Daily Global Macro Technical Trend Bias/Key Levels (Thurs 04 Oct)

FX mix with risk of minor USD strength setback in EUR, JPY & NZD. Bearish reversal signs emerge in S&P 500.

FX –  Mix bag with risk of USD strength setback in EUR, JPY & NZD

  • EUR/USD – Trend bias: Sideways with risk of countertrend rebound. Declined as expected and almost met the support/target of 1.1445/1410 (printed a low of 1.1465 in yesterday, 03 Oct U.S. session) per highlighted in our previous report. Recalled that 1.1445/1410 is major support as per defined by the major pull-back range support from May 2015/Jul 2017 of a 2-year range configuration that was challenged but held recently on the week of 13/17 Aug 2018. Interestingly, it is now the lower boundary/support of a minor descending channel in place since 24 Sep 2018 high and the minor 5th wave 0.618 Fibonacci projection stands at 1.1440 (a potential last down leg projection target that ends of an impulsive down move cycle before a mean reversion rebound occurs based on Elliot Wave/fractal analysis). In addition, both the 4 and 1-hour Stochastic oscillators have hit their respective extreme oversold levels. Thus, integrated technical analysis highlights the risk of a countertrend/mean reversion rebound to retrace the losses seen in the on-going down move since 24 Sep 2018 high of 1.1815. Thus, prefer to turn neutral now first between 1.1410 and 1.1530 (the former minor swing low areas of 04/10 Sep 2018 + median line of the minor descending channel since 24 Sep 2018 high). An hourly close above 1.1530 triggers a potential corrective rebound to target the next intermediate resistance at 1.1640/1680 (the 50%/61.8% Fibonacci retracement of the down move from 24 Sep 2018 high to 03 Oct 2018 low + upper boundary of the aforementioned minor descending channel). On the flipside, a break below 1.1410 sees an extension of the down move to target the next support at 1.1350/1300 (15 Aug 2018 swing low + Fibonacci projection cluster).
  • GBP/USD – Trend bias: Down. Continued to decline as expected to print a new minor “lower low” of 1.2923 in yesterday, 03 Oct U.S. session. No clear signs of bearish exhaustion yet, maintain bearish bias in any bounces below a tightened key short-term resistance now at 1.3000 (median line of the minor descending channel in place since 20 Sep 2018 high + pull-back resistance of the former minor ascending trendline support from 15 Aug 2018 low) for a further potential push down to target the next near-term support at 1.2890 next (minor swing low areas of 24 Aug/05 Sep 2018). A break below 1.2890 is likely to trigger a further potential downward acceleration towards 1.2810/2790 (the minor swing low areas of 24 Aug/05 Sep 2018 + 76.4% Fibonacci retracement of the recent up move from 15 Aug 2018 low to 20 Sep 2018 high). However, a clearance above 1.3000 negates the bearish tone for a deeper corrective rebound to retest 1.3110 (minor swing high area of 01 Oct 2018 +  upper boundary of the aforementioned minor descending channel).
  • USD/JPY - Trend bias: Sideways with risk of countertrend decline. Pushed up as expected and met the resistance/target of 114.10/30 (Fibonacci projection cluster + major range resistance from 09 May /03 Nov 2017) as it printed a current intraday high of 114.55 in today, 04 Oct Asian session. Shorter-term momentum indicators are now highlighting the risk of a pull-back/mean reversion decline to retrace the on-going up move since 07 Sep 2018 minor low of 110.36 with the 4-hour Stochastic oscillator at its extreme overbought level coupled with a bearish divergence signal  seen in the 1-hour Stochastic oscillator. Thus, prefer to turn neutral first between 114.70 (upper boundary of the minor ascending channel from 07 Sep 2018 low + Fibonacci projection cluster) and 114.00. An hourly close below 114.00 opens up scope for a potential countertrend/mean reversion decline to test the next near-term support at 113.50 (minor swing low area of 03 Oct 2018 + lower boundary of the minor ascending channel from 07 Sep 2018 low). On the flipside, a clearance above 114.70 sees an extension of the up move to target the next resistance at 115.10/60 (Fibonacci projection cluster + swing high areas of 19 Jan/10 Mar 2017.
  • AUD/USD – Trend bias: Down. Declined as expected and broke below the support/target of 0.7140/7125 (printed a current intraday low of 0.7090 in today, 04 Oct Asian session). No clear signs of bearish exhaustion except for extreme oversold readings seen in the 4 and 1-hour Stochastic oscillators that highlights the risk of a minor rebound at this juncture before another potential downleg resumes within an on-going medium-term downtrend in place since 26 Jan 2018 high of 0.8135. Maintain bearish bias in any bounces below tightened key short-term resistance now at 0.7165 (former minor swing low of 02 Oct 2018 + 50% Fibonacci retracement of the recent push down from 29 Sep 2018 high to today, 04 Oct current Asian session low of 0.7090) for another round of potential downleg to target next support at 0.6970/50 (Fibonacci projection cluster + lower boundary of the aforementioned medium-term descending channel).  However, a clearance above 0.7165 sees a squeeze up to retest 0.7240/7260 (minor swing high of 28 Sep/02 Oct 2018 + upper boundary of the aforementioned medium-term descending channel).
  • NZD/USD - Trend bias: Sideways with risk of countertrend rebound. Declined as expected and met the support/target of 0.6500 (printed a current intraday low of 0.6490 in today, 04 Oct Asian session). Mix elements now as extreme oversold reading has been sighted in the 4-hour Stochastic oscillator coupled with a bullish divergence signal seen in the 1-hour Stochastic oscillator. Prefer to turn neutral now between 0.6475 and 0.6560 (minor descending trendline from 26 Sep 2018 high + 50%v Fibonacci retracement of the recent push down from 28 Sep 2018 high to today, 04 Oct current intraday low of 0.6490). A clearance above 0.6560 sees an extension of the corrective rebound towards 0.6660 (upper boundary of a medium-term descending channel from 07 Jun 2018 high). On the flipside, an hourly close below 0.6475 opens up scope for an extension of the decline to target the next support at 0.6360/6330 (Fibonacci projection cluster + lower boundary of the aforementioned medium-term descending channel).

Stock Indices (CFD) – Mix bag with S&P 500 showing signs of bearish reversal

  • US SP 500 – Trend bias: Sideways with risk of bearish reversal below 2940. The Index has staged another attempt (the 3rd) to challenge our predefined long-term pivotal resistance at 2940 in yesterday, 03 Oct U.S. session and staged a minor bearish reversal towards the minor support at 2912 (02 Oct 2018 swing low + minor ascending trendline from 27 Sep 2018 low). In addition, it ended the U.S. session with another daily “Spinning Top” candlestick pattern (the second occurrence where the first was sighted on 21 Sep 2018 where the index staged its first attempt to challenge 2940). A sign of continuous weariness from the bulls coupled with a deterioration seen in broad based market breadth as the NYSE new 52-week highs -52-week lows cumulative line has continued to decline since 04 Sep 2018. Maintain neutral stance in short-term between 2912 and 2940. An hourly close below 2912 triggers a potential decline to target the near-term support of 2902/2900 (minor swing low area of 27 Sep 2018) in the first step. On the flipside, a clearance above 2940 sees a further potential push up to target 2951/55 next (minor ascending channel resistance from 28 Sep 2018 + Fibonacci projection cluster).       
  • Japan 225 – Trend bias: Sideways. The Index has reintegrated below 24200/100 (the former medium-term range resistance (swing high of 23 Jan 2018 which is also a 26-year high since Oct 1991) coupled with short-term weakness seen in the USD/JPY. A sign of failure bullish breakout  from the medium-term range if the Index fails to recapture 24200 by the end of today, 04 Oct. Prefer to turn neutral now with next near-term support to watch at 23780/750 (minor swing low areas of 24/27 Sep 2018) and intermediate resistance at 24360. An hourly close above 24360 reinstates the bullish tone for a potential push up to target 24660 (Fibonacci projection cluster).
  • Hong Kong 50 – Trend bias: Down. Declined as expected and met the support/target of 26670 (printed a current intraday low of 26553 in today, 04 Oct Asian session. No clear signs of bearish exhaustion except for an extreme oversold reading seen in the 1 hour Stochastic oscillator where the Index may stage a minor bounce at this juncture before another downleg resumes. Maintain bearish bias in any bounces below tightened key short-term resistance now at 26920 (today, 04 Oct Asian session gapped down + former minor swing low of 02 Oct 2018) for further potential push down to target the next near-term support at 26120 (the minor swing low area of 11 Sep 2018). On the flipside, a clearance above 26920 negates the bearish tone for a further corrective rebound towards 27260/430 (minor swing high of 03 Oct 2018 + former minor range support of 20/24 Sep 2018).
  • Australia 200 – Trend bias: Down. The Index squeezed up in today, 04 Oct early Asian session and broke above the 6165 key short-term resistance as per highlighted in our previous report (printed a high of 6198). The on-going rebound has managed to stall right at the pull-back resistance of the former “bearish flag” ascending range support from 07 Sep 2018 low coupled with the 4 hour Stochastic oscillator that has started inch down from an extreme overbought level and a bearish divergence signal sighted in the 1 hour Stochastic oscillator. Tolerate the excess and maintain bearish bias below 6200 for a potential push down to target the 6100 support (swing low area of 06 Sep 2018). On the flipside, a clearance above 6200 put the bears on hold for a further corrective rebound to test the 6250 key-medium-term resistance (refer to latest weekly technical outlook).
  • Germany 30 – Trend bias: Down. Yesterday’s bounce has managed to stall right at the 12375 key short-term resistance which also confluences with the upper boundary of the medium-term descending channel from 14 Jun 2018 high. No change, maintain bearish bias below 12375 key short-term resistance for a further potential push down to retest last Fri low at 12188 and even 12120/12090 next (former minor swing high area of 14 Sep 2018 + 61.8% Fibonacci retracement of the rebound from 11 Sep 2018 low to 27 Sep 2018 high). On the other hand, a break above 12375 negates the bearish tone for another round of choppy up move to retest the minor range resistance of 12460 in place since 21 Sep 2018.


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