Daily Global Macro Technical Trend Bias/Key Levels (Wed 31 Oct)
Kelvin Wong October 31, 2018 7:49 AM
Yesterday's bounces seen in S&P 500 is coming close to resistance with USD/JPY showing risk of a minor bearish reversal.
FX – Mix bag with USD/JPY at risk of shaping a minor bearish reversal
- EUR/USD – Trend bias: Down. The pair had continued to inch downwards as expected and it is now fast approaching the 1.1320/1300 support/target 15 Aug 2018 medium-term swing low area + Fibonacci projection cluster). No clear signs of bearish exhaustion as seen from daily momentum indicators while the shorter-term 1-hour Stochastic oscillator has reversed up from an extreme oversold level and yet to reach its overbought zone. Risk of a minor bounce at this juncture towards 1.1370 (yesterday, 30 Oct U.S. session swing high area + minor descending trendline from 16 Oct 2018 high) with key short-term resistance remains at 1.1400 for a further potential push down to target 1.1320/1300 follow by the next support at 1.1240/1.1200 (Fibonacci projection cluster + lower boundary of the minor descending channel from 24 Sep 2018 high). On the flipside, an hourly close above 1.1400 negates the bearish tone for a squeeze up to retest the next intermediate resistance of 1.1430/50 (25 Oct 2018 high + former minor swing low area of 19 Oct 2018).
- GBP/USD – Trend bias: Residual push down. Continued its downward spiral as expected. Elliot wave/fractal analysis is highlighting the risk of an imminent minor corrective rebound with the 4-hour Stochastic oscillator at an extreme oversold level. Tightened the key short-term resistance to 1.2780 (upper boundary of the minor descending channel from 16 Oct 2018 high + former minor swing low of 26 Oct 2018) for a potential residual push down towards 1.2660/2640 support (15 Aug 2018 medium-term swing low + Fibonacci projection cluster + lower boundary of the minor descending channel from 16 Oct 2018 high). On the flipside, a break above 1.2780 kick starts the minor corrective rebound towards the next intermediate resistance at 1.2900/2925 (38.2% Fibonacci retracement of the on-going decline from 16 Oct 2018 high to today, 31 Oct Asian session low of 1.2696 + former minor swing low area of 04 Oct 2018).
- USD/JPY - Trend bias: Push down within range. The pair broke above the 112.90 upper limit of the short-term neutrality range as per highlighted in our previous report and rallied towards the 113.30 intermediate resistance /target. Right now, the 4-hour Stochastic oscillator has reached an extreme overbought level coupled with a bearish divergence signal seen in the 1-hour Stochastic oscillator. Flip to a bearish bias with 113.40/50 as the key short-term resistance (former minor congestion area of 28 Sep/09 Oct 2018 and a Fibonacci projection cluster) for a potential push down to target the near-term supports at 112.70 and 112.30 (the ascending channel support from 26 Mar 2018 low). On the flipside, a clearance above 113.50 invalidates the bearish reversal scenario for a further squeeze up to retest the 114.10/50 medium-term range resistance in place since 10 May 2017.
- AUD/USD – Trend bias: Sideways. No change, maintain neutrality stance between 7140 (range resistance) and 0.7020 (last Fri, 26 Oct swing low area). An hourly close below 0.7020 validates a potential new downleg to target the next support at 0.6970/6950 (Fibonacci projection cluster) in the first step. However, a break above 0.7140 sees an extension of the corrective rebound towards 0.7180/7200 resistance (upper boundary the medium-term descending channel from 26 Jan 2018 high).
- NZD/USD - Trend bias: Push down within range. No change, maintain bearish bias below 0.6580 key short-term resistance (also the upper boundary of the medium-term descending channel from 07 Jun 2018 high + 76.4% Fibonacci retracement of the recent push down from 22 Oct 2018 high to 26 Oct 2018 low) for a potential push down to retest the near-term support of 0.6360/6325 (09/26 Oct 2018 swing lows). However, a break above 0.6580 negates the bearish tone for a squeeze up to retest 0.6610/6620 (19/21 Oct 2018 swing high).
Stock Indices (CFD) – On-going bounce coming close to resistances except ASX 200
- US SP 500 – Trend bias: Down. A volatile session seen yesterday where the Index dropped lower in the U.S. opening session to print a low of 2633 before it reversed up, erased almost all the losses inflicted on Mon, 29 Oct and broke above the 2692 tightened key short-term resistance in today, 31 Oct Asian session. Right now, it is hovering below Mon, 29 Oct high of 2706 and the upper boundary of a minor descending channel in place since 03 Oct 2018 high now acting as a resistance at 2713 coupled with an extreme overbought reading seen in the 4-hour Stochastic oscillator. Maintain bearish bias below 2713 key short-term resistance and added 2671 as the downside trigger level where an hourly close below it reinforces a potential new downleg to retest the recent low of 2603 before targeting the next support at 2590/85 (Fibonacci projection cluster + swing low area of 03 May 2018). On the flipside, a clearance above 2713 sees a further squeeze up towards the 2745 key medium-term pivotal resistance.
- Japan 225 – Trend bias: Down. The Index broke above 21500 minor range resistance and squeezed up toward the 21770 (resistance upper boundary of the minor descending channel from 01 Oct 2018 high + former 23 Oct 2018 minor swing low area). Right now, it is hovering below the 22030 key medium-term pivotal resistance (refer to the latest weekly technical outlook) coupled with the 4-hour Stochastic oscillator at an extreme overbought level with bearish divergence signal seen in the 1-hour Stochastic oscillator. Maintain bearish bias with 22030 as the key resistance and added 21500 as the downside trigger level to reinforce the start of a new potential downleg to retest the recent swing low of 20800 printed on 26/29 Oct 2018 in the first step. On the flipside, a clearance above 22030 put the on-going downtrend in place since 01 Oct 2018 high at risk for a further up move to target the next resistance at 22700 follow by 23000 (multi-month range resistance in place since 21 May 2018.
- Hong Kong 50 - Trend bias: Down. Continued to hover below the 25170 key short-term resistance. Maintain bearish bias further potential push down to target 24360 and 24000 supports (also the lower boundary of the medium-term descending channel from 07 Jun 2018 high) before risk of corrective rebound materialises. On the flipside, a break above 25170 put the bears on hold for a corrective rebound towards the 25580/26070 resistance (upper boundary of a minor descending channel from 26 Sep 2018 high + minor swing high area of 22 Oct 2018).
- Australia 200 – Trend bias: Corrective rebound in progress. The pair broke above 5785 upper limit of the medium-term neutrality zone as per highlighted in our latest weekly technical outlook where the corrective rebound scenario has been validated to retrace the decline seen from 29 Aug 2018 high to 26 Oct 2018 low. Flip to a bullish bias above 5760 key short-term support (minor ascending trendline from 29 Oct 2018 low + pull-back support of the former minor descending trendline resistance from 19 Oct 2018 high) for a further potential push up to target the next intermediate resistance at 5900 (38.2% Fibonacci retracement of the decline from 29 Aug 2018 high to 26 Oct 2018 low + 23 Oct 2018 minor swing high). On the flipside, failure to hold at 5760 reinstates the bearish tone for a fresh impulsive downleg to retest 26 Oct 2018 low of 5611 in the first step.
- Germany 30 – Trend bias: Down. No change, Maintain bearish bias below key short-term resistance at 11500 for a potential push down to retest last Fri, 26 Oct swing low area of 11050 before targeting the next support of 11800 (Fibonacci projection cluster + former range resistance of Aug/Nov 2016). On the flipside, a clearance above 11500 sees an extension of the corrective rebound towards the 11600 key medium-term pivotal resistance.
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