FX – Further USD strength intact accept in JPY
- EUR/USD – Trend bias: Down. No change, maintain bearish bias below 1.1520 key short-term resistance (close to 61.8% Fibonacci retracement of the decline from 1.1550 high of 22 Oct 2018 to yesterday, 23 Oct low of 1.1439 + former minor swing high areas of 20/22 Oct 2018) for a further potential push down 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. However, a break above 1.1520 negates the bearish tone for a squeeze up to retest the intermediate resistance of 1.1575/1605 (Fibonacci projection/retracement cluster + upper limit a triangle range configuration in place since 09 Oct 2018 low.
- GBP/USD – Trend bias: Down. No change, maintain bearish bias below the tightened 1.3050 key short-term resistance (minor descending trendline from 16 Oct 2018 high + former minor swing low of 22 Oct 2018) for a further potential push down to target the next near-term support at 1.2890/2870 (minor swing low areas of 06/10 Sep 2018 + Fibonacci projection/retracement cluster). However, a clearance above 1.3050 negates the bearish tone for squeeze up to retest the next intermediate resistance at 1.3140 (minor swing of 18 Oct 2018 + 61.8% Fibonacci retracement of the decline from 12 Oct 2018 high to 1.3258 to yesterday, 22 Oct low of 1.2954).
- USD/JPY - Trend bias: Sideways. Broke below the 112.30 key short-term support as per highlighted in our previous report and reintegrated back above it in today, 24 Oct Asian (printed a current intraday high of 112.61). Mix elements now plus with the stock indices still showing the risks of shaping another downleg at this juncture (negative for the USD/JPY due to its risk aversion nature). Thus, prefer to turn neutral now between 112.88 (22 Oct high) and 111.95 (yesterday, 23 Oct U.S. session low). Only an hourly close above 112.88 revives the corrective rebound scenario to target the 113.30/40 resistance (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, failure to hold at 111.95 sees an extension of the 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: Push down within range. The pair is now approaching the minor triangle range resistance of 0.7140/7150 in place since 17 Oct 2018 high with the shorter-term 1-hour Stochastic oscillator that is hovering close to an extreme overbought level. Flip to a bearish bias in any bounces below 0.7140/7150 keys short-term resistance for a potential push down to retest the triangle range support at 0.7050/7040. However, a clearance above 0.7140/7150 see an extension of the corrective rebound towards 0.7200 resistance (upper boundary the medium-term descending channel from 26 Jan 2018 high).
- NZD/USD - Trend bias: Down. No change, maintain bearish bias below 0.6580 key short-term resistance (former minor swing low area of 22 Oct 2018 seen in Asian session) for a further potential push down towards the next near-term support at 0.6495 (the minor swing low of 15 Oct 2018) in the first step. However, a break above 0.6580 negates the bearish tone for a squeeze up to retest 0.6610/6620 (21 Oct 2018 swing high).
Stock Indices (CFD) – Another round of potential downleg looms
- US SP 500 – Trend bias: Down. The Index had plummeted as expected throughout yesterday, 22 Oct Asian and European sessions to print a low of 2690 before it reversed its losses in the U.S. session to hit an intraday high of 2753. Interestingly, the recovery see in the U.S. session has managed to stall right at the pull-back resistance of a former minor ascending trendline support from 11 Oct 2018 low which is around 1% below the predefined key short-term resistance of 2780 as per highlighted in our previous report. In addition, despite yesterday’s recovery seen in the U.S. session, there is no clear indication that the high beta/risk on sectors ETF such as Consumer Discretionary, Industrials, Technology, Financials & Communication Services were outperforming the S&P 500; the 0.02% gain seen in the Consumer Discretionary was offset by losses of 0.35%, 0.77% and 1.65% seen in the Technology, Financials and Industrials respectively versus a loss of 0.55% seen in the S&P 500. Therefore, yesterday’s intraday U.S. session push up is more likely to be a corrective rebound within a medium-term impulsive down move sequence. Maintain bearish bias with 2780 remains a the key short-term resistance (the minor descending trendline from 17 Oct 2018 high) for another round of potential downleg to target the next support at 2674 (swing low area of 29 May 2018, pull-back support of the former primary/long-term ascending channel resistance from Mar 2009 & 23.3% Fibonacci retracement of the rally from 11 Feb 2016 low to current all-time high of 2941 on 21 Sep 2018). However, a clearance above 2780 put the bears on hold for another round of corrective rebound to test the 2822 key medium-term pivotal resistance.
- Japan 225 – Trend bias: Down. Pushed down as expected and hit the 21850 support/target (the major ascending channel support from Jun 2016). It printed a low of 21642 in the yesterday, 23 Oct early U.S. session before it recovered back above 21850. No clear signs of bearish exhaustion yet, maintain bearish bias with a new key short-term resistance at 22350 (the pull-back resistance of the former minor ascending trendline support from 15 Oct 2018 low + former minor swing low area of 19/22 Oct 2018) to retest 21850 before targeting the next near-term support of 21460/400 (Fibonacci projection + 05 Jul 2018 swing low + lower boundary of minor descending channel from 17 Oct 2018 high). However, a clearance above 22350 put the bears on hold for a squeeze up to retest the recent minor range resistance of 22690/710 formed on 19/22 Oct 2018.
- Hong Kong 50 - Trend bias: Down. Pushed down as expected and hit the 25080 support/target (11/19 Oct 2018 minor swing low areas) before it staged a recovery in today, 24 Oct Asian session. No change, maintain bearish bias with a new key short-term resistance at 25800 (former minor swing high areas of 12/17 Oct 2018 + 61.8% Fibonacci retracement of the recent decline from 22 Oct 2018 high to yesterday, 23 Oct U.S. session low of 25069) for another round of potential downleg to retest 25080 before targeting the next support at 24740 (refer to latest weekly technical outlook). However, a clearance above 25800 invalidates bearish scenario for a retest on 22 Oct 2018 high of 26242 and even an extension of the corrective rebound towards the next intermediate resistance at 27000 (also the upper boundary of the medium-term descending channel from 07 Jun 2018 high).
- Australia 200 – Trend bias: Down. Pushed down lower as expected to print a low of 5785 in yesterday, 23 Oct U.S. session before it recovered by 1.2% in today, 24 Oct Asian session. No change, maintain bearish bias with a tightened key short-term resistance now at 5894 (former minor swing low area of 22 Oct 2018 + minor descending trendline from 19 Oct 2018 high) for another round of potential downleg to retest the 11 Oct 2018 swing low area of 5750 in the first step. However, a break above 5894 negates the bearish tone for a squeeze up to retest recent range resistance of 5950 formed on 17/19 Oct 2018.
- Germany 30 – Trend bias: Down. Pushed down as expected and hit the 11300 support/target (printed a low of 11227 in yesterday, 23 Oct Europeans session before it recovery by 1.8% to print a high of 11435 in the U.S. session). No clear signs of bearish exhaustion yet, maintain bearish bias with a new key short-term resistance at 11550 (close to the former minor swing low area of 19 Oct 2018 + minor descending trendline from 17 Oct 2018 high) for another potential downleg to retest 11227 before target to next near-term support of 11100 (Fibonacci projection) in the first step. However, a clearance above 11550 put the bears on hold for a squeeze up to retest the 11800/900 key medium-term pivotal resistance (see latest weekly technical outlook).
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.