Daily Global Macro Technical Trend Bias/Key Levels (Tues 26 Jun)

USD strength setback in progress. Corrective decline in stock indices except in ASX 200 where its medium-term uptrend remains intact.

FX –  USD strength setback in progress

  • EUR/USD – Trend bias: Mean reversion rebound resurfaces. The pair had broken above the 1.1605 adjusted key short-term resistance as per highlighted in the previous reported dated on last Thurs, 21 Jun) after it printed a low of 1.1508 on 21 Jun 2018. The pair is now likely to be undergoing a potential mean reversion rebound phase to retrace the decline seen from 27 Mar 2018 high to 21 Jun 2018 low. Flip to a bullish bias in any dips above the 1.1630 key short-term support (minor swing low areas of 22/25 Jun 2018) for a further potential rebound to target the next intermediate resistance at 1.1840/1880 (minor range resistance from 07 Jun/14 Jun 2018 + 38.2% Fibonacci retracement of the decline from 27 Mar 2018 high to 21 Jun 2018 low). On the other hand, a break below 1.1630 reinstates the bearish tone for a slide to test the lower limit of the key long-term support at 1.1470/50 (the former resistance of the major basing configuration from Mar 2015 to Mar 2017).
  • GBP/USD - Trend bias: Mean reversion rebound resurfaces. The pair had failed to meet the expected downside target/support of 1.3020/3000 as it only printed a low of 1.3100 on last Thurs, 21 Jun before BOE monetary policy meeting. The pair has now broken above the 1.3220 adjusted key short-term resistance coupled with a bullish divergence signal seen in its daily RSI oscillator at the oversold region. These observations suggest that the multi-week downside momentum has started to ease and the pair is likely to be undergoing a potential mean reversion rebound phase to retrace the decline seen from 17 Apr 2018 high to 21 Jun 2018 low. Flip to a bullish bias in any dips above 1.3210 key short-term support (former minor swing high of 20 Jun 2018 + 50% Fibonacci retracement of the on-going rebound form 21 Jun 2018 low to 22 Jun 2018 high) for a for potential push up to target the next intermediate resistance at 1.3445/3470 (swing high areas of 07/14 Jun 2018). On the other hand, a break below 1.3210 reinstates the bearish tone for a slide back towards the 1.3020/3000 support (minor swing low areas of 05 Oct/03 Nov 2017 + psychological).
  • AUD/USD - Trend bias: Mean reversion rebound resurfaces. The residual push down target/support of 0.7330/7300 as per highlighted in the previous report has almost been met (printed a low of 0.7345 on 21 Jun 2018). The 4 hour Stochastic oscillator has flashed a bullish divergence signal at its oversold region and still has room to manoeuvre to the upside before it reaches an extreme overbought level of 94.  Flip to a bullish bias with key short-term support at 0.7385 (former minor swing high area of 22 Jun 2018 + close to 61.8% Fibonacci retracement of the on-going rebound from 21 Jun 2018 low to 25 Jun 2018 high) for a further potential push up to target the next intermediate resistance at 0.7480 (former minor swing low area of 30 May 2018 + 38.2% Fibonacci retracement of the decline from 06 Jun 2018 high to 21 Jun 2018 low. However, failure to hold at 0.7385 reinstates the bearish tone for as slide to retest the 0.7330/7300 support (09 May 2017 swing low area + 61.8% Fibonacci retracement of the up move from Jan 2016 low to 26 Jan 2018 high).
  • NZD/USD – Trend bias: Mean reversion rebound resurfaces. Cleared above the 0.6890 upper limit of the short-term neutrality zone. Flip to a bullish bias above key short-term support at 0.6880 (former minor swing high areas of 21/22 Jun 2018) for a potential rebound towards the 0.6970/6990 intermediate resistance (former minor swing low area of 14 Jun 2018 + 61.8% Fibonacci retracement of the recent decline from 06 Jun 2018 high to 21 Jun 2018 low). However, failure to hold at 0.6880 reinstates the bearish tone for a slide back to test the 0.6780 support (key medium-term range support in place since 11 May 2017).
  • USD/JPY - Trend bias: Sideways. Mix elements now with the on-going medium-term uptrend since 26 Mar 2018 low at risk of shaping a corrective decline within a longer-term “Triangle Range” structure in place since Jun 2015 after the bearish break of the former 109.90 key short-term support. Prefer to turn neutral first between 109.25 and 109.90. An hourly close below 109.25 opens up scope for a corrective decline towards the next support at 108.10/107.80 (the former medium-term swing low area of 08 Sep 2017 + 50% Fibonacci retracement of the up move from 26 Mar 2018 low to 21 May 2018 high) in the first step. On the flipside, a clearance above 109.90 sees a squeeze up to retest the next intermediate resistance at 110.55 (minor swing high of 21 Jun 2018 + minor descending trendline from 15 Jun 2018).

Stock Indices (CFD) – Corrective decline in progress while ASX 200 outpeforms

  • US SP 500 – Trend bias: Choppy corrective decline  in progress. The Index had broken below the 2640 key medium-term support (the lower boundary of the medium-term uptrend from 03 May 2018 low, the former minor range resistance from 14/25 May 2018 & close to 23.6% Fibonacci retracement of the up move from 03 May 2018 low to 13 Jun 2018 high) with a daily close below it. Therefore, the short-term upleg scenario has been put on hold. Turn bearish now in any bounces below 2740 key short-term resistance (the former medium-term support + 50% Fibonacci retracement of the on-going decline from 21 Jun 2018 high to yesterday, 25 Jun U.S. session low of 2698) for a further potential push down to target the next support at 2690/80 (30 May 2018 minor swing low + Fibonacci retracement/cluster) before another round of potential upleg materialises. On the flipside, a clearance above 2740 negates the bearish tone for a squeeze up to test the 2767 medium-term upside trigger level (minor descending trendline from 13 Jun 2018 high +  close to 22 Jun 2018 minor swing high). In the longer-term, the up move  that started from 03 May 2018 low has the characteristics to justify that we are coming close to the tail-end of the melt-up phase in place since Feb 2016 low (capitulated by the 2nd Chinese Yuan devaluation) to mark a potential major cycle top to end the 9-year of bull run since Mar 2009 where a multi-year corrective down move may occur next. The up move in the U.S. stock market since 03 May 2018 has been led only by a concentration of higher beta indices/sectors; Nasdaq 100 (technology), NYSE FANG+, U.S. semiconductor sector & Russell 2000 (small caps) and this positive loop has failed to spill over to other risk sensitive heavy weights such as the Industrials &  Financials sectors which has continued to underperform the S&P 500 (down by -4% & -3% respectively YTD versus a gain of 3% seen in the S&P 500).
  • Japan 225 – Trend bias: Push down within range configuration. Flip to a bearish bias in any bounces below 22450 key short-term resistance (21 Jun 2018 former minor swing low area + 61.8% Fibonacci retracement of the on-going decline from 22 Jun 2018 high to yesterday, 25 Jun U.S. session low of 22043) for a further potential push down to test the 22000/21900 key medium-term range support (the former range resistance from 12 Mar/05 Apr 2018 that has been tested and staged a rebound on 29 May 2018). However, a clearance above 22450 negates the bearish tone for a squeeze up to test the next intermediate resistance at 22600 (minor swing high area of 23 Jun 2018 +  minor descending trendline from 12 Jun 2018).
  • Hong Kong 50 – Trend bias: Corrective decline in progress. The Index has staged a bearish breakdown below the key medium-term support at 29070 of a 5-month range configuration since 10 Feb 2018. Flip to a bearish bias in any bounces below 29020 (the former medium-term range support area + upper boundary of a minor descending channel from 12 Jun 2018 high) for a further potential down to target the next supports at 28250 (lower boundary of the aforementioned minor descending channel) and even the 28000 key long-term support (the swing low areas of 19 Oct/07 Dec 2017 & the primary ascending trendline in place since Feb 2016 low). On the flipside, reintegration back above 29020 negates the bearish tone for a short-term recovery to retest the 30000/30070 intermediate resistance (former minor swing low areas of 04 May/30 May 2018).
  • Australia 200 – Trend bias: Up move remains in progress. The only Index (as per highlighted in this report) that is still holding the fort for its medium-term uptrend in place since 04 Apr 2018 low. Maintain bullish bias in any dips with 6140/6136 as the key short-term support (former range resistance from 10 Jan/10 May 2018 that has been just tested and staged a rebound in yesterday, 25 Jun U.S. session) for a further potential push up to retest last week high of 6258 before targeting the next intermediate resistance at 6270/80. However, a break below 6136 shall put the bulls on hold for a further pull-back towards the 6085 key medium-term support set for this week (the lower boundary of the medium-term ascending channel from 04 Apr 2018 low + former minor range support from 07/12 Jun 2018).
  • Germany 30 – Trend bias: Corrective decline in progress. Flip to a bearish bias in any bounces below 12500 key short-term resistance (the former minor swing low area of 22 Jun 2018 + close to the 23.6% Fibonacci retracement of the on-going decline from 15 Jun 2018 high to yesterday, 25 Jun U.S. session low of 12251) for a further potential push down to target the next support at 12200/100 (swing low area of 25 Apr 2018, 61.8% Fibonacci retracement of the up move from 26 Mar low to 22 May 2018 high & the primary ascending trendline in place since Feb 2016 low). However, a break above 12500 negates the bearish tone for a squeeze up to retest the 12630 intermediate resistance (former minor swing low areas of 29 May/08 Jun 2018).     

*Levels are obtained from City Index Advantage TraderPro platform




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