Daily Global Macro Technicals Trend/Bias Key Levels (Fri 09 Feb)
Kelvin Wong February 9, 2018 10:00 AM
S&P 500 pull-backed back but still holding above 2540/30 major support. USD is mixed with on-going EUR/USD push down that is coming close to a medium-term support at 1.2200/2180 where a potential recovery may materialise. WTI Crude validated further potential downside through the bearish break below 60.90.
Stock Indices (CFD) – Pull-backed towards key supports except Hong Kong (need to have a weekly close below 29900 to validate further down move)
- US SP 500 – Staged an extension of the pull-back as expected in yesterday (08 Feb) U.S. session. The on-going drop from its recent minor swing high of 2728 printed on 07 Feb 2018 has retraced 61.8%/76.4% of its gains of the recovery from the major support zone of 2540/30. Right now, it is just hovering above the 2574 key short-term support with the 4 hour Stochastic oscillator at its oversold region. In addition, the U.S. 10-year Treasury yield had pushed up yesterday and retested this Mon, 05 Feb high of 2.86% before it retreated an formed a daily “Doji” candlestick pattern, a sign of hesitation on the recent bullish sentiment on the yield where it may stage a pull-back at this juncture. Based on intermarket analysis, the aforementioned technical elements seen on the U.S. 10-year Treasury yield may put a floor on yesterday drop as seen in the S&P 500. Therefore, maintain the bullish on the Index but adjust today’s key support to 2540/30 (due to higher volatility) with2648 as the upside trigger level for another round of potential upleg to retest 2728 before targeting the next resistance at 2740/60 (61.8% Fibonacci retracement of the decline from 29 Jan 2018 high to yesterday low, 05 Jan U.S. session former swing low area & the minor descending trendline from 296 Jan 2018 high). However, failure to hold above 2540/30 should invalidate the recovery scenario for a further decline to test the 2480 key long-term pivotal support (38.2% Fibonacci retracement of the up move from Feb 2016 low to 29 Jan 2018 + former range resistance from Jul/Sep 2017).
- Japan 225 – Dropped to retest this Tues (06 Feb) low of 21070 with is closed to the significant long-term support at 20800/20600 (the former major swing high areas of Jun 2015/Mar 2000 + 38.2% Fibonacci retracement of the up move from 24 Jun 2016 to 23 Jan 2018 high + major ascending channel support from 24 Jun 2016 low). Mix elements, prefer to maintain neutrality stance between 20800/20600 & 21990 (close to the minor descending trendline from 07 Feb 2018 high + minor swing high area of 08 Feb 2018). Only a break above 21990 is likely to see a potential recovery towards the near-term resistance of 22710/820.
- Hong Kong 50 – Underperformed against the rest as it gapped down in today (09Feb) Asian opening session below a major support of 29900 (major ascending channel support from 28 Dec 2016 low + 23.6% Fibonacci retracement of the up move from 11 Feb 2016 low to 29 Jan 2018 high). The on-going decline/underperformance in Hong Kong is due to the weakness seen in the China stock market. Interestingly, the China A50 Index has dropped towards a major support zone of 12790/12500 and it is still holding at this critical zone (the 38.2% of the up move from Feb 2016 low to 24 Jan 2018 high + former medium-term swing high area of Jun 2015). Thus, prefer to stay neutral first on Hong Kong and wait a for a weekly close below 20990 to validate a further bearish move. The next support for Hong Kong will be at 28600/28100 (the former major swing high areas of Apr/May 2015 + 38.2% Fibonacci retracement of the up move from May 2016 low to 29 Jan 2018 high).
- Australia 200 – Managed to inch back up above the 5800/780 major support in today (09 Feb) Asian session after a break crack below it in yesterday (08 Feb) U.S. session (printed a low of 5747). No change, the 5910 minor range top formed since 06 Feb 2018 needs to be taken out to trigger a potential recovery in first step to retest 5986 (former swing low areas of 17/30 Jan 2018).
- Germany 30 – Pull-backed as expected towards the 12100/12070 key short-term support couple with a bullish divergence signal seen in the hourly Stochastic oscillator. Maintain bullish bias above 12100/12070 support with 12400 as the upside trigger level to reinforce another potential upleg to retest the recent 12620 minor swing high printed on 07/08 Feb 2018 before targeting the next near-term resistance of 12845 in the first step (former range support from 15 Nov 2017). However, a break below 12070 should negate the bullish tone for a deeper pull-back to retest the 11800/700 major support.
FX – Mix bag with EUR coming close to a medium-term support against the USD
- EUR/USD – Dropped as expected and it is now coming close to 1.2200/2180 support/target (swing low area of 18 Jan 2018 + ascending trendline from 18 Dec 2017 low + Fibonacci cluster). Mix elements, turn neutral first between 1.2200/2180 & 1.2335 (former minor range support since 30 Jan 2018 + minor descending trendline from 02 Feb 2018. A break above 1.2335 is likely to trigger a recovery to retest the 1.2520 range resistance in the first step.
- GBP/USD – Pushed up from the 1.3830/3800 key short-term support as expected reinforced by a hawkish BoE. No change, maintain bullish bias above 1.3830/3800 support for another potential upleg to target the 1.4270/4310 range resistance in place since 25 Jan 2018 in the first step. On the flipside, failure to hold above 1.3800 should invalidate the recovery scenario for an extension of the minor corrective decline towards the 1.3620/3590 key medium-term support.
- AUD/USD – Cracked below the 0.7800 key short-term support but it still displays lacklustre downside momentum as the 4 Hour Stochastic oscillator has continued to flash a bullish divergence signal at its oversold region. Prefer to turn neutral now between 0.7745/30 (61.8% Fibonacci retracement of the up move from 08 Dec 2017 low to 27 Jan 2018 high & the former swing high areas of 22 Feb/17 Mar 2017) & 0.7810 (the minor descending trendline from 31 Jan 2018). Only a break above 0.7810 is likely to reinstate the snap-back rebound scenario towards the 0.7930/50 resistance (minor swing high area of 05 Feb 2018).
- NZD/USD – Tested the 0.7190 key short-term support before it rebounded. No change, maintain bullish bias above 0.7190/80 support for a potential snap-back rebound to retest 0.7260/80 (former range support from 20 Jan/06 Feb 2018 + 38.2% Fibonacci retracement of the ongoing decline from 31 Jan 2018 high to today Asian session current intraday low). However, a break below 0.7190/80 should invalidate the snap-back rebound scenario for an extension of the drop to target the next support at 0.7060/50 (61.8% Fibonacci retracement of the up move from 17 Nov 2017 low to 24 Jan 2018 high.
- USD/JPY - Retreated right at the 109.75 minor range resistance in line with the pull-back seen in the U.S. S&P 500. It drifted down towards the 108.30 medium-term support. Given that the S&P 500 may stage another potential upleg at this juncture, turn bullish above 108.30 support for a potential push back up to retest the 109.75 minor range resistance. Only a break above 109.75 is likely to validate a further potential corrective up move towards 110.80/111.00 resistance in the first step.
Commodities – WTI validated further potential downside
- Gold – Still stuck within the range. No change, maintain neutrality stance between 1305 & 1322 (former minor swing low of 07 Feb 2018). A break below 1305 is likely to open up scope for an extension of the drop to target the next support at 1290/85 (Fibonacci cluster). On the other hand, a clearance above 1322 is likely to see a push up to retest its near-term resistance of 1338/1344 (minor swing high area of 06 Feb 2018 + descending trendline from 25 Jan 2018 high).
- WTI (Mar 2018)- Broke below 60.90 lower limit of the short-term neutrality zone that validated further potential downside. Flip back to bearish bias below 62.10/30 key short-term resistance (yesterday, 08 Feb U.S. session high + close to the 23.6% Fibonacci retracement of the recent slide from 02 Feb 2018 high to today, 08 Feb Asian session current intraday low of 60.28) for a further potential push down to target next near-term support at 58.90/58.50 (former swing high areas of 24 Nov/01 Dec 2017 + 2.618 Fibonacci projection of the recent decline from 25 Jan 2018 high. However a break above 62.30 should negate the bearish tone for a squeeze back up to retest 63.00 (former minor range support since 12 Jan 2018).
*Levels are obtained from City Index Advantage TraderPro platform
StoneX Financial Ltd (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.