Daily Global Macro Technical Trend Bias/Key Levels (Mon 18 Jun)

Recent USD strength at risk of a minor pull-back. Mix bag in stock indices with S&P 500 and Nikkei 225 still at risk of undergoing a deeper pull-back.

FX – Recent USD strength at risk of a pull-back except against JPY

  • EUR/USD – Trend bias: Risk of minor mean reversion rebound. Last Thurs, 14 Jun, the pair had broken below the 1.1725 lower limit of the short-term neutrality zone and reinforced the bearish move as expected. It hit the intermediate support/downside target of 1.1650/1616 (printed an intraday low of 1.1563 in the U.S session on 14 Jun 2018 post ECB). The single day steep plunged of 300 pips seen on 14 Jun from its intraday high of 1.1851 was the worst performance since the start of the medium-term down trend from 16 Feb 2018, partly fuelled by dovish tone by undertook by ECB to keep its policy interest rates at record low levels till 2019 to balance out its plan to end its quantitative easing programme by 2018.  From a technical analysis perspective, the aforementioned steep decline now faces the risk of a minor mean reversion rebound as the pair action of the pair has reintegrated back above its 4 hour lower Bollinger Band after 4 consecutive periods of trading below the lower Band which indicates an “overstretched”. Interestingly, the swing low of the recent decline at 1.1543 confluences with the medium-term ascending channel support from 03 Jan 2017 low. Flip to a bullish bias with 1.1540 as the key short-term support for a potential minor rebound to retest the 1.1650/1660 intermediate resistance (former minor range support from 31 May/05 Jun 2018 + 38.2% Fibonacci retracement of the recent steep decline from 14 Jun 2018 high to 15 Jun 2018 low) before another potential fresh downleg materialises. However, failure to hold at 1.1540 opens up scope for a continuation of the waterfall slide towards the next support to test 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: Risk of minor mean reversion rebound. The pair had dropped lower as expected and hit the intermediate support/downside target of 1.3260 (printed a low of 1.3211 on last Fri, 15 Jun). Last Fri, 15 Jun low coincides with 29 May 2018 minor swing low of 1.3205 coupled with a daily “Doji-liked” candlestick pattern that was formed at the end of the last Fri, 15 Jun U.S. session. These observations suggest a slowdown in the recent downside momentum. Flip to a bullish bias in any dips with 1.3205 as the key short-term support for a potential minor rebound to retest the 1.3320/3340 intermediate resistance (former minor swing low area of 13 Jun 2018 + 50% Fibonacci retracement of the steep decline from 14 Jun to 15 Jun 2018 low). However, failure to hold at 1.3205 sees another round of downleg to target the next intermediate support at 1.3020/3000 (minor swing low areas of 05 Oct/03 Nov 2017 + psychological).
  • AUD/USD - Trend bias: Risk of minor mean reversion rebound. The pair tumbled as expected and hit the intermediate support/downside target of 0.7450/7410 (printed a current intraday low of 0.7425 in today, 18 Jun Asian session. The 4 hour Stochastic oscillator has flashed a bullish divergence signal at its oversold region which indicates an “overstretched” decline with a slow-down seen in downside momentum. Flip to a bullish bias with 0.7410 as the key short-term support (09 May 2018 swing low area) for a potential minor rebound to retest 0.7480/7500 intermediate resistance (the former minor swing low area of 30 May 2018 + 38.2% Fibonacci retracement of the recent steep decline from 12 Jun 2018 high to current intraday low of 0.7425) before another fresh downleg materialises. However, failure to hold at 0.7410 sees another fresh downleg of the on-going medium-term downtrend phase in place since 14 Mar 2018 high to target the next intermediate support at 0.7370/7330 in the first step (09 May 2017 swing low area + 61.8% Fibonacci retracement of the up move from Jan 2016 low to 26 Jan 2018 high).
  • NZD/USD - Trend bias: Coming close to 0.6900 minor support with risk of minor reversion rebound. On last Thurs, 14 Jun U.S. session, the pair had broken below the 0.7000 lower limit of the short-term neutrality zone and tumbled towards the intermediate support/downside target of 0.6900 (printed a current intraday low of 0.6920 in today, 18 Jun Asian session). Mix elements now, prefer to turn neutral between 0.6900 and 0.6960 (last Fri, 15 Jun 2018 high). An hourly close above 0.6960 may see a minor rebound to retest 0.6980/6995 intermediate resistance (minor swing low area of 05 Jun/14 Jun 2018 + 50%/61.8% Fibonacci retracement of the steep decline from 14 Jun 2018 high to today current intraday low of 0.6920). On the flipside, a break below 0.6900 opens up scope for another round of downleg to target the 0.6820 medium-term range support in place since 08 May 2017.
  • USD/JPY - Trend bias: Sideways. Mix elements at this juncture. Prefer to turn neutral between 109.90 (14 Jun 2018 minor swing low) and 110.90 (15 June 2018 minor swing high). An hourly close above 110.90 opens up scope for another round of upleg within the medium-term uptrend phase in place since 26 Jun 2018 low) for a further potential push up to target the 111.40/60 intermediate resistance in the first step (minor swing high area of 21 May 2018) before the major resistance at 122.00/30 (the descending trendline in place since Jun 2015 and Fibonacci retracement/projection cluster). On the flipside, an hourly close below 109.90 sees a deeper pull-back towards the next intermediate supports at 109.60 and 109.20 (former minor swing high of 08 Jun 2018 + minor swing low area of 08 Jun 2018 + lower boundary of the medium-term ascending channel from 26 Mar 2018 low).

Stock Indices (CFD) – Mix bag with risk of a deeper pull-back in S&P 500 & Nikkei 225

  • US SP 500 – Trend bias: Deeper pull-back within medium-term uptrend. No change, maintain bearish bias with 2791 remains as the key short-term resistance (13 Jun 2018 U.S. session high) for a further potential push down to target the 2752/47 intermediate support (08 Jun 2018 minor swing low + Fibonacci retracement/projection cluster + medium-term ascending channel support from 03 May 2018  low) before another round of potential upleg materialises. However, a break above 2791 reinstates the bullish tone for a potential push up to target the next intermediate resistances at 2800 (minor swing high areas of 12/13 Mar 2018) follow by 2815 next (Fibonacci projection cluster).
  • Japan 225 – Trend bias: Deeper pull-back within the medium-term uptrend. Broke below the 22760 lower limit of the short-term neutrality zone that validated a deeper pull-back. Flip to a bearish bias in any bounce below key short-term resistance now at 22880 (18 Jun 2018 minor swing high + close to the minor descending trendline from 12 Jun 2018 high) for a further potential push down to target the next intermediate support at 22550/450 (the lower boundary of the medium-term ascending channel from 23 Mar 2018 low + minor swing low area of 08 Jun 2018). On the other hand, a clearance above 22880 reinstates the bullish tone for a continuation of the up move to target the 23150/200 in the first step (0.618 Fibonacci projection of the up move from 29 May 2018 low to 07 Jun 2018 high projected from 08 Jun 2018 low).
  • Hong Kong 50 – Trend bias: Sideways. Drifted down lower as expected and almost met the range support/downside target of 30000/29900 (printed a current intraday low of 30029 in today, 18 Jun Asian session). Mix elements at this juncture, prefer to turn neutral first between 30000/29900 (minor range support in place since 17 Apr 2018) and 30660 (former minor swing low area of 13 Jun 2018 + minor descending trendline from 07 Jun 2018 high). An hourly close below 29900 opens up scope for a deeper slide to test the 29070 key medium-term range support. On the flipside, an hourly close above 30660 sees a push up within range scenario to retest the 31220 intermediate resistance (minor swing high area of 12 Jun 2018).   
  • Australia 200 – Trend bias: Up move in progress. Cleared above the 6060 upper limit of the short-term neutrality zone which reinstates the bullish movement coupled with a positive reading seen in the daily RSI oscillator (an indicator that measures momentum). Flip back to a bullish bias in any dips with key short-term support now at 6070 (former minor swing high areas of 07/12 Jun 2018) for a further potential push up to retest the 08 Jan 2018 swing high area of 6150 in the first step. However, failure to hold at 6070 suggests a failure bullish breakout from the short-term neutrality range to see a further slide back towards the 5980 key medium-term support (pull-back support of the former “Symmetrical Triangle” resistance from 09 Jan 2018 and the 38.2% Fibonacci retracement of the up move from 04 Apr low to 10 May 2018 high).
  • Germany 30 – Trend bias: Up move in progress. Cleared above the 12930 upper limit of the short-term neutrality zone and rallied/cleared above the 13000/13040 next intermediate resistance reinforced by ECB’s dovish stance to keep key policy interest rates at record low till 2019. Flip to a bullish bias in any dips with key short-term support now at 12900 (former minor range resistance from 05 Jun/12 Jun 2018) for another round of potential push up to target the next intermediate resistance at 13275 in the first step (minor swing high area of 01 Feb 2018 + 1.618 Fibonacci projection of the up move from 06 Feb 2018 low). However, failure to hold at 12900 sees another round of choppy down move to retest 12770 (minor swing low area of 11 Jun 2018) and even the key medium-term support at 12630 (the former 3-month range resistance of the “Bottoming” configuration from 07 Feb/24 Apr 2018 + the 38.2% Fibonacci retracement of the up move from 26 Mar 2018 low to 22 May 2018 high).

 *Levels are obtained from City Index Advantage TraderPro platform


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