Daily Global Macro Technicals Trend Bias/Key Levels (Fri 27 Apr)

USD strength at risk of a mean reversion setback. Watch the 2718/2720 resistance on the S&P 500.

FX –  USD strength at risk of a mean reversion setback

  • EUR/USD – Trend bias: Recent decline at risk of rebound. Dropped as expected and it is coming close to the downside target/medium-term support zone of 1.2065/2030 (median line of a medium-term ascending channel in place since 03 Jan 2017 + former medium-term swing high areas of 29 Aug/08 Sep 2017 + 23.6% Fibonacci retracement of the on-going medium-term uptrend from 03 Jan 2017 low to 16 Feb 2018 high). It printed a low of 1.2098 in yesterday,  26 Apr U.S. session reinforced by a dovish guidance from ECB on its future monetary policy trajectory where ECB President Draghi stated that core inflation in Euro zone has not yet shown a clear upward trend and expect interest rates to remain at their current levels for an extended period of time and beyond the period of net asset purchases (QE programme).  Elliot Wave/fractal analysis suggest that the current decline from 17 Apr 2018 high is coming close to an inflection zone for a potential mean reversion rebound that can be of a greater magnitude of the recent rebound seen from 24 Apr low of 1.2180 to its U.S session high of 1.2245 (refer to yesterday report). Prefer to turn neutral first between 1.2030 and 1.2160 (former minor swing low areas of 01 Mar/26 Apr 2018 + minor descending trendline from 19 Apr 2018 high). Only a clearance above 1.2160 (an hourly close above it) is likely to kickstart a rebound to target the next intermediate resistance at 1.2250/2290 zone (50%/61.8% Fibonacci retracement of the on-going decline from 17 Apr high to 26 Apr 2018 low + pull-back resistance of the former minor ascending trendline from 01 Mar 2018 low. On the flipside, a break below 1.2030 sees an extension of the decline towards the next support at  1.1930 in the first step (minor swing low area of  09 Jan 2018 that coincides with the former swing high area of 27 Nov 2017).  
  • GBP/USD - Trend bias: Minor corrective decline remains intact. Traded sideways after a retest on Tues, 24 Apr low of 1.3918. No change maintain bearish bias below adjusted key short-term resistance now at 1.4000 (the minor range resistance of 25/26 Apr 2018 + 23.6% Fibonacci retracement of the on-going decline from 17 Apr 2018 high to 26 Apr 2018 low) for a potential residual push down to target the 1.3765/3590 key medium-term support zone (medium-term ascending channel support from 14 Mar 2017 low + swing low areas of 09 Feb/01 Mar 2018). However, a clearance above 1.4000 negates the bearish tone for a squeeze back up towards the 1.4300/4345 failure bullish breakout zone seen on 17 Apr 2018.
  • AUD/USD – Trend bias: Recent decline at risk of rebound. Continued to inch lower as expected and it is now coming close to the downside target/support of 0.7510/07500 support (the medium-term swing low of 08 Dec 2017 + Fibonacci projection cluster). In addition, the 4 hour Stochastic oscillator has started to flash a bullish divergence signal at its oversold region which indicates a slowdown in the recent downside momentum of price action.  Prefer to turn  neutral first between 0.7600 (former minor swing low area of 24 Apr 2018 + 23.6% Fibonacci retracement of the on-going decline from 19 Apr high to today, 27 Apr current Asian session low of 0.7538) and 0.7500. Only a clearance above 0.7600 (an hourly close above it) is likely to kickstart a rebound to target the next intermediate resistance at 0.7650/7670 (the former minor range support from 29 Mar/09 Apr 2018).  On the flipside, a break below 0.7600 sees an extension of the decline to target the next support at 0.7370/7330 (the swing low areas of 08 May/01 Jun 2017).
  • NZD/USD – Trend bias: Recent decline at risk of rebound.  Inched lower as expected and it is now coming close to the downside target/support of 0.7030/7000 support (former minor swing high area of 13 Dec 2017 + Fibonacci retracement /projection cluster). Yesterday, 26 Apr, it ended the U.S. session with a daily bullish “Inverted Hammer” candlestick pattern which indicates a potential pause in the recent bearish sentiment. Prefer to turn neutral now between 0.7000 and 0.7130 (minor swing high area of 24 Apr 2018 + pull-back resistance of the former medium-term ascending support from 17 Nov 2017 low). Only a clearance above 0.7130 (an hourly close above it) is likely to kickstart a rebound to target the next intermediate resistance at 0.7180 (former medium-term range support of 08 Feb/20 Mar 2018). On the flipside, a break below 0.7000 sees an extension of the decline to target the next support at 0.6960/6935 (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:  Risk of pull-back to retrace recent up move from 26 Mar 2018 low. No change, maintain bearish bias below key short-term resistance at 109.65 with 108.95 as downside trigger to reinforce a potential minor reversion decline to target the supports of 108.50 and 107.80/65 next (minor swing low area of 10/11 Apr 2018 + 38.2% Fibonacci retracement of the on-going up move from 26 Mar low to 26 Apr 2018 high). However, a clearance above 109.65 opens up scope for an extension of the up move to target the next resistance at 110.85/111.00 (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.

Stock Indices (CFD) –  Watch the 2718/20 resistance on the S&P 500

  • US SP 500 – Trend bias:  Push up to test “Symmetrical Triangle” range resistance.  Broke above the 2660 key short-term resistance that invalidated the push down scenario to test the key  “Symmetrical Triangle” range support. Another “bi-polar” movement within the medium-term “Symmetrical Triangle” range configuration in place since 06 Feb 2018 low.  Yesterday, rally had been led by the high beta Technology sector where the S&P Tech Sector ETF (XLK) recorded a gain of 1.82% that outperformed 1.04% gain seen in the S&P 500. It looks set to retest the previous minor swing high of 2718 printed on 18 Apr 2018 which also confluences closely with the upper boundary of the “Symmetrical Triangle” range configuration now acting as a resistance at 2720 with the key short-term support now at 2655 (the minor ascending trendline from 25 Apr 2018 low + former minor swing high area of 26 Apr 2018). However, a break below 2655 invalidates the bullish tone for another round of choppy decline to retest the 25 Apr low of 2611.
  • Japan 225 Trend bias: Push up to test key medium-term upside trigger level. Broke above the 22360 upper limit of the short-term neutrality zone that validated a further push up scenario. Flip back to a bullish bias in any dips with 22340 as key short-term support (former minor range resistance from 19/26 Apr 2018) for a further potential push up to target the next intermediate resistance at 22510/600 (swing high area of 27 Feb 2018). A break above 22600 opens up  scope for a further rally to target 23000/23280 resistance next (former range top of 09 Nov/18 Dec 2017 & 76.4% Fibonacci retracement of the recent decline from 23 Jan 2018 high to 24 Mar 2018 low).
  • Hong Kong 50Trend bias: Sideways. No change, maintain neutrality stance between 30000/29950 (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) and 30790 (yesterday, 24 Apr European session high). Only a break above 30790 (an hourly close above it) reinstates the  bullish tone for a push up towards the 31165 minor range resistance in first step.
  • Australia 200 – Trend bias: Push up to test “Symmetrical Triangle” range resistance. Broke above the 5950 upper limit of the short-term neutrality zone (refer to yesterday report). Flip back to a bullish bias with 5924 as key short-term support (today, 27 Apr Asian session low) for a further potential push up to target the next intermediate resistances at 6000 follow by 6030 (upper boundary of the “Symmetrical Triangle” range from 09 Jan 2018 high + minor swing high of 12 Mar 2018). However, failure to hold at 5924 negates the bullish tone to see a deeper pull-back to retest the 5880 support (25 Apr minor swing low + minor ascending trendline from 03 Apr 2018 low).
  • Germany 30Trend bias: Sideways. Maintain neutrality stance between 12640 and 12311. Only a clearance above 12640 reinstates the bullish tone for a further potential push up to test 12750/865 resistance in first step (former range support from 15 Nov 2017/02 Jan 2018, 61.8% Fibonacci retracement of the decline from its current all-time high printed on 23 Jan 2018 to 06 Feb 2018 low). On the flipside, a break below 12311 sees the risk of a deeper slide towards the 12150/12090 key medium-term support (ascending trendline from 26 Mar 2018 low + close to the 61.8% Fibonacci retracement of the up move from 26 Mar low to  24 Apr high of 12649) before a recovery materialises.

Commodities – Potential residual push down in Gold towards medium-term range configuration support

  • WTI Crude (Jun 2018) - Trend bias: Sideways. No change, maintain neutrality stance between 69.90 and 67.15. A 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: Residual push down towards medium-term sideways range support. Inched lower as expected. Maintain bearish bias with adjusted key short-term resistance now at 1326 (minor swing high of 26 Apr 2018 + 23.6% Fibonacci retracement of the on-going decline from 11 Apr high to 26 Apr U.S. session low of 1315) for a potential residual push down to target the medium-term range support of 1310/1303 in place since 08 Feb 2018 low before a mean reversion rebound materialises. On the other hand, a break above 1326 negates the short-term bearish tone for a squeeze back up to retest 1340/47 intermediate resistance (minor descending trendline from 11 Apr 2018 high).

*Levels are obtained from City Index Advantage TraderPro platform




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