Daily Global Macro Technicals Trend Bias/Key Levels (Fri 11 May)

Mix bag in FX space with risk of furher USD strength setback in EUR, GBP & AUD. Stock indices remain in bullish configurations with the laggards; S&P500, Nikkei 225 & Hang Seng playing a catch up. Watch 1323 on Gold for a potential short-tern bullish breakout.

FX –  Mix bag with risk of further USD strength setback in EUR, GBP & AUD

  • EUR/USD – Trend bias: Emergence of short-term mean reversion rebound. Recalled that In our prior report, we had turned cautious on the current down move on the pair and highlighted the elements that may kickstarted a mean reversion rebound. The pair broke above the 1.1900 adjusted key short-term resistance reinforced by a tame Apr U.S. inflation data where CPI (ex food & energy) came in at 2.1% y/y versus an consensus of 2.2% y/y.  Key short-erm support now will be at 1.1870 (minor ascending trendline from 09 May 2018 low + 61.8% Fibonacci retracement of the on-going rebound from 09 May low to yesterday, 10 May high of 1.1946) for a further potential push up to target 1.1990/1.2000 intermediate resistance (minor swing high areas of 03/04 May 2018) in the first step within the short-term mean reversion rebound phase. On the other hand, a break below 1.1870 invalidates the mean reversion rebound scenario for an extension of the down move towards the 1.1740/1700 support (the swing lows area of 21 Nov/12 Dec 2017 + 38.2% Fibonacci retracement of the 1 year of up move from 03 Jan 2017 low to 16 Feb 2018 high + 2.618 Fibonacci projection of the down move from 27 Mar 2018 high).
  • GBP/USD - Trend bias: Short-term mean reversion rebound scenario remains intact. The pair churned between the 1.3430 key short-term support and 1.3607 upside trigger level after the BoE monetary policy decision. The printed an intraday high of 1.3617 in yesterday, 10 May European session but no hourly close above it 1.3607 before it dropped to print a low of 1.3460. No change, maintain bullish bias with 1.3430 remains as key short-term support (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) and 1.3607 as the upside trigger (an  hourly close above it) to reinforce a potential push up to target the next intermediate resistance at 1.3700/3760 (pull-back resistance of the former medium-term ascending channel support from 14 Mar 2017 low + former swing low areas of 09 Feb/01 Mar 2018 + 23.6% Fibonacci retracement of the on-going slide from 17 Apr high to 04 May 2018 low). On the other hand, failure to hold at 1.3430 sees an extension of the down move towards 1.3280/3200 next (former congestion area of 13 Oct/01 Nov 2017 + 50% Fibonacci retracement of the 1 year of up move from 16 Jan 2017 low to 17 Apr 2018 high).
  • AUD/USD - Trend bias: Emergence of short-term mean reversion rebound. The pair broke above the 0.7495 key short-term resistance which invalidated the down move extension scenario and ended yesterday, 10 May U.S. session with a bullish daily “Morning Star” candlestick pattern. Key short-term support will be at  0.7490 (minor ascending trendline from 09 May 2018 low + 50% Fibonacci retracement of the up move from 10 May Asian session low to yesterday, 10 May U.S. session high of 0.7540) for a further potential push up towards the intermediate resistance of 0.7550 (04 May 2018 minor swing high formed from the recent rebound from 01 May low) and an hourly close above 0.7550 is likely to reinforce the potential mean reversion rebound towards the next intermediate resistance at 0.7600/7640 (the former swing low areas of 29 Mar/09 Apr 2018 + 38.2%/50% Fibonacci retracement of the down move from 19 Apr high to 01 May 2018 low). On the other hand, a break below 0.7490 invalidates the mean reversion rebound scenario to reinstate the down move extension towards the next intermediate support at 0.7370/0.7330 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).
  • NZD/USD - Trend bias: downtrend at risk. The pair inched higher from the 0.6910 downside trigger level but remained below the 0.7000 key short-term resistance. Given the emergence of USD weakness seen in EUR & AUD and its own technical elements such as the appearance of a daily bullish “Hammer” candlestick pattern at the end of yesterday, 10 May U.S. session, the pair now sees a lower probability of a downside extension scenario below 0.6910/0.6900. Thus, prefer to turn neutral now between 0.70000 and 0.6900. A break above 0.7000 (an hourly close above it) puts the mean reversion rebound scenario into play for a push up to retest 0.7095/71185 (the minor swing high areas of 26/28 Apr 2018 + 38.2% Fibonacci retracement of the on-going decline from 13 Apr high to 08 May 2018 low).
  • USD/JPY - Trend bias: Uptrend remains intact. The pair staged a pull-back in line with USD strength seen in the EUR and challenged the 109.35 adjusted key short-term in today, 11 May early Asian session as it printed a current intraday low of 109.20 before it rebounded back 109.35 supported by bullish configurations seen  in major stock indices across different regions. Tolerate the excess and maintain bullish bias with key short-term support remains at 109.35/109.20 (former minor swing high area of 07 May 2018 + minor ascending trendline from 04 May 2018 low) for another round of potential upleg to retest 110.00 (yesterday, 10 May minor swing high area) before targeting 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 other hand, failure to hold at 109.35/20 negates the bullish tone for a slide back to retest the 108.70 minor range support in place since 04 May 2018 low and only a break below 108.70 (an hourly close below it) triggers a deeper pull-back 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) – Positive flow has started to spread to the laggards; S&P 500, Nikkei & Hang Seng

  • US SP 500 – Trend bias:  Bullish breakout from “Symmetrical Triangle” range resistance. The Index has staged a bullish breakout as expected(an hourly close above 2720) from the upper boundary of the “Symmetrical Triangle” range configuration after 4-month of consolidation since late Jan 2018. Yesterday, 10 May up move has continued to be supported by the high beta S&P Technology sector where the sector ETF (XLK) recorded a gain of 1.30% that surpassed the 0.94% gain seen in the S&P 500. No change, maintain bullish bias in any dips with an adjusted key short-term support now at 2694 (minor swing low area of 10 May 2018 + pull-back support of the former medium-term Symmetrical Triangle range resistance + 23.6% Fibonacci retracement of the on-going up move from 03 May low to yesterday, 10 May U.S. session high of 2724) for a further potential push up to target the intermediate resistance at 2743 (1.00 Fibonacci projection of the up move from 03 May 2018 low) follow by 2765 next (upper boundary of a minor ascending channel from 03 May 2018 low + 1.236 Fibonacci projection from 03 May 2018 low). However, failure to hold at 2694 negates the bullish tone  for a deeper pull-back towards the next support at 2657/55 (minor swing low area of 08 May 2018 + former minor swing high area of 03 May 2018).
  • Japan 225 Trend bias: Bullish breakout from 22710 key medium-term upside trigger. The index had pushed up as expected and surpassed the resistance/target of 22710 as per highlighted in yesterday report. The 22710 level is the key medium-term upside trigger level (61.8% Fibonacci retracement of the decline from 23 Jan high to 23 Mar 2018 low) where a break above it reinforces a potential multi-week up move -  refer to weekly technical outlook for details). In today, 11 May Asian session the Index has an hourly close above 22710, thus we maintain the bullish scenario in any dips above an adjusted key short-term support now at 22560/550 (former minor swing high area of 08 May 2018 + minor ascending trendline from 03 May 2018 low) for a further potential up move to target the next intermediate resistances at 22840 (1.00 Fibonacci projection of the minor up move from 03 May 2018 low) follow by 23000/23090 next (psychological + former minor swing low area of 31 Jan 2018). However, failure to hold at 22550 negates the bullish tone for a deeper pull-back to retest the 22360/40 support (former minor swing high area of  04 May that has been tested and saw a rebound on 09 May 2018).
  • Hong Kong 50 Trend bias: Push up towards medium-term range resistance. Pushed up higher as expected and met the short-term resistance/target of 31100 (printed a current intraday high of 31312 as seen in today, 11 May Asian session. No change, maintain bullish bias in any dips above adjusted key short-term support now at 30800 (former minor range resistance from 20 Apr/10 May 2018 +  close to the 23.6% Fibonacci retracement of the on-going up move from 04 May low to today, 11 May current Asian session high of 31312) for a further potential push up to target the 31800 medium-term range resistance (the failure bullish breakout that occurred on 21 Mar 2018). However, a break below 30800 shall invalidate the further push up scenario for another round of choppy decline towards the next support at 30500/400 (former minor swing high area of 08 May 2018 + 61.8% Fibonacci retracement of the on-going up move from 04 May low to today, 11 May current Asian session high of 31312).
  • Australia 200 – Trend bias: Uptrend remains intact. No change, maintain bullish bias with key short-term support now remains at 6087 (minor range bottom in place since 08 May 2018) for a further potential push up to target the 6210 intermediate resistance next (upper boundary of a minor ascending channel from 25 Apr 2018 low + Fibonacci projection cluster). On the other hand, failure to hold at 6087 negates the bullish tone for a deeper pull-back to retest the next intermediate support of 6080/78 (swing low of 07 May 2018).
  • Germany 30Trend bias: Uptrend remains intact. Rise in progress as expected and met the first short-term resistance/target of 13020. Maintain bullish bias in any dips above adjusted key short-term support now at 12930/900 (minor swing low of 10 May 2018 + close to the 23.6% Fibonacci retracement of the on-going up move from 01 May 2018 low to yesterday, 10 May U.S. session high of 13037) for a further potential push up to target the next intermediate resistance at 13140/150 (76.4% Fibonacci retracement of the steep down move from 23 Jan high to 06 Feb 2018 low + upper boundary of a minor ascending channel from 04 Apr 2018 low). However, failure to hold at 12930/900 negates the bullish tone for a deeper pull-back to retest the 12800 support (minor swing low area of 07 May 2018)

Commodities –  Watch 1323 on Gold for a potential short-term bullish breakout within a major range configuration

  • WTI Crude (Jun 2018) – Trend bias: Uptrend remains intact. Tested the predefined key short-term support at 70.60 before it staged a rebound (printed an intraday low of 70.57 in yesterday, 10 May U.S. session). No change, maintain bullish bias in any dips with key short-term support remains at 70.60 (09 May U.S. session low + close to the 23.6% Fibonacci retracement of the on-going up move from 08 May 2018 low to 10 May European session high of 71.88) for a further potential push up to target the next resistance at 73.30/90 (the upper boundary of a major ascending channel from Feb 2016 low + Fibonacci projection cluster). On the other hand, failure to hold at 70.60 negates the bullish tone for a deeper pull-back towards the next intermediate support at 69.20/68.60 (recent reversal low area of 08 May 2018 + minor ascending trendline from 02 May 2018 low).
  • Gold - Trend bias: Unclear. Continued to trade sideways. No change, maintain neutrality stance between 1300 and 1323 (former minor swing low areas of 29 Mar/23 Apr 2018) as it tested the 1323 level before it staged a pull-back in yesterday, 10 May U.S. session). 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




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