FX – JPY & NZD remains weak against USD
- EUR/USD – Trend bias: Sideways. Whipsawed as it broke below the 1.1630 predefined key short-term support as per highlighted in our previous report dated Wed, 27 Jun but ended the week backed above 1.1630 on last Fri, 29 Jun with a U.S. session close of 1.1684. In addition, it ended last week with a weekly bullish "Hammer" candlestick, the second since its prior week of 18 Jun 2018 formed right at the medium-term ascending channel support in place since 02 Jan 2017 low. These observations suggest that downside momentum of the multi-month down move since 27 Mar 2018 has started to abate. Prefer to turn neutral first between 1.1740 (the descending trendline from 17 Apr 2018 + 23.6% Fibonacci retracement of the down move from 27 Mar 2018 high to 21 Jun 2018 low) and 1.1510 (the range support that was formed since 29 May 2018). An hourly close above 1.1740 is likely to open up scope for a mean reversion rebound towards the next intermediate resistance at 1.1930/1995 (the congestion area of 08 Sep/28 Nov 2017 & 09 Jan/14 May 2018 + 50% Fibonacci retracement of the down move from 27 Mar 2018 high to 21 Jun 2018 low). On the flipside, a break below 1.1510 sees a test on the lower limit of the key long-term support at 1.1470/50 (the former resistance of the major basing configuration from Mar 2015 to Mar 2017).
- GBP/USD - Trend bias: Mean reversion rebound. Broke below the 1.3210 key short-term support and almost met the 1.3020/3000 support (minor swing low areas of 05 Oct/03 Nov 2017 + psychological) as it printed a low of 1.3050 on last Thurs, 1.3050. Interestingly, it ended the week with a bullish weekly “Hammer” candlestick right above the 1.3020/3000 support coupled with a bullish divergence signal seen in the daily RSI oscillator. These observations suggest that the downside momentum of the multi-month down move since 17 Apr 2018 high of 1.14377 has started to abate. Thus, a mean reversion rebound scenario cannot be ruled out at this juncture. Watch the key short-term support at 1.3100 (the former minor swing low 21 Jun 2018 that has been surpassed above + close to the 61.8% Fibonacci retracement of the recent push up from last Thurs, 28 Jun 2018 low to 29 Jun 2018 high of 1.3214) for a potential push up to test 1.3230 (minor swing high area of 27 Jun 2018) and an hourly close above it is likely to see a further potential corrective mean reversion rebound towards the 1.3360 resistance in the first step (descending trendline from 10 May 2018 + 23.6% Fibonacci retracement of the multi-month down move since 17 Apr 2018 high to 28 Jun 2018 low). However, failure to hold at 1.3100 sees another slide to test the 1.3020/3000 support.
- AUD/USD - Trend bias: Sideways. The first 0.7330/7300 downside target/support/target has been met and the pair ended the week with a bullish “Hammer” candlestick right above the 0.7330/7300 support (it printed a low of 0.7323 on last Wed, 27 Jun). Prefer to turn neutral first between 0.7450 (the former medium-term swing low area of 09 May 2018) and 0.7300. An hourly close above 0.7450 is likely to open up scope for a potential mean reversion rebound towards the 0.7580 resistance (the upper boundary of the medium-term descending channel from 26 Jan 2018 high). On the flipside, an hourly close below 0.7300 sees a further downleg to target the next intermediate support at 0.7240/7220 (lower boundary of a medium-term descending channel from 26 Jan 2018 high + Fibonacci projection cluster).
- NZD/USD - Trend bias: Bearish breakdown from major support. The pair broke below (a daily close below it) the neckline support of a major bearish “Double Top” configuration in place since late July 2017 on last Thurs, 28 Jun. Maintain bearish bias in any bounces below the 0.6830 key short-term resistance (former minor swing low area of 21 Jun 2018 + upper boundary of the minor descending channel from 14 Jun 2018 high) for a further potential down leg to target the next intermediate support at 0.6675/50 in the first step (30 May 2016 medium-term swing low + 1.00 Fibonacci projection of the down move from 27 Jul 2017 high to 17 Nov 2017 low projected from 16 Feb 2018 high). However, a clearance above 0.6830 negates the bearish tone for a squeeze up towards the 0.6920 resistance (the minor swing high area of 23/25 Jun 2018 + descending trendline from 13 Apr 2018 high).
- USD/JPY - Trend bias: Bullish breakout from minor range. Pushed up as expected and met the 110.40/55 intermediate resistance on last Thurs, 28 Jun. It broke above the 110.40/55 level (minor swing high of 21 Jun 2018 + minor descending trendline from 15 Jun 2018 + Fibonacci retracement/projection cluster) on last Fri, 29 Jun which suggests another potential upleg has materialised for the on-going medium uptrend in place since 26 Mar 2018 low. Maintain bullish bias in any dips with adjusted key short-term support now at 110.45 (the pull-back support of the former minor descending trendline from 15 Jun 2018 + minor ascending trendline in place since 26 Jun 2018 low) for a further potential push up to retest the 21 May 2018 high of 111.39 before targeting the lower limit of the major resistance at 112.00 (the upper boundary of a major descending resistance in place since Jun 2015 high + Fibonacci projection/retracement cluster). On the other hand, failure to hold at 110.45 implies a failure bullish breakout for another round of choppy slide back to retest the 109.35/25 medium-term range support in place since 08 Jun 2018.
Stock Indices (CFD) – Mix bag
- US SP 500 – Trend bias: Sideways. It had hit the 2690/80 downside target/support (30 May 2018 minor swing low + Fibonacci retracement/cluster + lower boundary of the medium-term ascending channel in place since 11 Feb 2016 low)as it printed a low of 2691 on last Thurs, 28 Jun. Mix elements now, prefer to turn neutral first in short-term between 2680 and 2744 (minor swing high areas of 27/29 Jun 2018). An hourly close above 2744 opens up scope for a further potential push up to retest the 2767 descending trendline resistance in in place since 13 Jun 2018 high. However, failure to hold at 2680 sees a further slide towards 2615 (the swing low areas of 25 Apr/03 May 2018) and even the 2540/30 long-term key support.
- Japan 225 – Trend bias: : Push down within range configuration. Maintain bearish bias below 22420 key short-term resistance (the minor swing high area of 27 Jun 2018) for another round of potential push down to test the 22000/21900 key medium-term range support (the former range resistance from 12 Mar/05 Apr 2018 that has been tested and staged a rebound on 29 May 2018). However, a clearance above 22420 negates the bearish tone for a squeeze up towards next intermediate resistance at 22600 (minor swing high area of 23 Jun 2018 + minor descending trendline from 12 Jun 2018).
- Hong Kong 50 – Hong Kong market closed for a public holiday today.
- Australia 200 – Trend bias: Up move remains in progress. No change, maintain bullish bias in any dips with 6140/6136 remains as the key short-term support (former range resistance from 10 Jan/10 May 2018) for a further potential push up to retest the 22 Jun high of 6257. On the other hand, a break below 6136 shall put the bulls on hold for a further pull-back towards the 6085 key medium-term support (the lower boundary of the medium-term ascending channel from 04 Apr 2018 low + former minor range support from 07/12 Jun 2018).
- Germany 30 – Trend bias: Sideways. Pushed down as expected and met the 12100 target/support (Fibonacci projection/retracement cluster + lower boundary of a minor descending channel from 15 Jun 2018 high + former swing high area of 29 Mar 2018) as it printed a low of 12101 on last Thurs, 28 Jun. Mix elements now, prefer to turn neutral first in short-term between 12400 (minor swing high areas of 28/29 Jun 2018) and 12100. An hourly close below 12100 sees a further slide towards the major support of 11900/800 (the neckline of an impending bearish “Head & Shoulders” bearish reversal configuration in place since 20 Jun 2017). On the other hand, a break above 12400 sees a corrective mean reversion rebound towards the 12630 intermediate resistance (the former swing low area of 31 May 2018 + 50% Fibonacci retracement of the recent decline from 15 Jun 2018 high to 28 Jun 2018 low).
*Levels are obtained from City Index Advantage TraderPro platform
GAIN Capital UK Limited (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.