rebound in progress The pair had broken above the 1.1375 tightened key short-term resistance which invalidated the further downleg scenario towards 1.1240/1200 support. The bears has failed to make any inroads after it hit the 1.1320/1300 support (also coincides with the previous medium-term swing low of 15 Aug 2018) on Wed, 31 Oct. Interestingly, it ended yesterday, 01 Nov U.S. session with a bullish “One White Soldier” candlestick pattern which suggests that the pair is still in a potential corrective consolidation/sideways range configuration mode since its 15 Aug 2018 swing low area of 1.1300 with the range resistance coming in at 1.1815/1850). Flip to a bullish bias in any dips with key short-term support at 1.1360 (50% Fibonacci retracement of yesterday’s bounce of yesterday’s bounce from 31 Oct low of 1.1300 to yesterday, 01 Nov high of 1.1424) for a further potential push up to retest the next intermediate resistance at 1.1465 (03/09 Oct 2018 former swing low areas + upper boundary of the minor descending channel from 24 Sep 2018 high). On the other hand, failure to hold at 1.1360 reinstates the bears for a downleg to retest 1.1300 before targeting the 1.1240/1200 support (Fibonacci projection cluster + lower boundary of the minor descending channel from 24 Sep 2018 high).
- GBP/USD – Trend bias: Corrective rebound in progress. The pair had pushed up as expected and surpassed the 1.2920/2950 resistance (50% Fibonacci retracement of the decline from 16 Oct 2018 high to 31 Oct 2018 low + former minor swing low of 04 Oct 2018) as per highlighted in our previous report. Maintain bullish bias in any dips above tightened the key short-term support to 1.2865 (50% Fibonacci retracement of the recent up move from 30 Oct 2018 low to yesterday, 01 Nov high of 1.3035 + minor ascending trendline from 31 Oct 2018 low) for a further potential push up on the next intermediate resistance at 1.3125 (pull-back resistance of the former ascending trendline from 15 Aug 2018 low). ). On the other hand, failure to hold at 1.2865 negates the bulls for a push down to retest the recent range support at 1.2700.
- USD/JPY - Trend bias: Push down within range. No change, maintain bearish bias with a tightened key short-term resistance now at 113.10 (31 Oct 2018 minor swing high + Fibonacci projection/retracement cluster) for a further potential push down to target the next support at 112.30 (the ascending channel support from 26 Mar 2018 low). On the other hand, a break above 113.10 negates the bearish tone for a push up to retest the 113.40/50 resistance (former minor congestion area of 28 Sep/09 Oct 2018 and a Fibonacci projection cluster).
- AUD/USD – Trend bias: Corrective rebound in progress. The pair had staged a bullish breakout from the minor range resistance of 0.7150/0.7160 which invalidated the push down scenario towards its range support at 0.7040. Flip to a bullish bias in any dips above key short-term support at 0.7145 (pull-back support of the former minor range resistance from 15/19 Oct 2018 + pull-back support of the former medium-term descending channel resistance from 26 Jan 2018 high) for a further potential push up to target the next intermediate resistance at 0.7290/7340 (congestion zone of 27 Jun/21 Aug 2018 + 23.6% Fibonacci retracement of the on-going medium-term down move from 26 Jan 2018 high to 26 Oct 2018 low). On the flipside, a break below 0.7145 negates the bullish tone for a slide to retest the recent swing low areas of 0.7040/7020.
- NZD/USD - Trend bias: Corrective rebound in progress. Broke above 0.6580 short-term resistance which invalidated the push down within range scenario. Right now, the pair is likely to be in the motion of undergoing a corrective rebound to retrace the medium-term down move from 24 Jan 2018 high to 08 Oct 2018 low. Flip to a bullish bias in dips above key short-term support at 0.6570 (former minor swing high area of 30 Oct 2018 + pull-back support of former descending channel resistance from 07 Jun 2018 high) for a further potential push up to target the next intermediate resistances at 0.6720 and 0.6780 (former medium-term swing low of 17 Nov 2017 + Fibonacci projection/retracement cluster). On the flipside, a break below 0.6570 negates the bullish tone for a slide to retest 0.6475/6460 support (minor swing low area of 26 Oct 2018 + the minor ascending trendline from 08 Oct 2018 low).
Stock Indices (CFD) – Testing key medium-term pivotal resistances on positive U.S./China trade news flow
- US SP 500 – Trend bias: Down with low conviction. The Index had staged a minor bearish reversal of 0.6% to print a low of 2723 on today, 02 Nov Asian opening from yesterday’s U.S. intraday high of 2742 printed in the last hour of the U.S. session (before Apple’s earnings). The only reasonable fundamental/economic explanation for the current push ups seen in the Index despite Apple’s sharp downside reversal of 7% seen to print a low of 205.16 in the “after hours” of the normal U.S. trading session due to weaker outlook guidance for the upcoming holiday season is U.S. President Trump’s tweet on having a “good conversion” with China President Xi over trade related issues. The Index is now testing the 2745 key medium-term pivotal resistance (see weekly technical outlook report) after a report out in today, Asian session that stated U.S President Trump is considering to conclude a trade deal with China at the upcoming G20 meeting. Right now, the bears need to break below the 2704 adjusted downside trigger level (the minor swing low of 31 Oct 2018 + 23.6% Fibonacci retracement of the recent push up from 29 Oct 2018 low to yesterday, 01 Nov high of 2742) fast in order to reinforce another potential fresh downleg to retest the recent 29 Oct low of 2603 in the first step. However, a daily close above 2745 jeopardises the bears for an extension of the corrective rebound to target the next resistances at 2800 and 2822 (17 Oct 2018 swing high + 61.8% Fibonacci retracement of the decline from 21 Sep 2018 all-time high to 29 oct 2018 low).
- Japan 225 – Trend bias: Down with low conviction. Testing the 22030 key medium-term resistance and the Index now needs to break below 21500 fast to reinforce the start of a new potential downleg to retest the recent swing low of 20800 printed on 26/29 Oct 2018 in the first step. However, a daily close above 22030 put the on-going downtrend in place since 01 Oct 2018 high at risk for a further up move to target the next resistance at 22700 follow by 23000 (multi-month range resistance in place since 21 May 2018.
- Hong Kong 50 - Trend bias: Down with low conviction. Strong push up after a news report that stated U.S. President Trump had asked his staff to draft a possible trade deal with China to be presented in the upcoming G20 meeting. Right now, the Index is hovering just below the 26700 key medium-term pivotal resistance (also the medium-term descending channel from 07 Jun 2018 high) with the 4-hour Stochastic oscillator at an extreme overbought level. The bears need to break below the 25540 downside trigger level (minor ascending trendline from 01 Nov 2018 low) to flip the bias back to kick start a fresh potential downleg to retest the recent swing low area of 24500/480. However, a daily close above 26700 put the bears on hold for an extension of the corrective rebound to retest the major resistance at 28000 (also the pull-back resistance of the former primary ascending trendline support from Feb 2016 low).
- Australia 200 – Trend bias: Sideways. Still hovering below the 5900 key short-term resistance as per highlighted in our previous report with mix elements. Thus, prefer to turn neutral now between 5900 and 5785 where only a break below 5785 is likely to open up scope for a potential fresh downleg to retest the recent 29/26 Oct swing low of 5640/5611 in the first step. On the flipside, a clearance above 5900 sees an extension of the corrective rebound towards the next resistance at 5950 (swing high areas of 17/19 Oct 2018).
- Germany 30 – Trend bias: Sideways. Hovering right below the 11600 key medium-term pivotal resistance which is also now the upper limit of a minor bearish “Ascending Wedge” configuration in place since 30 Oct 2018 low. Mix elements now, prefer to turn neutral between 11600 and 11470 (the lower limit of the “Ascending Wedge”). Only a break below 11470 reinstates the bearish tone for a potential fresh downleg to retest 11154 before last Fri, 26 Oct swing low area of 11050. On the flipside, a daily close above 11600 sees an extension of the corrective rebound to retest the 11800/900 neckline resistance of the major “Head & Shoulders” bearish breakdown seen on 10 Oct 2018.
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