Daily Global Macro Technical Trend Bias/Key Levels (Thurs 18 Oct)

USD bulls are lurking around. Residual corrective rebound for S&P 500 before risk of another impulsive downleg

FX –  USD bulls are lurking around

  • EUR/USD – Trend bias: Down. The pair had broken down below the 1.1530 key short-term support, reinforced by the release of  the Fed minutes on its Sep 25/26 FOMC meeting. The residual countertrend/corrective rebound scenario to target the 1.1650/1670 resistance has been invalidated (it printed an intraday high of  1.1621 on 16 Oct 2018). Flip back to a bearish bias in any bounces below the key short-term resistance at 1.1570 (close to the neckline of a broken down minor bearish reversal “ Double Top” that was formed from 12 Oct/16 Oct 2018 + 61.8% Fibonacci retracement of the recent slide from 16 Oct 2018 high to today, 18 Oct current intraday low of 1.1495) for a revival of the impulsive down move to target the 1.1430/1410 support (swing low area of 09 Oct 2018 + the major pull-back range support from May 2015/Jul 2017 of a 2-year range configuration bullish breakout that was challenged but held recently on the week of 13/17 Aug 2018) and even the recent 15 Aug 2018 medium-term swing low area  of 1.1300. On the flipside, a clearance above 1.1570 negates the bearish tone for a squeeze back up to retest the minor “Double Top” range resistance of 1.1610/1620.
  • GBP/USD – Trend bias: Push down within range. The pair broke below the 1.3120 lower limit of the short-term/minor neutrality range that was highlighted in our previous report which validated a push down scenario within a choppy range configuration that is evolving since its 20 Sep 2018 high of 1.3300. Flip to a bearish bias below key short-term resistance at 1.3150 (former minor swing high of 18 Oct 2018 + pull-back resistance of the former minor ascending trendline support from 04 Oct 2018 low) for a further potential push down to retest the near-term support of 1.3030/3000 (Fibonacci projection/retracement cluster + minor swing low areas of 08/09 Oct 2018). On the flipside, a break back above 1.3150 sees a squeeze back up to retest the 1.3300 range resistance.
  • USD/JPY - Trend bias: Countertrend/corrective rebound in progress.  The pair pull-back and staged a bullish reversal right above the predefined tightened key short-term support of 111.90 (printed a low of 111.98 in yesterday, 17 Oct early U.S. session). No change, maintain bullish bias in any dips with a tightened key short-term support now at 112.25 (Fibonacci retracement cluster + former minor swing high areas of 17 Oct 2018 European session) for a further potential corrective rebound  to target next intermediate resistances at 112.80 follow by 113.30/40 (minor swing high of 09/10 Oct 2018 + 61.8% Fibonacci retracement of the decline from 04 Oct 2018 high to 15 Oct 2018 low of 111.59). On the flipside, a break below 112.25 negates the bullish tone for a further slide to retest the 111.65/50 key medium-term support (medium-term ascending channel support from 26 Mar 2018 low +former medium-term range resistance from 31 Jul 2018 high).
  • AUD/USD – Trend bias:  Sideways with risk of impulsive down move revival.  The pair pushed down but managed to find support right above the 0.7100 lower limit of the short-term/minor neutrality zone that we highlighted in our previous report (printed a current intraday low of 0.7102 in today, 18 Oct Asian session). Interestingly, it has formed a daily bearish candlestick at the end of yesterday, 17 Oct U.S. session that closed below Tues, 16 Oct “Hanging Man” candlestick low of 0.7112. These observations suggest a potential bearish reversal is on the cards; an hourly close below 0.7100 opens up scope for another leg of potential impulsive down move to retest the recent 06 Oct 2018 swing low area of 0.7040 before targeting 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 0.7150 reinstates the corrective rebound scenario for a squeeze up towards 0.7200/7220 resistance (Fibonacci projection/retracement cluster + upper boundary of the medium-term descending channel from 26 Jan 2018 high).
  • NZD/USD - Trend bias: Sideways. Mix elements now as yesterday’s slide from 17 Oct 2018 high of 0.6601 has managed to find a floor at the minor ascending trendline from 09 Oct 2018 low now acting as a support at 0.6530 (also the former minor swing high of 12 Oct 2018). Prefer to turn neutral now between 0.6560 (minor descending trendline from 17 Oct 2018 high) and 0.6530. An hourly close above 0.6560 reinstates the residual corrective rebound scenario to target the 0.6630/0.6660 resistance (upper boundary of a medium-term descending channel from 07 Jun 2018 high + 38.2% Fibonacci retracement of the down move from 06 Jun 2018 high to 08 Oct 2018 low of 0.6421). On the flipside, a break below 0.6530 reinstates the bears for a slide to retest 0.6430/20 swing low area of 08/09 Oct 2018 in the first step.

Stock Indices (CFD) – Residual countertrend/corrective rebound in S&P 500 before risk of impulsive down move resumes

  • US SP 500 – Trend bias: Residual countertrend/corrective rebound. The index had managed to find a floor right above the predefined key short-term support at 2780 as per highlighted in our previous report. Despite it had a daily close higher that its intraday low of 2781 at the end of yesterday, 17 Oct U.S. session, it formed a bearish daily “Hanging Man” candlestick pattern coupled with underperformance seen in the “high beta/risk on” heavy weights S&P sectors (represented by ETF) where the Technology and Consumer Discretionary sectors recorded losses of -0.46% and 0.82% respectively versus a -0.03% return seen in the S&P 500. Cautious now, Elliot Wave/fractal analysis suggests one more potential push up before the on-going corrective rebound from 11 Oct 2018 low of 2708 ends. Key short-term support remains at 2780 for a potential push up towards 2840/50 resistance (pull-back resistance of the former ascending trendline support from 02 Apr 2018 low + 50% Fibonacci retracement of the previous impulsive down move from 03 Oct 2018 high to 11 Oct 2018 low) before another potential impulsive down move materialises. On the flipside, failure to hold at 2780 invalidates the residual corrective rebound scenario for a slide to retest the 11 Oct 2018 low of 2708.
  • Japan 225 – Trend bias: Sideways. Mix elements now, yesterday’s price action had ended the U.S. session with a daily “Doji” candlestick pattern right below the 23000 resistance (former range support that was broken out four weeks ago on 14 Sep 2018 & reintegrated back below on 10 Oct 2018. These observations suggest signs of indecisiveness by the bulls in the on-going corrective rebound. Prefer to turn neutral now between 22600 (minor ascending trendline from 15 Oct 2018 low + close to yesterday, 17 Oct U.S. session low) and 23000. Only an hourly close above 23000 reinstates the residual corrective rebound scenario to target the next resistance at 23270/320 (minor swing low of 09 Oct 2018 + 50% Fibonacci retracement of the previous impulsive down move from 01 Oct 2018 high to 15 Oct 2018 low). ). On the flipside, failure to hold at 22600 negates the corrective rebound scenario of a slide to retest the 15 Oct 2018 swing low area of 22170/22000.
  • Hong Kong 50 - Trend bias: Sideways. No change, maintain neutrality stance between 25815 and 25220 (minor ascending trendline from 11 Oct 2018 low). A break above 25815 opens up scope for a potential countertrend/corrective rebound to target the next resistances at 26100 follow by 27260/500 (close to the upper boundary of the medium-term descending channel from 07 Jun 2018 high + 38.2% Fibonacci retracement of the impulsive down move from 07 Jun 2018 high to 11 Oct 2018 low). On the flipside, failure to hold at 25220 reinstates the bearish tone for a slide to retest the 11 Oct 2018 low of 25080 and even the 24740 support (refer to our latest weekly technical outlook for details).
  • Australia 200 – Trend bias: Residual countertrend/corrective rebound. Tested and managed to inch up from the 5900 predefined key short-term support as per highlighted in our previous report (printed an intraday low of 5891 in yesterday, 17 Oct U.S. session. No change, maintain bullish bias with 5900/5891 (excess) remains as the key short-term support for a potential residual corrective rebound to target the 5980/6045 resistance zone (50%/61.8% Fibonacci retracement of the previous impulsive down move from 28 Sep 2018 high to 11 Oct 2018 low + pull-back resistance of the former major ascending channel support from 10 Feb 2016 low) before a potential impulsive down move materialises. On the flipside, failure to hold at 5900/5891 negates the corrective rebound scenario for a slide to retest the 5750/5700 support (11 Oct 2018 low + medium-term swing low areas of 09 Feb/04 Apr 2018).
  • Germany 30 – Trend bias: Sideways.  Mix elements as yesterday’s push up seen in the European opening session failed to break above the 11800 neckline resistance of the major “Head & Shoulders” bearish breakdown triggered on 10 Oct 2018. Prefer to maintain neutrality stance between 11800 and 11600 (minor ascending trendline from 16 Oct 2018). An hourly close below 11600 reinstates the impulsive down move for a retest on the 11400/300 near-term support in the first step. On the flipside, a clearance with an hourly close above 11800 sees an extension of the corrective rebound towards  12100/12300 resistance (former minor swing low of 28 Jun 2018 + 38.2% Fibonacci retracement of recent down move from 22 May 2018 high to 11 Oct 2018 low + close to the upper boundary of medium-term descending channel from 14 Jun 2018 high).     

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