Daily Global Macro Technicals Trend Bias/Key Levels (Thurs 22 Mar)
Kelvin Wong March 22, 2018 5:09 AM
Current USD weakness is overstretched. S&P 500 has met the lower limit of the corrective rebound target at 2740, at risk of shaping another downleg. Gold & WTI further short-term potential uposide.
FX – Current USD weakness “overstretched” in the short-term
- EUR/USD – Broke above the 1.2300 short-term resistance post FOCM which invalidated the push down scenario to target the 1.2220/2200 range support (it printed a low of 1.2239 on Tues, 20 Mar U.S. session). Current price action of the pair is now right below the 1.2360/2380 (triangle range resistance from 16 Feb 2018 high + 61.8% Fibonacci retracement of the 08 Mar high to 20 Mar 2018 U.S. session low). The 4 hour Stochastic oscillator has reached an extreme overbought level of 97% . As long as 1.2360/2380 triangle range resistance is not surpassed, the pair may see a slide back to retest 1.2295 and below it exposes the 1.2250/2240 minor swing low areas of 20/21 Mar 2018. On the flipside, a clearance above 1.2380 sees a bullish breakout from the 4 weeks of range configuration for a potential rally towards the major resistance of 1.2600/2640 (Fibonacci projection cluster + major descending channel resistance from Jul 2008 high).
- GBP/USD – Rallied as expected & hit the 1.4145 short-term resistance/target as expected. The 4 hour Stochastic oscillator has reached an extreme overbought level of 96% which indicates an “overstretched” up move. In addition, Elliot Wave/fractal analysis highlights the risk of a minor pull-back consolidation below 1.4190 towards the 1.4090/4060 near-term support (former minor swing high areas of 19/20 Mar 2018 + 38.2% Fibonacci retracement of the up move from 16 Mar low to today, 22 Mar Asia session current intraday high of 1.4170). Above 1.4190 sees a further acceleration towards the next intermediate resistance at 1.4270 (swing high areas of 26 Jan/02 Feb 2018).
- AUD/USD – Managed to drift lower as expected to print a low of 0.7672 in yesterday, 21 Mar European session but did not met the expected downside target/support of 0.7655/7640. Recalled that we had highlighted in our report yesterday that the decline from 14 Mar 2018 high is “overstretched” where it faces to risk of a rebound/consolidation Indeed, it broke above 0.7730 and squeezed up to print a current intraday high of 0.7785 in today, 22 Mar 2018 Asian session post FOMC. The squeezed up stalled at a former medium-term range support from 09 Feb/05 Mar 2018 now turns pull-back resistance at 0.7760 & also close to the 50% % Fibonacci retracement of the decline from 14 Mar 2018 high to 21 Mar 2018 low at 0.7794. In addition, the 4 hour Stochastic oscillator is now coming close to an extreme overbought level of 97%. Therefore, the aforementioned squeezed up is likely to have reach an inflection zone where a potential downleg should resume. Bearish bias below 0.7785/7794 key short-term resistance for a potential slide to retest yesterday, 21 Mar low of 0.7672 before targeting the major support zone of 0.7655/7640 (major “Descending Wedge” support from Jan 2016 low + former minor range resistance of 27 Nov/05 Dec 2017 + Fibonacci projection cluster). However, a break above 0.7794 should invalidate the bearish bias for a further push up towards 0.7880 (minor descending trendline from 27 Jan 2018).
- NZD/USD – Broke above 0.7210 key short-term resistance which invalidated the bearish breakdown scenario of the “Double Top” configuration in shape since 25 Jan 2018 high. Mix elements now as the pair is now testing the minor descending channel resistance (from 14 Mar 2018 high) at 0.7250 + former minor swing low area of 08 Mar 2018. Prefer to turn neutral between 0.7250 & 0.7180 (minor ascending trendline from yesterday, 21 Mar low). A break below 0.7180 should reinstate the bearish tone for a slide to target the the next intermediate support at 0.7100 (Fibonacci cluster).
- USD/JPY – Pushed down as expected and it is now coming close to the bearish “Descending Triangle” range support of 105.50/25. Mix elements now, prefer to turn neutral first between 105.50/25 & 107.00 (“Descending Triangle” range resistance). A break below 105.25 is likely to trigger a bearish breakout from the “Descending Triangle” for a decline to target the next support at 103.80/60 (Fibonacci cluster + former congestion area of Sep/Oct 2016).
Stock Indices (CFD) – S&P 500 met lower limit of minor corrective rebound at 2740, risk of another downleg within “triangle range”
- US SP 500 – Corrective rebound target met at 2740 (former minor range support of 15/16 Mar 2018 + 38.2% Fibonacci retracement of the decline from 13 Mar high to 19 Mar 2018, U.S. session low). In addition, the hourly Stochastic oscillator has flashed a bearish divergence signal at its overbought region which indicates yesterday’s upside momentum of price action has abated. Yesterday’s sectors performance saw an underperformance from the high beta S&P Technology sector where its respective ETF (XLK) recorded a wider loss of -0.60% versus a loss of -0.18% seen on the S&P 500. Turn bearish below 2740 short-term resistance for another round of potential downleg to retest 19 Mar low of 2693 before targeting the next intermediate support at 2660 (minor swing low area of 02 Mar 2018) within a medium-term “Symmetrical Triangle” range configuration. On the flipside, a break above 2660 should invalidated the bearish bias for an extension of the corrective rebound towards 2760 (minor range resistance of 15/16 Mar 2018 + 61.8% Fibonacci retracement of the decline from 13 Mar high to 19 Mar 2018, U.S. session low).
- Japan 225 – Mix elements still prevail. Right now, it is testing the minor descending trendline from 13 Mar 2018 high now acting as a resistance at 21600. Prefer to remain neutral between 21100 (19 Mar U.S. session low) & 21600. A break above 21600 is likely to see a minor push up to retest 21880 intermediate resistance (medium-term descending trendline from 27 Feb 2018 high + 76.4% Fibonacci retracement of the recent slide from 13 Mar high to 19 Mar 2018 U.S. session low).
- Hong Kong 50 - Yesterday’s intraday bullish breakout above the 31800 medium-term upside trigger level has failed to have a daily close above 31800 and reintegrated below the 31600 support (former minor range resistance from 13 Mar 2018). These observations have negated the bullish tone. Right now, it has reverted back to its short-term rang support of 31060 (in place since 15 Mar) with the 4 hour Stochastic oscillator that is coming close to an extreme oversold level of 4%. Therefore as long as 31060 key short-term support holds, it may see a rebound towards the range resistance of 31700/800. However, a break below 31060 should trigger a deeper slide towards the 30070 key medium-term support.
- Australia 200 – Continued to churn within a range. Prefer to maintain neutrality stance between 5880 (key medium-term support) & 5980 (minor descending trendline from 12 Mar 2018 high. A break above 5980 is likely to see a push up towards 6030 (the upper limit of a potential triangle range configuration in place since 09 Jan 2018 high).
- Germany 30 – Whipsawed around the 12270 adjusted key short-term support as it started to churn within a range. Prefer to turn neutral now between 12340 (minor descending trendline from 16 Mar 2018 high) & 12160/1150 (minor range support in place since 14 Mar 2018 low). A break above 12340 sees a push up to target 12450/550 (neckline resistance of the “Double Bottom” in shape since 06 Feb 2018 low).
Commodities – Further potential upside in Gold & WTI Crude
- Gold – It broke above the 1320 resistance invalidated the residual push down scenario towards 1303/1300. Flip back to bullish bias in any dips above 1318 key short-term support (61.8% Fibonacci retracement of yesterday’s rally from 20 Mar low to 21 Mar 2018 U.S. session high + pull-back support of the former descending trendline resistance from 16 Feb 2018 high) for a further potential push up towards 1340 (minor swing high areas of 26 Feb/07 Mar 2018) before targeting 1360/65 next (major range resistance in place since Jul 2016 high). A break below 1318 negates the short-term bullish tone for a slide to retest 1303/1300 medium-term range support in place since 08 Feb 2018 low.
- WTI Crude (May 2018) – Broke above the 64.20 upper limit of the short-term neutrality range that has validated a further push up scenario. Flip back to a bullish bias in any dips above 64.10 key short-term support (former minor swing high area of 27 Feb 2018 + 23.6% Fibonacci retracement of the up move from 14 Mar 2018 low to today, 22 Mar Asian session current intraday high of 65.71) for a further potential push up to retest 66.66 (medium-term swing high of 25 Jan 2018). Failure to hold above 64.10 should negate the bulls for a corrective pull-back to retest 62.30 support (former minor range resistance of 12/17 Mar 2018 + 61.8% Fibonacci retracement of the up move from 14 Mar 2018 low to today, 22 Mar Asian session current intraday high of 65.71).
*Levels are obtained from City Index Advantage TraderPro platform
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