Daily Global Macro Technicals Trend Bias/Key Levels (Mon 12 Feb)

S&P 500 retested 2540/30 major support with positive signals. USD at risk of shaping another downleg except in USD/JPY/. Gold inching higher, watch 1344 resistance next.

FX – USD reacted from key inflection resistance zones, potential start of another USD downleg except in JPY

  • EUR/USD – Tested the 1.2200/2180 support swing low area of 18 Jan 2018 + ascending trendline from 18 Dec 2017 low + Fibonacci cluster) and formed a second consecutive daily “Doji” candlestick pattern at the end of last Fri, 09 Feb U.S. session coupled with a bullish divergence signal seen in both the 4-hour Stochastic & RSI oscillators. These observations suggest that the downside momentum of the price decline since  02 Feb 2018 has started to ease. Turn bullish above 1.2200/2180 key support with 1.2335 (former minor range support since 30 Jan 2018 + minor descending trendline) from 02 Feb 2018 to reinforce the start of another potential upleg to retest the recent 1.2520 range resistance in the first step. However, a break below 1.2200/2180 should invalidate the recovery scenario for an extension of the drop towards the next support at 1.2035/20 (former medium-term swing high area of 04 Sep 2017 + 23.6% Fibonacci retracement of the 12-month up move from 02 Jan 2017 to 29 Jan 2018 high).
  • GBP/USD – Challenged the 1.3830/3800 key short-term support on last Fri, 09 Feb U.S. session where it printed a low of 1.3764 before it inched back up coupled with a bullish divergence signal seen in the 4 hour RSI oscillator (lack of downside momentum seen in last Fri, price action). Tolerate the excess and maintain bullish bias above 1.3800/3764 key short-term support and added 1.4000 as upside trigger level (former swing low of 30 Jan 2018 + minor descending trendline from 02 Feb 2018) to reinforce a potential push up to retest the 1.4270/4310 range resistance in place since 25 Jan 2018 in the first step. On the flipside, failure to hold above 1.3800/3764 should invalidate the recovery scenario for an extension of the minor corrective decline towards the 1.3620/3590 key medium-term support.
  • AUD/USD – Broke above the 0.7810 upper limit of the short-term neutrality zone (the minor descending trendline from 31 Jan 2018) coupled with a daily “Bullish Piercing” candlestick pattern formed at the end of last Fri, 09 Feb U.S. session. Flip back to bullish bias in any dips  above the 0.7760 key short-term support (last Fri, 09 Feb low) for a further potential push up to target the next near-term resistance of 0.7950 (minor swing high area of 05 Feb 2018 + 50% Fibonacci retracement of the decline from 27 Jan 2018 high to 09 Feb 2018 low). However, a break below 0.7760 should see a potential residual push down to test the 0.7745/7730 support (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).
  • NZD/USD – Continued to inch higher as expected from the 0.7190 key short-term support and almost hit the 0.7260/80 short-term resistance/target. Ended last Fri, 09 Feb U.S. session with a daily “Bullish Engulfing” candlestick pattern after last Thursday, 08 Feb daily “Hammer”candlestick. These observations suggest a potential bullish reversal in price action in the recent decline seen from 25 Jan 2018 high.  Maintain bullish bias in any dips above 0.7190 key short-term support for a further potential up move to target the next near-term resistance at 0.7340 (minor swing high area of 07 Feb 2018 + 61.8% Fibonacci retracement of the decline from 25 Jan to 08 Feb 2018 low). However, a break below 0.7190should 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 – Challenged the 108.30 medium-term support in last Fri, 09 Feb U.S. session (printed a low of 108.05) in line with the initial sell-off in the U.S. stock market (S&P 500) before in recovered above 108.30. The short-term movement of this pair is now more correlated with the movement seen on the U.S S&P 500 due to its risk on/risk off proxy. Given that the S&P 500 has formed a bullish signal after a retest on its 2540/30 major support last Fri, 09 Feb, there is a high probability that the USD/JPY can stage a potential short-term rebound at  this juncture within a longer-term range configuration. Tolerate the excess and maintain bullish bias above 108.30/108.05 support for a further potential push up to retest the 109.75 minor swing high areas of 07/08 Feb 2018 and 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 (former swing low area of 27 Nov 2017 + 50% Fibonacci retracement of the decline from 12 Dec 2017 high to 09 Feb 2018 low). However, failure to hold above 108.30/108.05 should trigger an extension of the decline towards the next support at 107.40/30 (medium-term swing low of 08 Sep 2017 + 1.618 Fibonacci projection of the down move from 06 Nov to 27 Nov 2017 projected from 12 Dec 2017). 

Stock Indices (CFD) – U.S S&P 500 rebounded from 2540/30 major support with positive signals

  • US SP 500 – Ended last Fri, 09  Feb 2018 U.S. session with positive signals after a retest on the 2540 major support (printed a low of 253). The Index formed a daily bullish “Hammer” candlestick pattern right at 2540/30, the VIX futures managed to have a weekly close back in the 26.40/28.25 “Fear Zone” where the VIX futures tested this “Fear Zone” in the past and thereafter led to significant bullish reversal seen in the S&P 500 (May 2012, Oct 2014, Aug 2015, Feb 2016) post 2011/2012 European sovereign debt crisis. The 10-year U.S Treasury yield  had ended the week with a weekly “Doji” candlestick pattern after a retest on last Mon, 05 Feb high of 2.86%, a sign of indecisiveness for the bulls to push up the yield. No change, maintain the bullish bias above to 2540/30 major support for a further potential recovery to  target the next near-term resistance at 2728/45 in the first step (61.8% Fibonacci retracement of the decline from 29 Jan 2018 high to 05 Jan 2018 U.S. session low & the minor descending trendline from 29 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 –  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 22820/23040 in the first step (61.8% Fibonacci retracement of the decline from 23 Jan 2018 high to 09 Feb 2018 U.S. session low + descending trendline from 23 Jan 2018 high).
  • Hong Kong 50 – On last Fri, 09 Feb 2018 U.S. session, it continued to drop and printed a new minor low of 29072 which is just 3% above the next major support of 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). In addition, the China A50 (a benchmark index for the China stock market) had managed to hold the major support zone of 12790/12500 (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). The Hong Kong 50 had also flashed a bullish divergence signal on its 4 hour Stochastic oscillator at its oversold region. These observations suggest that the recent downside momentum of price action has started to ease. Turn bullish above 29072 key short-term support (last Fri, 09 Feb low) for a potential recovery to retest the next near-term resistance of 31255/31400 in the first step (minor swing high of 07 Feb 2018 + descending trendline from 29 Jan 2018 high + 50% Fibonacci retracement of the decline from 29 Jan high to 09 Feb 2018 U.S. session low). However, a break below 29072 should invalidate the recovery scenario for an extension of the decline to test the next major support zone of 28600/28100.
  • Australia 200 – Managed to inch back up above the 5800/780 major support in today (12 Feb) Asian session. 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 – Declined in last Fri, 09 Feb U.S. session but managed to hold the 11800/700 major support. Mix elements now, prefer to turn neutral between 11800/700 & 12650 (minor range top in place since 07 Feb 2018). A break above 12650 is likely to validate a potential recovery to retest the near-term resistance of 13150 in the first step (76.4% Fibonacci retracement of the decline from 23 Jan 2018 high to 06 Feb 2018 low).

Commodities – Gold inched higher, watch 1344 resistance next

  • Gold – Broke above 1322 upper limit of short-term neutrality zone in today, 12 Feb Asian session. Turn bullish above 1310 key short-term support (swing low area of 08 Feb 2018) for a further potential 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) in the first step. A break above 1344 may open up scope for a further recovery to retest the 25 Jan 2018 swing high of 1365.  However, failure to hold above 1310 should invalidate the recovery scenario for an extension of the drop towards the next support at 1290/85 (Fibonacci cluster).
  • WTI (Mar 2018) – Dropped and met the 58.90/58.50 support/target as expected. Mix elements at this juncture, prefer to turn neutral first between 58.00 & 62.10 (descending trendline from 02 Feb 2018 high + 50% Fibonacci retracement of the decline from 02 Feb 2018 high to last Fri, 09 Feb 2018 U.S. session low). A break above 62.10 may see a recovery to retest 64.30 in the first step (minor congestion zone of  02/06 Feb 2018).

*Levels are obtained from City Index Advantage TraderPro platform



Join our live webinars for the latest analysis and trading ideas. Register now

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.

For further details see our full non-independent research disclaimer and quarterly summary.