Daily Global Macro Technical Trend Bias/Key Levels (Tues 10 Jul)

Mix bag in FX while USD/JPY now at risk of a shaping a pull-back in line with major stock indices.

FX –  Mix bag with USD/JPY at risk of shaping a minor pull-back

  • EUR/USD – Trend bias: Mean reversion rebound scenario remains intact. The pair had staged the expected push up and met the intermediate resistance target of 1.1740 as per highlighted in our previous report (printed a high of 1.1767 on last Fri, 06 Jul). It continued its march northwards to hit a high on 1.1790 in yesterday, 09 Jul early U.S. session before a pull-backed of 60 pips after the announcement of the sudden resignation of U.K foreign minister Boris Johnson over disagreement with U.K PM May's softer approach over Brexit plans. From a technical analysis perspective, elements are still advocating a potential second wave of minor mean reversion rebound after the risk of a slide towards 1.1710 (minor ascending channel support from 28 Jun 2018 low + 38.2% Fibonacci retracement of the up move of the recent push up from 04 Jul 2018 low to yesterday, 09 Jul high of 1.1790). Thus, maintain bullish bias in any dips above adjusted key short-term support now at 1.1680 (former minor swing high area of 30 Jun/02 Jul 2018 + Fibonacci retracement cluster) for another potential upleg to target the next intermediate resistance at 1.1840/1880 (swing high areas of 07/14 Jun + 38.2% Fibonacci retracement of the down move from 27 Mar 2018 high to 21 Jun 2018 low). On the flipside, a break below 1.1680 reinstates the bears for a slide to retest 1.1590 before 1.1510 in the first step (the range support that was formed since 29 May 2018).
  • GBP/USD - Trend bias: Further pull-back to retrace first wave of minor mean reversion rebound. The pair met the 1.3310/3360 intermediate resistance/target as per highlighted in our previous report. It printed a high of 1.3363 in yesterday, 09 Jul European before a slide of 174 pips, the most since the mean reversion rebound began on 28 Jun 2018 triggered by the sudden resignation of U.K foreign minister Boris Johnson over disagreement with U.K PM May's softer approach over Brexit plans. Short-term technical elements are still showing risk of a further pull-back to retrace the first wave of the mean reversion rebound in place since 28 Jun 2018 low. Flip to a bearish bias in any bounce below 1.3300 key short-term resistance (61.8% Fibonacci retracement of the pull-back from yesterday, 09 Jul high of 1.3363 to its U.S. session low of 1.3189) for a further potential slide to target the 1.3140/3110 support (minor swing low of 02 Jul 2018 + Fibonacci retracement/projection cluster) before a potential second wave of mean reversion rebound occurs. On the other hand, a clearance above 1.3300 reinstates the bulls for an extension of the first wave of the mean reversion rebound towards the next resistance at 1.3460 (swing high area of 07/14 Jun 2018).
  • AUD/USD - Trend bias: Mean reversion rebound scenario remains intact. The pair has push up as expected and hit the first intermediate resistance/target of 0.7450 (printed a high of 0.7483 in yesterday, 09 Jul early U.S. session. No clear signs of bullish exhaustion, maintain bullish bias in any dips above adjusted key short-term support now at 0.7440 (former minor swing high areas of 23/25 Jun 2018 + 23.6% Fibonacci retracement of entire up move from 02 Jul 2018 low to 09 Jul  2018 high of 0.7483) for a further potential push up to target the next intermediate resistance at 0.7540/0.7600 resistance (upper boundary of the medium-term descending channel from 26 Jan 2018 + 38.2% Fibonacci retracement of the decline from 14 Mar 2018 high to 29 Jun 2018 low). On the other hand, failure to hold at 0.7440 negates the bullish tone for a deeper pull-back towards the 0.7400 key medium-term support (former range resistance from 29 Jun/05 Jul 2018 + close to the lower boundary of ascending channel from 02 Jul 2018 low).
  • NZD/USD - Trend bias: Sideways. The pair had staged the expected mean reversion rebound and hit the intermediate resistance/target of 0.6830/6865 (printed a high of 0.6858 in yesterday, 09 Jul European session). Recall that 0.6830/6865 is the pull-back resistance of the  former neckline support of the major “Double Top” that broke down on 27 Jun 2018 and the 23.6% Fibonacci retracement of the down move from 16 Feb 2018 high to 03 Jul 2018 low. Mix elements now, prefer to turn neutral between 0.6865 and 0.6810 (the minor ascending trendline from 03 Jul 2018 + 23.6% Fibonacci retracement of the on-going up move from 03 Jul 2018 low to yesterday, 09 Jul 2018 high of 0.6858). An hourly close below 0.6810 opens up scope for a deeper pull-back towards 0.6770/6750 (50%/61.8% Fibonacci retracement of the on-going up move from 03 Jul 2018 low to yesterday, 09 Jul 2018 high + minor congestion area of 29 Jun/05 Jul 2018).
  • USD/JPY - Trend bias: Risk of minor pull-back. Push up as expected and it is now coming close to the intermediate resistance/target of 111.39 as per highlighted in the previous report. The 4 hour Stochastic oscillator has reached an extreme overbought level with a bearish divergence signal sighted in the hourly Stochastic oscillator at is overbought region. These observations indicate that short-term upside momentum is overstretched and the pair faces the risk of a pull-back in price action. Flip to a bearish bias below 111.40 key short-term resistance for a pull-back to target the 110.75 support follow by 110.30 next (the minor swing low areas of 04 Jul/05 Jul/09 Jul + ascending trendline from 30 May 2018 low + 50% Fibonacci retracement of the recent up move from 25 Jun 2018 low to today, 10 Jul Asian session intraday high of 111.20). On the other hand, a clearance above 111.40 sees another upshot to target the lower limit of the major resistance at 112.00 (the upper boundary of a major descending resistance in place since Jun 2015 high + Fibonacci projection/retracement cluster).

Stock Indices (CFD) – At risk of a pull-back

  • US SP 500 – Trend bias: Minor pull-back. The Index met the upside target/intermediate resistance at 2740/2744 (former minor range top om place since 27 Jun 2018) and even staged a bullish breakout from it on last Fri, 06 Jul. The Index has continued to push up in today, 10 Jul Asian session to challenge the 2790 intermediate resistance (swing high areas of 12 Mar/14 Jun 2018 + now a 2.00 Fibonacci projection of the up move from 28 Jun 2018 minor low to 29 Jun 2018 minor high projected from 02 Jul 2018 low of 2696). In addition, the 4 hour Stochastic oscillator has reached an extreme overbought level of 98 which indicates that the current up move from 02 Jul 2018 low is overstretched where the Index now faces the risk of a pull-back. Flip to a bearish bias below 2800 key short-term resistance for a potential slide to target the 2757/55 support (38.2% Fibonacci retracement of the on-going up move from 02 Jul 2018 low to today, 10 Jul Asian session high of 2795 + pull-back support of a former minor descending trendline from 13 Jun 2018 high). On the flipside, a clearance above 2800 opens up scope for an extension of the up move towards the next resistance at 2838 (the upper boundary of the medium-term “Ascending Wedge” configuration in place since 03 Apr 2018 low + Fibonacci projection cluster).
  • Japan 225 – Trend bias: Impulsive downleg may resume The Index has met the 21900/22000 mean reversion rebound target as expected. Right now, it is hovering just below the 22350 key medium-term resistance (the descending trendline from 12 Jun 2018 high + 26/29 Jun 2018 swing high areas + Fibonacci retracement/projection cluster). In addition, the 4 hour Stochastic oscillator has just exited from its overbought region and it hit an extreme overbought level of 99. Flip to bearish bias below 22350 key medium-term resistance for a potential pull-back in the first step to target the 21950/21900 intermediate support (former minor swing high area of 03 Jul 2018 + minor ascending trendline from 05 Jul 2018 low). On the other hand, a daily close above 22350 invalidates the start of another impulsive downleg scenario for an extension of the mean reversion rebound towards the next resistance at 22650/750 (the minor swing high area of 21 Jun 2018 + 76.4% Fibonacci retracement of the decline from 12 Jun 2018 high to 05 Jul 2018 low).
  • Hong Kong 50 – Trend bias: Sideways. The first wave of the mean reversion rebound target has almost been met at 29000 (printed a high of 28982 in today, 10 Jul Asian opening session). Mix elements now prefer to turn neutral between 29000 (minor swing high areas of 27/29 Jun 2018) & 28500 (former minor swing high area of 06 Jul 2018 + minor ascending trendline from 05 Jul 2018). An hourly close below 28500 sees another slide to retest the 28000 major support (the swing low areas of 19 Oct/07 Dec 2017 & the primary ascending trendline in place since Feb 2016 low). On the flipside, an hourly close above 2900 triggers an extension of the mean reversion rebound to target the next intermediate resistance at 29400 (former minor swing low areas of 04 Apr/19 Jun 2018).
  • Australia 200 – Trend bias: Minor pull-back in progress. The 4 hour Stochastic has exited from its overbought region after a bearish divergence signal and it still has room to manoeuvre to the downside before it reaches an extreme oversold level of 4. Flip to a bearish bias in any bounce below 6280 key short-term resistance (former minor swing low of 09 Jul 2018) for a further potential pull-back to target the 6230 intermediate support (the pull-back support of the former minor “Symmetrical Triangle resistance”). However, a break above 6280 invalidates the pull-back scenario for the start of another upleg to retest 6318 before targeting the 6350 resistance (Fibonacci projection + close to the upper boundary of the medium-term ascending channel in place since 04 Apr 2018 low).
  • Germany 30 – Trend bias: Minor pull-back. The recent rebound has reached the 12630 key medium-term range resistance and started to flash a minor bullish exhaustion signal. Its recent price actions from 06 Jul 2018 minor swing low of 12426 has traced out a minor bearish reversal “Ascending Wedge” configuration. Flip to a bearish bias below 12630 and a break below 12515 (the minor “Ascending Wedge” support) opens up scope for a pull-back to retest the 12420/400 support (former minor range resistance from 27 Jun/03 Jul 2018). On the other hand, a daily close above 12630 sees an extension of the mean reversion rebound towards the next resistance at 12900/950 in the first step.           

*Levels are obtained from City Index Advantage TraderPro platform


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