Daily Global Macro Technical Trend Bias/Key Levels (Thurs 11 Oct)

USD strength remains on support against AUD & NZD. Impulsive downleg resumes for stock indices but minor bounce cannot be ruled out at this junture.

FX –  USD strength remains on support against AUD & NZD

  • EUR/USD – Trend bias: Countertrend rebound in progress. The pair had cleared above the 1.1520 upper limit of the short-term neutrality zone as per highlighted in our previous report which validated a countertrend/corrective rebound. Flip to a bullish bias in any dips above key short-term support at 1.1515 (former minor swing high of 10 Oct 2018 + minor ascending trendline from 09 Oct 2018 low) to target the next intermediate resistance at 1.1580/1600 (38.2% Fibonacci retracement of the down move from 24 Sep 2018 high to 09 Oct 2018 low) follow by 1.1620 next (minor swing high areas of 28 Sep/01 Oct 2018 + 50%  Fibonacci retracement of the down move from 24 Sep 2018 high to 09 Oct 2018 low + upper boundary of the aforementioned minor descending channel). However, failure to hold above 1.1515 invalidates the corrective rebound scenario for a continuation of the impulsive down move to retest 1.1430/1410 support.
  • GBP/USD – Trend bias: Sideways. The expected countertrend rebound/resistance target has been met at 1.3220/3240 (printed a current intraday high of 1.3244 in today, 11 Oct Asians session. Mix elements now as the 4 hour Stochastic oscillator has flashed out a bearish divergence signal at its extreme overbought level. Prefer to turn neutral now between 1.3300 (medium-term range resistance in place since 09 Jul 2018) & 1.3130 (former minor swing high area of 08 Oct 2018). An hourly close below 1.3130 shall trigger a potential slide to retest the near-term support of 1.3030 (minor swing low areas of 08/09 Oct 2018). On the flipside, a clearance above 1.3300 sees a squeeze up towards the next intermediate resistance at 1.3440/3510 (swing high area of 07 Jun 2018 + 50% Fibonacci retracement of the decline from 17 Apr 2018 high to 15 Aug 2018 low).
  • USD/JPY - Trend bias: Sideways. Dropped as expected and met the support/target of 112.10/111.95 (61.8% Fibonacci retracement of the prior up move from 07 Sep 2018 low to 04 Oct 2018 high + pull-back support of the former major descending resistance from 05 Jun 2015). Mix elements now, prefer to turn neutral first between 111.90 and 112.55 (former minor swing low area of 27 Sep 2018 + 23.6% Fibonacci retracement of the on-going decline from 04 Oct 2018 high to today, 11 Oct Asian session current intraday low of 111.97). An hourly close above 112.55 opens up scope for a potential countertrend rebound towards the intermediate resistance of 113.20/35 (minor swing high areas of 09/10 Oct 2018 + 50% Fibonacci retracement of the on-going decline from 04 Oct 2018 high to today, 11 Oct Asian session current intraday low of 111.97). On the flipside, failure to hold at 111.90 sees an extension of the impulsive downleg to target the next near-term support at 111.65/50 (medium-term ascending channel support from 26 Mar 2018 low +former medium-term range resistance from 31 Jul 2018 high).
  • AUD/USD - Trend bias: Down. Pushed up, tested and managed to reverse down from the 0.7120/7126 key short-term resistance. No change, maintain bearish bias below 0.7120/7126 a potential push down to target the next support at 0.6970/50 (Fibonacci projection cluster + lower boundary of the medium-term descending channel in place since 26 Jan 2018 high). On the flipside, a clearance above 0.7120/7126 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: Down. No change, maintain bearish bias below the 0.6500 key short-term resistance (the minor descending trendline from post FOMC 26 Sep high of 0.6696 + former minor swing low areas of 11/12 Sep 2018) for a further potential push down to target the next support at 0.6360/6330 (Fibonacci projection cluster + lower boundary of the medium-term descending channel in place since 07 Jun 2018 high). On the flipside, a clearance above 0.6500 negates the bearish tone for a squeeze up to test 0.6630 (upper boundary of a medium-term descending channel from 07 Jun 2018 high).

Stock Indices (CFD) – Impulsive down move resumes

  • US SP 500 – Trend bias: Down. The earlier anticipated countertrend rebound had stopped short of our intermediate resistance/target of 2910/12 (only printed a high of 2895 on Tues, 09 Oct) before it tumbled by 3.07% (from its high to low of yesterday’s U.S. session) and broke below the 2860 key medium-term downside trigger level (refer to our last weekly technical outlook report). Yesterday, 10 Oct U.S. session intraday fall was the steepest since 08 Feb 2018 with the key S&P 500 technology sector, represented by its ETF (XLK) that led the losses (down by 4.85$% versus a loss of 3.29% seen in the broader S&P 500). This is a very crucial technical element as the melt-up phase that started in Feb 2016 of this aging bull market since Mar 2009 is being supported by the outperformance of the higher beta Technology sector with significant inflows. Right now, its longer-term/weekly relative values strength chart against the S&P 500 has broken a major ascending trendline support which increases the probability that we are staring the initial stage of a major (multi-month) impulsive down move after the 3rd failed attempt by the S&P 500 to break above our predefined 2940 key long-term pivotal resistance. Yesterday, steep fall has met our medium-term support/downside target of 2790/80 set for this week (printed a current intraday low of 2745 in today, 11 Oct Asian session). Elements remain negative, we maintain our bearish bias for the medium-term (multi-week) and for today, key short-term resistance will be at 2803 (close to the 2790 pull-back resistance of the former range support bullish breakout from 26 Feb/13 Jun 2018 + 38.2% Fibonacci retracement of the on-going decline from 09 Oct 2018 high of 2895 to today, 11 Oct current intraday low of 2745) with risk of a minor bounce as both the 4/1- hour Stochastic oscillators have reached extreme oversold level before another potential downleg resumes to target the next near-term support at 2700/2690 (Fibonacci retracement/projection cluster + medium-term swing low areas of 29 May/28 Jun 2018 + pull-back support for the former primary/long-term ascending channel resistance bullish breakout from Mar 2009).  On the other hand, a clearance above 2803 sees a steeper corrective rebound to retest the intermediate resistance zone of 2837/60 (the Fibonacci retracement of the on-going decline from 09 Oct 2018 high of 2895 to today, 11 Oct current intraday low of 2745 + former medium-term downside trigger level).
  • Japan 225 – Trend bias: Down. Broke below the 23000 key medium-term range support (refer to our latest weekly technical outlook) which reinforces our earlier view of a failure bullish breakout above its previous swing area of 24200 (printed on 23 Jan 2018 + a 26-year high since Oct 1991). Today, we flip back to a bearish bias in any bounces (due to extreme oversold levels seen in both in the 4/1- hour Stochastic oscillators) below 23000 key short-term resistance (also now the 23.6% Fibonacci retracement of the on-going decline from 01 Oct 2018 high to current, 11 Oct  Asian session intraday low of 22496) for a further potential push down to target the next support at 21850 (swing low areas of 13/15 Aug 2018 + major ascending channel support from Jun 2016 low). On the other hand, a clearance above 23000 sees a steeper corrective rebound to retest the intermediate resistance of 23500/600 (minor swing high of 10 Oct 2018 + 50% Fibonacci retracement of the on-going decline from 01 Oct 2018 high to current, 11 Oct  Asian session intraday low of 22496).
  • Hong Kong 50 – Trend bias: Down. The initial anticipated countertrend rebound had stopped short of our intermediate resistance/target of 26800 (only printed a high of 26500 yesterday, 10 Oct) before it staged a bearish reversal. Today, we flip back to a bearish bias in any bounces below key short-term resistance 25815 (upper limit of today, 10 Oct Asian session opening gapped down + Fibonacci retracement cluster) for a further potential push down to target our medium-term support/target at 24900/740 (also the lower boundary of the medium-term descending channel from 07 Jun 2018 high). On the other hand, a clearance above 25815 sees a steeper corrective rebound to retest the intermediate resistance of 26500/640 (minor swing high areas of 05/10 Oct 2018 + 50%v Fibonacci retracement of the on-going decline from 26 Sep 2018 high to today, 11 Oct current intraday low of 25178).
  • Australia 200 – Trend bias: Down. Impulsive down move resumes with the break below our medium-term support/target of 5950 (recalled that in our latest weekly technical outlook 5950 is defined by the major ascending channel support that held all previous drops since 10 Feb 2016 low). A violation below 5950 reinforces the start of a potential multi-month impulsive down move. We maintain our medium-term bearish bias and for today, key short-term resistance will be at 5980 (pull-back resistance of the former major ascending channel support from 10 Feb 2016 + minor descending trendline from 05 Oct 2018 high + 23.6% Fibonacci retracement of the minor decline from 05 Oct 2018 high to today, 11 Oct Asian session low of 5902) to cap any bounces for a further potential push down to target the next near-term support at 5850 (Fibonacci projection + minor swing low area of 20 Apr 2018). On the other hand, a clearance above 5980 sees a steeper corrective rebound to retest the intermediate resistance of 6100/115 (former swing low area of 07 Sep 2018 + 61.8% Fibonacci retracement of the decline from 28 Sep 2018 high to 11 Oct Asian session low of 5902).
  • Germany 30 – Trend bias: Down. The break below the key 11800 neckline support of the major “Head & Shoulders” bearish reversal configuration in place since 20 Jun 2017) has reinforced our earlier anticipated potential multi-month impulsive down move. For today, key short-term resistance will be at 11800 (also the minor descending trendline from 04 Oct 2018 high + close to 23.6% Fibonacci retracement of the decline from 27 Sep 2018 high to today, 11 Oct Asian session current intraday low of 11476) for a further potential push down to target the next supports at 11400 (lower boundary of the medium-term descending channel from 14 Jun 2018 high) follow by 11280 (former medium-term swing high area of Nov 2015 + Fibonacci projection). On the other hand, a clearance above 11800 sees a steeper corrective rebound to retest the intermediate resistance of 12000/12090 (minor swing high areas of 09/10 Oct 2018 + 50%/61.8% Fibonacci retracement of the decline from 27 Sep 2018 high to today, 11 Oct Asian session current intraday low of 1147).                        

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