Daily Global Macro Technicals Trend Bias Key/Levels (Thurs 22 Feb)

Mix bad for USD, watch the key support for EUR/USD at 1.2200. S&P 500 has reached an inflection level where a recovery may take shape.

FX – Mix bag

  • EUR/USD – Declined towards the 1.2276  short-term lower neutrality zone as per highlighted in yesterday report (14 Feb 2018 low + medium-term ascending trendline support from 18 Dec 2017 low ) after the release of the U.S. Fed FOMC minutes for the recent Jan meeting that highlighted Fed officials were optimistic that U.S. inflation growth is likely to reach the Feb’s target of 2% In the medium-term and a tighter monetary policy would likely be appropriate in 2018.  Based on Elliot Wave/fractal analysis in addition with a bullish divergence signal seen short-term hourly RSI oscillator, the pair now faces the risk of minor mean reversion rebound at this juncture. The decline has reached a Fibonacci cluster (inflection level), the 76.4% retracement of the recent up move from the  10 Feb 2018 minor low to 16 Feb 2018 high & the 1.00  projection of the down move from 16 Feb 2018 high to 17 Feb 2018 minor low projected from 19 Feb 2018 minor high).  Mix elements now, prefer to turn neutral between 1.2200 (neckline support of the impending “Double Top” that is forming since 01 Feb 2018 high) & 1.2370 (former minor swing low area of 19 Feb 2018 that rejected yesterday’s U.S. session spiked up). Only a break above 1.2370 is likely to increase the conviction for a potential recovery to retest the 16 Feb 2018 high of 1.2555/1.2575. On the other hand, failure to hold above 1.2200 should trigger a deeper corrective down move 1.2070/2035 (former medium-term swing high areas of 29 Aug/08 Sep 2017).
  • GBP/USD – Now at risk of shaping a further push down to retest the 14 Feb 2018 low of 1.3800 holding below yesterday, 21 Feb U.S. session swing high of 1.4010. Below 1.3800 is likely to see an extension of corrective down move to target the next support at 1.3620/3580 (the former medium-term swing high area of 15 Sep 2017). However, a clearance above 1.4010 should negate the bearish tone for a push up to retest the minor descending trendline from 25 Jan 2018 high now acting as a resistance at 1.4090.     
  • AUD/USD – Declined as expected and it is now coming close to the 0.7773 short-term support/target as per highlighted in yesterday report.  Mix elements now as the 4 hour Stochastic oscillator has dipped into an extreme oversold zone. Prefer to turn neutral first between 0.7770 & 0.7860 (the minor descending trendline from 16 Feb 2018 high + minor swing high area of 21 Feb 2018). A break below 0.7770 is likely to trigger another downleg to target the  next near-term support at 0.7650 (76.4% Fibonacci retracement of the previous up move from 08 Dec 2017 to 26 Jan 2018 + congestion area of 27 Oct/05 Dec 2017).
  • NZD/USD – Broke below 0.7330 key short-term support that has invalidated the push up scenario towards the major resistance of 0.7485/7500 (multi-month range top in place since Sep 2016). Right now, at risk of shaping a further slide to retest the 14 Feb 2018 low of 0.7240 in the first step holding below a key short-term resistance now at 0.7370 (former the minor swing lows area of 15/19 Feb 2018) However, a break above 0.7370 is likely to reinstate the bulls for a push up to retest 0.7485/7500 major range resistance.
  • USD/JPY – Traded lower below yesterday, 21 Feb Asian session high of 107.90 (also failure to break above this level in the U.S. session after the release of the Fed FOMC minutes) and broke below the minor ascending trendline support  from 16 Feb 2018 low. Maintain bearish bias below an adjusted key short-term resistance now at 107.90 for a further potential push down towards a near-term support at 106.70 in the first step (50% Fibonacci retracement of the recent rally from 16 Feb low to 21 Feb 2018 high) and a break below 106.70 exposes the 105.55 swing low of 16 Feb 2018. On the flipside, a break above 107.90 should see a further squeeze up towards the  108.30/50 resistance (upper boundary of a descending channel in place since 08 Jan 2018 + former minor range support from 27 Jan 2018 low + the 0.382% Fibonacci retracement of the decline from 08 Jan 2018 high to 16 Feb 2018 low).

Stock Indices (CFD) – S&P 500 has reached an inflection level while the rest are still holding above supports.

  • US SP 500 –  The Index had shaped the expected slide towards the 2690 level (minor swing low area of 15 Feb 2018 U.S. session + Fibonacci cluster) as expected after the second rejection at the 2745 medium-term upside trigger level (61.8% Fibonacci retracement of the decline from 29 Jan high to 06 Feb 2018 low- see yesterday report). The market had interpreted the latest Fed FOMC minutes as hawkish where higher interest rates/funding costs will be a drag on future earnings growth. Interestingly, based on Elliot Wave/fractal analysis, yesterday’s push down has led the Index to reach an inflection level where the Index may see a recovery at this juncture (50%  Fibonacci retracement of the up move from 14 Feb 2018 low to 16 Feb 2018 high + 1.00 Fibonacci projection of the recent slide from 16 Feb high to 20 Feb 2018 minor swing low projected from 20 Feb 2018 minor swing high) coupled with an extreme oversold reading seen in the 4 hour Stochastic oscillator. In addition, current price action is also resting at the pull-back support of a former minor descending trendline resistance from 29 Jan 2018. Flip back to a bullish bias above 2683 key short-term support (today’s Asian session intraday low) for a potential push up to retest the 2745 medium-term upside trigger level. A daily close above 2745 is required the increase the conviction for the start of another potential upleg to target the next near-term resistance at 2800/2810 in the first step (former minor swing low area of 01 Feb 2018). On the other hand, failure to hold above 2683 should see an extension of the decline to test the 2662 key medium-term support (see latest weekly technical outlook).
  • Japan 225 – Today, earlier sell-off seen in the Asian session has managed to stall at the predefined 21570 key short-term support (former minor swing high area of 15 Feb 2018 and formed an hourly  “Doji” candlestick pattern which indicates indecisiveness of the bears to push the Index lower. Maintain bullish bias above 21570 support for a potential push up to retest the near-term resistance zone of 22185/22250 (21 Feb 2018 high +  minor swing high area of 07 Feb 2018).  However, a break below 21570 should negate the bullish tone for a slide back to retest the 21000 minor swing low areas of 13/14 Feb 2018.
  • Hong Kong 50 – Gapped down in today Asian opening session but managed to hold above yesterday’s swing low at 30700 and the pull-back support of a former minor descending trendline from 29 Jan 2018 high that was taken out in yesterday’s Asian session. The hourly Stochastic oscillator has also retraced back to its oversold region. Maintain bullish bias with a tightened key short-term support at 30700/560 for another potential upleg to target the next near-term resistance at 31800/32000 (gapped down formed on 06 Feb 2018 + 61.8%  Fibonacci retracement of the decline from 29 Jan high to 09 Feb 2018 U.S. session low). However, failure to hold above 30700/560 should negate the bullish tone for a deeper slide to retest the next near-term support at 30075 (former minor swing high of 13 Feb 2018 +close to  61.8% Fibonacci retracement of the on-going up move from 09 Feb 2018 low to yesterday, 21 Feb 2018 U.S. session high).  
  • Australia 200 – In yesterday, U.S. session (before the release of the Fed FOMC minutes), the Index had pushed up and hit the 5990 short-term resistance/target as expected before it staged a pull-back post Fed FOCM minutes. Interestingly, the pull-back has managed to stall at the minor ascending trendline in place since 09 Feb 2018 low now acting as a support at 5910 and also the former swing high area of 07 Feb 2018. Maintain bullish bias above tightened key short-term support at 5910 for a potential push up to retest 5990 (pull-back resistance from the minor swing low of 15 Nov 2017 + 61.8% Fibonacci retracement of the recent decline from 09 Jan 2018 high to 09 Feb 2018 U.S. session low). On the flipside, failure to hold above 5910 should negate the bullish tone for a slide back to retest the 5780 key medium-term support set for this week (see latest weekly technical outlook).
  • Germany 30 – Still holding the 12370/330 key short-term support. Maintain bullish bias above 12370/330 support for a potential push up to test the 12650/12845 resistance in the first step (neckline of the minor “Double Bottom” in place since 06 Feb 2018 low + 61.8% Fibonacci retracement of the steep decline from 23 Jan 2018 high). However, failure to hold at 12370/330 should negate the bullish tone for a slide back to retest 14 Feb 2018 swing low area of 12110/12070.

Commodities – Further potential weakness in Gold & WTI Crude

  • Gold Still showing weakness for a further potential slide to retest the recent 08 Feb 2018 low of 1309 holding below the adjusted key resistance at 1336 (yesterday, U.S. session high after the release of the Fed FOMC minutes). However, a clearance above 1336 should negate the bearish tone for a push up to retest the major range resistance zone of 1365/1378.
  • WTI (Apr 2018) – No change, maintain bearish bias for below adjusted key short-term resistance now at 61.86 (yesterday, U.S. session high + minor descending trendline from 20 Feb 2018 high) for a further potential push down to test the next near-term support at 59.60 (15 Feb 2018 minor swing low) in the first step. On the flipside, a break above 61.86 should negate the bearish tone for a push up to retest 20 Feb 2018 high of 62.65.

*Levels are obtained from City Index Advantage TraderPro platform


  

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