Daily Global Macro Technical Trend Bias/Key Levels (Thurs 14 Jun)

Mix bag in FX space. S&P 500 at risk of shaping a deeper pull-back within medium-term uptrend.

FX – Mix bag with risk of a deeper pull-back in USD/JPY

  • EUR/USD – Trend bias: Sideways. Continued to churn sideways post FOMC  holding above the 1.1725 lower limit of the short-term neutrality zone (printed a low of 1.1725 after the release of the Fed’s  “Dot Plot” that indicated a projection of 2 more interest rate hikes before 2018 ends ( a total of 4 hikes in 2018 versus an earlier projection of 3 hikes). No change, maintain neutrality stance between 1.1725 and 1.1840. A break below 1.1725 (an hourly close below it) opens up scope for the continuation of the medium-term down move in place since Apr 2018 for a potential push down towards the next intermediate supports at 1.1650/1616 in the first step (the minor swing low areas of 01/05 Jun 2018 + 50%/61.8% Fibonacci retracement of the up move from 29 May 2018 low to 07 Jun 2018 high) . On the other hand, a clearance above 1.1840 (an hourly close above it) reinstates the short-term bullish tone for a potential push up to target the next intermediate resistance at 1.1880/1940 (38.2% Fibonacci retracement of the decline from 16 Feb 2018 high to 29 May 2018 low + former minor swing low area of 09/10 Jan 2018 that was rejected on 14 May 2018 + also now the potential breakout target of the aforementioned minor “Ascending Triangle”).
  • GBP/USD – Trend bias: Deeper pull-back/retracement remains in progress. The pair had broken below the 1.3350 lower limit of the short-term neutrality zone with an hourly close below in yesterday, 13 Jun European session to print an intraday low of 1.3306 (6 pips above the first intermediate support/downside target of 1.3300 as per highlighted in yesterday report). Thereafter, it staged a rebound in the U.S. session to print a high of 1.3384 post FOMC.  The push up seen in yesterday U.S. is still being capped by a minor descending trendline from 07 Jun 2018 high now acting as a resistance at 1.3400 that also confluences with the 76.4% Fibonacci retracement of yesterday’s slide from 12 Jun minor high of  1.3425 to yesterday, 13 Jun low of 1.3306. Flip to a bearish bias with 1.3400 as the key short-term resistance for a further potential push down to target  the next intermediate supports at 1.3300 (minor swing low areas of 04/05 Jun 2018 + 61.8% Fibonacci retracement of the up move from 29 May 2018 low to yesterday, 06 Jun high of 1.3472) follow by 1.3260 (minor swing low area of 01 Jun 2018) in the first step. However, a clearance above 1.3400 negates the bearish tone for a squeeze up to retest 1.3470/3480 (the minor swing high areas of 22 May/07 Jun 2018).
  • AUD/USD – Trend bias: Deeper pull-back/retracement remains in progress. Continued to push down lower as expected to print a low of 0.7528 in yesterday, 13 Jun U.S. session before a rebound materialised post FOMC to hit a minor high of 0.7582. No signs of bearish exhaustion, maintain bearish bias with adjusted key short-term resistance now at 0.7608 (yesterday, 13 Jun U.S. session high + close to the minor descending trendline in place since 06 Jun 2018 high) for a further potential push down to target the next intermediate support at 0.7515 (the minor swing low of 01 Jun 2018 & the lower boundary of the minor ascending channel from 09 May 2018 low). A break below 0.7515 shall see the continuation of the medium-term down move in place since 14 Mar 2018 high for a further potential decline to retest the 09 May 2018 swing low area of 0.7450/0.7410. However, a clearance above 0.7608 negates the bearish tone for a squeeze up to retest 0.7675/7690 key medium-term resistance (the pull-back resistance of the former major bearish “Ascending Wedge” support from Jan 2016 + the former medium-term swing low area of 20 Mar 2018).
  • NZD/USD - Trend bias: Sideways with a bearish bias. Continued to churn sideways holding above the 0.7000 lower limit of the short-term neutrality zone (printed a low of 0.6972 before an hourly close back above 0.7000 post FOMC). No change, maintain neutrality stance between 0.7060 (former minor swing high area of 04 May 2018 + Fibonacci projection/retracement cluster) and 0.7000 (05 Jun 2018 minor swing low).  An hourly close below  0.7000 opens up scope for a decline towards the next intermediate support of 0.6960 (the former minor swing low area of 01 Jun 2018) and below exposes the next support of 0.6900 (psychological + minor ascending trendline from 15 May 2018/the start of the current short-term rebound). On the flipside, a clearance (an hourly close) above 0.7060 triggers a potential squeeze up to retest a significant medium-term resistance at 0.7190 (the former range support from 08 Feb/20 Mar 2018 before the recent bearish breakdown that led to a decline of 330 pips + 61.8% Fibonacci retracement of the decline from 13 Apr 2018 high to 16 May 2018 low).
  • USD/JPY - Trend bias: Risk of a deeper pull-back within medium-term uptrend. Yesterday post FOMC slide hit an intraday low of 110.06 before an hourly close back above the 110.10 predefined adjusted key short-term support as per highlighted in yesterday report. Even though the key short-term support still holds at 110.10 but bearish signs have emerged that can trigger a deeper pull-back within its ongoing medium-term uptrend in place since 26 Mar 2018 low. The pair has shaped a bearish daily “Shooting Star” candlestick pattern at the end of yesterday, 13 Jun U.S. session and the high of the Shooting Star stands at 110.85 which confluences with the 0.618 Fibonacci projection of the recent up move from 30 May 2018 low to 07 Jun 2018 high projected from 08 Jun 2018 minor low of 109.17 that indicates a potential 5th wave target has been met that marks the end of the minor up move cycle from 30 May 2018 low based on Elliot Wave/fractal analysis. Thus, prefer to turn neutral first between 110.10 and 110.85. An hourly close above 110.85 reinstates the bullish tone for a further potential upleg to target the 111.40/60 intermediate resistance in the first step (minor swing high area of 21 May 2018 + median line of the aforementioned medium-term ascending channel + Fibonacci projection cluster). On the flipside, an hourly close below 110.10 opens up scope for 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) – S&P 500 at risk of shaping a deeper pull-back

  • US SP 500 – Trend bias: Deeper pull-back within medium-term uptrend.  The Index is now testing the lower limit of the adjusted the short-term support at 2275 after failure to shape a push up towards the 2800 intermediate resistance (printed a high of 2791 in yesterday, 13 Jun U.S. session) Signs of weakness have emerged as the Index had a recorded a daily close below the previous day (Tues, 12 Jun) daily “Doji” candlestick low of 2778. Flip to a bearish bias below 2791 as the key short-term resistance for a further potential push down to target the next intermediate supports at 2752 (08 Jun 2018 minor swing low) follow by 2740/35 (former minor range resistance from 14 May/25 May 2018 + lower boundary of a medium-term ascending channel 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: Sideways. Given the weakness seen in the S&P 500 and the USD/JPY where the Nikkei/Japan 225 Index has a direct correlation, prefer to turn neutral now even though the Index is still holding above the 22790/22760 adjusted key short-term support as per highlighted in yesterday report.  The short-term neutrality range will be at 22760 and 23020 (the minor swing high area of 21 May 2018 that has stalled the recent push up seen on 12 Jun 2018). An hourly close below 22760 opens up scope for a deeper pull-back towards the 22550/450 support (the lower boundary of the medium-term ascending channel from 23 Mar 2018 low + minor swing low area of 08 Jun 2018). On the flipside a clearance above 23020 reinstates the bulls for a continuation of the up move to target the next intermediate resistance at 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: Push down within range configuration. Broke below the 30800 lower limit of the short-term neutrality zone. Turn bearish in any bounce below key short-term resistance at 30870 (former minor swing area of 08 Jun 2018 + minor descending trendline from 07 Jun 2018 high) for further potential push down to target the range support of 30000/29900 in place since 17 Apr 2018 low. On the other hand, a clearance above 30870 negates the bearish tone to see a push up to retest the recent 12 Jun 2018 swing high area of 31200/300.
  • Australia 200 – Trend bias: Sideways. No change, maintain neutrality stance between 6060 (13 Jun 2018 minor swing high) and 5980 key medium-term support. Only an hourly close above 6060 reinstates the bullish tone for a push up to target the next intermediate resistance at 6087 (minor congestion area from 07 May/21 May 2018 + 61.8%/76.4% Fibonacci retracement of the recent decline from 15 May high to 29 May 2018 U.S. session low of 5943) in the first step. A daily close below 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) opens up scope for a deeper pull-back towards the next support at 5850 (the former minor swing high areas of 27 Mar/10 Apr 2018 & close to the 61.8% Fibonacci retracement of the up move from 04 Apr low to 10 May 2018 high).
  • Germany 30 – Trend bias: Sideways. Given the lack of upside momentum seen in the rest of the major indices, prefer to turn neutral first between 12930 (minor range top formed from 05/12 Jun 2018) and 12750 (minor swing low area of 11 Jun 2018). Only an hourly close above 12930 in the European session reinstates the bullish tone for a potential push up to retest next range resistance at 13000/13040 (minor swing high areas of 24/25/28 May 2018). On the flipside, failure to hold at 12750 sees another round of choppy slide to retest the 12630 key medium-term support (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




Join our live webinars for the latest analysis and trading ideas. Register now

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.

For further details see our full non-independent research disclaimer and quarterly summary.