Daily Global Macro Technicals Trend Bias/Key Levels Thurs 17 May

Mix bag again in FX space EURUSD down move has reached a minor inflection where USD strength may see a setback. S&P 500 remains in a short-term sideways configuration with bullish elements. WTI Crude may see a bullish breakout from its recent minor range configuration.

FX –  Mix bag as USD strength seen in EUR has reached a minor inflection zone

  • EUR/USD – Trend bias: Risk of a mean reversion rebound. The pair had inched lower as expected to print a low of 1.1763 in yesterday, 16 May European session which is closed to the short-term support/target of  1.1730/1700 (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). In addition, the daily RSI oscillator has flashed a bullish divergence signal at its oversold region which indicates the on-going medium-term downside momentum of price action has started to abate. Thus, we are cautious at this juncture for a further downleg scenario and prefer to turn neutral first between 1.1730/1700 and 1.1830 (former minor swing low areas of  09/15 May 2018 + close to 23.6% Fibonacci retracement of the recent decline from 14 May high to yesterday, 16 May low of 1.1763). A break above 1.1830 (an hourly close above it) is likely to open up scope for a short-term rebound to retest the next intermediate resistance at 1.1935/1970  (minor swing high area of 15 May 2018 + pull-back resistance of former minor ascending trendline from 09 May 2018 low. On the other hand, failure to hold at 1.1700 sees an extension of the down move to target the key medium-term support zone at 1.1570/1480 (former medium-term range resistance from 15 May 2015/02 May 2016 + medium-term ascending channel support from 03 Jan 2017 low + close to 50% Fibonacci retracement of the 1 year of up move from 03 Jan 2017 low to 16 Feb 2018 high).
  • GBP/USD – Trend bias: Sideways. Managed to hold above the 1.3430 key short-term support. No change, maintain neutrality stance between 1.3430 and 1.3607 (minor range resistance in place since 08 May 2018). A clearance above 1.3607 (an hourly close above it) shall validate a potential mean reversion rebound towards the next intermediate resistance at 1.3700/3770 (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). On the flipside, a break below 1.3430 ( an hourly close below its) opens up scope for a fresh impulsive downleg to target the next supports at 1.3280 follow by 1.3200 (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: Sideways with risk of a further mean reversion rebound. The pair broke above the 0.7485 short-term resistance which put the minor downleg cycle of its medium-term downtrend phase on hold. Mix elements now, prefer to turn neutral first between 0.7560 (minor range resistance in place sine 04 May 2018) & 0.7410 (minor swing low of 09 May 2018). A clearance above 0.7560 (an hourly close above it) opens up scope for a potential rebound to retest the  0.7625/7655 resistance (pull-back resistance of the former major “Ascending Wedge” support from Jan 2016 low + 50%/61.8% Fibonacci retracement of the down move from 19 Apr high to 09 May 2018 low). On the flipside, a break below 0.7410 reinstates the bearish tone for an extension of the down move to target the next intermediate support at 0.7330 (minor swing low of 09 May 2017).
  • NZD/USD - Trend bias: Sideways. The pair is now attempting to break above the 0.6925 key short-term resistance (the pull-back resistance of the former major ascending range support from 24 Aug 2015 low). Mix elements at this juncture, prefer to turn neutral now between 0.6925 and 0.6850 (minor swing low of 16 May 2018). A clearance above 0.6925 (an hourly close above it) opens up scope for a potential mean reversion rebound to target the next intermediate resistance at  0.7050/7060 (minor swing high area of 04 May 2018 + 38.2% Fibonacci retracement of the recent steep decline from 13 Apr high to 16 May 2018 low). On the flipside, a break below 0.6850 reinstates the bearish tone for a further downside extension to target 0.6800 support next (the medium-term swing low areas of 11 May/17 Nov 2017 + psychological).
  • USD/JPY - Trend bias: Uptrend remains intact. No change, maintain bullish bias with 109.90 remains as the key short-term support  (former minor range resistance of 02/10 May 2018 for a further potential push up to target the next resistance at 110.85/111.00 in the first step (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). However, failure to hold at 109.90 negates the bullish tone a slide back towards the minor range support of 109.35/20 which also confluences with the minor ascending trendline from 04 May 2018 low.

Stock Indices (CFD) – Sideways with emergence of bullish elements

  • US SP 500 – Trend bias: Sideways with bullish elements. The Index had broken above the 2717 key short-term resistance which put the deeper pull-back scenario towards 2690/80 support on hold (the pull-back support of the former “Symmetrical Triangle” range resistance from 29 Jan 2018 high + 38.2% Fibonacci retracement of the up move from 03 May low to 14 May 2018 high). Related higher beta benchmark indices have started to show outperformance against the S&P 500 despite the U.S. 10-year Treasury yield continued its surge above 3%.  Firstly, the technology related indices; the NYSE FANG+ and Semiconductor sector ETF (SOXX) had rallied by 0.93% and 1.35% respectively in yesterday, 16 May U.S. session versus a gain of 0.41% seen in the S&P 500. Secondly, small-caps stocks as represented by the Russell 2000 Index had rallied by 0.96% and recorded a fresh new all-time high of 1620 and ended yesterday with a positive close at 1616. Therefore, prefer to turn neutral first on the SP 500 between 2741 (minor swing high of 14 May) and 2700. A clearance above 2741 (an hourly close above it) opens up scope for another round of potential impulsive upleg to target the next intermediate resistance at  2760/65 next in the first step (minor swing high area of 15/16 Mar 2018 + 1.236 Fibonacci projection from 03 May 2018 low).
  • Japan 225 – Trend bias: Up move resumes. The Index had inched higher from the 22700 key short-term support (minor ascending channel support from 03 May 2018 low + 23.6% Fibonacci retracement of the up move from 03 May low to 15 May 2018 high) and it has broken above 22840 upper limit of yesterday’s neutrality zone with an hourly close above it. Flip back to a bullish  bias with adjusted key short-term support now at 22770 (former minor swing high area of 16 May 2018 + close to 61.8% Fibonacci retracement of the current up move from 16 May low to today, 17 May current Asian session intraday high of 22872) for another round of potential impulsive upleg to target the 23000/23090 resistance (psychological + former minor swing low area of 31 Jan 2018 + minor ascending channel resistance from 03 May 2018 low).
  • Hong Kong 50 – Trend bias: Sideways. Tested the upper limit of yesterday’s neutrality range at 31320 (61.8% Fibonacci retracement of the pull-back from 14 May high to 16 May low of 30762 + former minor swing high area of 11 May 2018) in today, 17 May Asian opening session but failed to have an hourly close above it after it printed an intraday high of 31435 before it pull-backed by 1.2% to print a current Asian session intraday low of 31035. No change, maintain neutrality stance between 30800 and 31320. Only a clear break above 31320 (an hourly close above it) reinstates the push up scenario towards 31800. On the flipside, failure to hold at 30800 sees a deeper pull-back towards the next intermediate support at 30500/400 (61.8% Fibonacci retracement of the up move from 04 May low to 14 May 2018 high).
  • Australia 200 – Trend bias: Sideways. A  weak opening in today, 17 May Asian session as the Index tumbled close to 0.6% to challenge the 6087 key short-term support as it printed a current intraday low of 6078 in today’s Asian session before an hourly close back above 6087. No change, maintain neutrality stance between 6087/78 & 6150.  A clear break below 6087 (an hourly close below it) sees a deeper pull-back towards the 6054/40 key medium-term support zone (ascending trendline from 04 Apr 2018 low + 23.6% Fibonacci retracement of the on-going 6-weeks of up move from 04 Apr low to 10 May 2018 high).
  • Germany 30 – Trend bias: Sideways. No change, maintain neutrality stance between 13050 and 12900. Only a break above 13050 (a hourly close above it) reinstates the bullish tone towards the 13140/150 intermediate resistance (76.4% Fibonacci retracement of the steep down move from 23 Jan high to 06 Feb 2018 low). 0n the flipside, failure to hold at 12900 sees a deeper pull-back towards the 12830/800 support (minor swing low area of 07 May 2018 + ascending channel support from 04 Apr 2018 low).

Commodities – Watch the 71.63 upside trigger level in WTI Crude

  • WTI Crude (Jun 2018) – Trend bias: Sideways with bullish elements. Broke above the 71.63 upper limit of the short-term neutrality zone (an hourly close above it in today, 17 May Asian session). Due to a lower liquidity environment in the Asian session, prefer to maintain neutrality stance between 71.63 and 70.27. An hourly close above 71.63 in today European session is likely to cement 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 flipside, failure to hold at 70.27 opens up scope 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: Short-term mean reversion rebound. The yellow metal had inched down as expected and almost met the 1284/81 intermediate support/target as it printed low of 1286 in yesterday, 15 May European session. The hourly Stochastic oscillator has flashed a bullish divergence signal at its oversold region with the longer-term 4 hour Stochastic oscillator that has exited from its oversold region and still has room for further potential upside before it reaches an extreme overbought level of 92%. These observations suggest that downside momentum has started to abate. Flip to a bullish bias above 1281 key short-term support for a potential minor rebound to retest the 1300/1303 resistance (former range support + 38.2% Fibonacci retracement of the on-going decline from 11 May high to 16 May 2018 low). On the other hand, failure to hold at 1281 sees an extension of the down move to target the next support at 1248 (the medium-term swing low of Dec 2017 + 50% Fibonacci retracement of the multi-year up move from Dec 2016 low to  11 Apr 2018 high)

*Levels are obtained from City Index Advantage TraderPro platform




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