Daily Global Macro Technicals Trend Bias/Key Levels (Fri 04 May)
Kelvin Wong May 4, 2018 5:53 AM
Yesterday's sell-off in the S&P 500 stalled right above 2585 key medium-term support with positive elements sighted. USD strength remains on support ahead of NFP.
FX – USD strength remains on support ahead of NFP
- EUR/USD – Trend bias: Downtrend remains intact. Traded sideways below the 1.2065 adjusted key short-term resistance at 1.2065 (former minor swing low areas of 27/30 Apr 2018 + upper boundary of the minor descending channel in place since 19 Apr 2018 high + close to the 23.6% Fibonacci retracement of the on-going decline from 19 Apr high to 02 May U.S. session low of 1.1938). No change, maintain bearish bias in any bounce with key short-term resistance remains at 1.2065 for a further potential push down to target the lower limit of the short-term support zone of 1.1890 (former medium-term swing high areas of 24 Nov/01 Dec 2017 that was tested & held on 10 Jan 2018 + Fibonacci projection cluster) before the risk of a consolidation sets in. On the other hand, a clearance above 1.2065 sees the start of a potential minor mean reversion rebound to retest the 1.2160/2190 resistance (former swing low areas of 18 Jan/01 Mar 2018).
- GBP/USD - Trend bias: Downtrend remains intact. Dropped lower as expected and printed a new minor lower low of 1.3538 in yesterday, 03 May U.S. session. No change, maintain bearish bias with an adjusted key short-term resistance now at 1.3670 (minor swing high area of 02 May 2018 + minor descending channel resistance from 17 Apr 2018 high) for a further potential down move to target the next intermediate support at 1.3470/3430 (swing low area of 11 Jan 2018 + 38.2% Fibonacci retracement of the 16-month up move from 16 Jan 2017 high to 17 Apr 2018 high) before the risk of a consolidation sets in. On the other hand, a clearance above 1.3670 sees the start of a potential minor mean reversion rebound to retest the 1.3745/3780 resistance in first step (the former minor swing low areas of 10 Feb/01 Mar 2018.
- AUD/USD – Trend bias: Downtrend remains intact. Floated up and now it is hovering right below the predefined 0.7550 key short-term resistance (refer to yesterday report). In addition, the 4 hour Stochastic oscillator has reached its overbought region. No change, maintain bearish bias with 0.7550 remains as the key short-term resistance (former minor swing low areas of 25/27 Apr 2018 + 23.6% Fibonacci retracement of the on-going decline from 19 Apr 2018 high to 01 May 2018 low of 0.7472) for another round of potential downleg to retest 0.7472 before the 0.7370/7330 support next (the swing low areas of 08 May/01 Jun 2017 + 61.8% Fibonacci retracement of the up move from 15 Jan 2016 low to 26 Jan 2018 high). However, a clearance above 0.7550 negates the bearish tone for a squeeze back up towards the 0.7660 resistance (the former minor range support from 29 Mar/09 Apr 2018).
- NZD/USD - Trend bias: Unclear. Maintain neutrality stance between 0.7000/6985 and 0.7095. Only a clear break below 0.6985 (an hourly close below) is likely to see an extension of the down move to target the next support at 0.6930/6910 in first step (former swing high area of 09 Nov 2017 + 76.4% Fibonacci retracement of the up move from 17 Nov 2017 low to 16 Feb 2018 high).
- USD/JPY - Trend bias: Sideways within medium-term uptrend from 26 Mar 2018 low. Broke below the 109.40 key short-term support in yesterday, 03 May European session in line with the sell-off seen in the S&P 500 futures which invalidated the direct rise scenario towards the 110.85/111.00 resistance. The pair is now resting at a significant short-term support of 108.70 (lower boundary of the ascending channel from 26 Mar 2018 low + minor swing low area of 24 Apr 2018 + 23.6% Fibonacci retracement of the on-going up move from 26 Mar low to 02 May 2018 high). Mix elements in short-term, prefer to turn neutral first between 109.40 (yesterday’s short-term support which also coincides now with a minor descending trendline from 02 May 2018 high) and 108.70. Only a clear break above 109.40 (an hour close above it) reinstates the bullish tone for another round of potential upleg to target the 110.85/111.00 resistance (the former medium-term swing low area of 27 Nov 2017 & the 61.8% Fibonacci retracement of the multi-month decline from 06 Nov 2017 high to 26 Mar 2018 low). On the flipside, failure to hold at 108.70 sees a deeper slide towards the key medium-term support zone of 107.80/40 (former medium-term swing high area of 21 Feb 2018 + 50% Fibonacci retracement of the on-going up move from 26 Mar low to 02 May 2018 high).
Stock Indices (CFD) – Sell-off in S&P 500 stalled right above 2585 key medium-term support with positive elements
- US SP 500 – Trend bias: Push up within “Symmetrical Triangle” range configuration. Recalled that we had turned neutral in the last 2 days due to the risk of a push down to retest the “Symmetrical Triangle” range support at 2585 and indeed, the S&P 500 futures sold off before the start of yesterday, 03 May 2018 U.S. session and broke below the minor swing low of 2625 (01/02 May). Thereafter, it tumbled all the way to print a low 2593 (0.3% away from the predefined 2585 key medium-term support) before a sharp reversal to end the U.S. session with a close at 2630 (almost the same level of with its opening level of 03 May). The early sell-off was not triggered by another significant economic/earnings data news flow) either than a speculation in some media outlets that reported the on-going U.S/China trade talks (expected to be concluded today) will not end well. Algos related selling ahead of the outcome of U.S./China trade talks? Technically, yesterday’s price action is deemed positive. Firstly, the S&P 500 has managed to hold right above the 2585 key medium-term support (lower boundary of the “Symmetrical Triangle” range configuration in place since 06 Feb 2018 low + Fibonacci retracement/projection cluster) and ended the U.S. session with a daily bullish “Dragonfly Doji” candlestick pattern. Secondly, two key high beta/momentum play sectors (Semiconductors & FANGS/Tech related) had shown similar positive elements right above their parallel key supports. The Semiconductors sector ETF (SOXX) has staged a rebound from a gap support of 169.30 (seen after the appearance of a daily bullish “Hammer” candlestick on 25 Apr 2018) and the NYSE FANG+ Index has continued to push higher and formed a higher low after a test on its key long-term support of 2334/2300 on 04 Apr 2018. Lastly, the Financials sector ETF (XLF), an underperforming high weightage sector (14.5%) that saw a decline of -2.68% in the past 5 days versus a loss of -0.14% seen in the S&P 500 has started to exhibit positive elements as it ended yesterday, 03 May U.S. session with a daily bullish “Hammer” candlestick pattern right at its key medium-term support zone of 26.76/45. Therefore, we flip back to a bullish bias on the S&P 500 with 2585 as the key support to watch for today for a potential push up to retest the intermediate resistance of 2660/63 (the minor range top of 02/03 May 2018). On the other hand, a daily close below 2585 negates the recovery scenario for a further decline to retest the 2540/30 major support zone.
- Japan 225 – Trend bias: Sideways Cash stock market remains close for a public holiday. The Index tumbled in yesterday’s 03 May U.S. session and broke below the 22330/250 key short-term support in line with the sell-off seen in the U.S. S&P 500. The sell-off has managed to hold above the 21915 key medium-term support (former range resistance from 05/16 Apr 2018 + close to 23.6% Fibonacci retracement of the on-going up move from 24 Mar low to 30 Apr 2018 high) as it printed an intraday low of 22088 and reversed back up to retest the prior 22330/250 support zone. Mix elements now, prefer to turn neutral first between 21915 and 22430 (former minor range support from 27 Apr/02 May 2018). Only a clear break above 22430 (an hourly close above it) reinstates the bullish tone for a potential push up to target the range resistance of 22510/710 which is the medium-term upside trigger level (61.8% Fibonacci retracement of the decline from 23 Jan high to 23 Mar 2018 low).
- Hong Kong 50 – Trend bias: Pushed up towards range resistance. Yesterday’ sell-off seen in the U.S. session had managed to stall at the 30000/29950 key short-term support (psychological level + former swing low areas of 23 Mar/03 Apr 2018 + 61.8% Fibonacci retracement of the up move from 04 Apr 2018 low to 12 Apr 2018 high) coupled with a bullish divergence signal seen in the hourly Stochastic oscillator at its oversold region. No change, maintain bullish bias with 30000/29950 remains as the key short-term support for a potential push up to retest the minor range resistance of 30760/830. However, a break below 29950 opens up scope for a deeper slide towards the 29360/29070 key medium-term support zone.
- Australia 200 – Trend bias: Uptrend remains intact. The sell-off seen in yesterday, 03 May U.S. session had managed to hold right at the 6054 adjusted key short-term support (refer to yesterday report). No change, maintain bullish bias with 6054 remains as the key short-term support for a further potential push up to retest 6112 before targeting the next intermediate resistance at 6150 (09 Jan 2018 swing high area). On the other hand, a break below 6054 opens up scope for a deeper pull-back to retest the former “Symmetrical Triangle” range resistance now acting as a pull-back support at 5995.
- Germany 30 – Trend bias: Imminent bullish breakout from 3-month range configuration. The Index has managed to hold right above the 12620 key short-term support (the former minor range resistance from 18 Apr to 02 May 2018) as it printed a low of 12664 in yesterday, 03 May early U.S session before it reversed up towards its European session opening level of 12775. No change, maintain bullish bias with 12620 remains as the key short-term support and a break above 12850 (an hourly close above it) advocates for a further potential upleg to target 13020 intermediate resistance (1.618 Fibonacci projection from 25 Apr 2018 minor swing low). On the flipside, failure to hold at 12620 negates the bullish tone for a deeper pull-back to retest the 01 May 2018 minor swing low area of 12490.
Commodities – Watch the 1300 medium-term range support on Gold
- WTI Crude (Jun 2018) - Trend bias: Sideways. No change, maintain neutrality stance between 69.90 and 67.15. Only a clear break below 67.15 (an hourly close below it) opens up scope for a deeper pull-back to retest the next intermediate support of 66.50/10 (former medium-term range resistance from 25 Jan/23 Mar 2018).
- Gold - Trend bias: Unclear. Continued to trade sideways above the 1303/1300 medium-term range support in place since 08 Feb 2018. No change, maintain neutrality stance between 1300 and 1323 (former minor swing low areas of 29 Mar/23 Apr 2018). Only a break above 1323 (an hourly close above it) sees a potential push up towards the next intermediate resistance at 1334/41 (the minor descending resistance from 11 Apr 2018 high + former minor swing low of 13 Apr 2018) within a major sideways range configuration in place since Jul 2016.
*Levels are obtained from City Index Advantage TraderPro platform
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.