Daily Global Macro Technicals Trend Bias/Key Levels (Thurs 24 May)

USD strength remains intact against EUR & GBP. Mix bag in stock indices with underperformance in Nikkei 225

FX –  USD strength remains intact against EUR & GBP

  • EUR/USD – Trend bias: Down move extends. The pair had staged a breakdown below  the lower limit of the short-term neutrality zone at 1.1700 (an hourly close below it in yesterday, 23 May European session) which put the short-term mean reversion rebound scenario in the backburner. Flip back to a bearish bias in any bounce below key short-term resistance at 1.1770 (former minor swing low of 22 May 2018 + 61.8% Fibonacci retracement of the recent slide from 22 May high to yesterday, 23 May low of 1.1675) for a further potential push down to target the upper limit of the key medium-term support at 1.1590/70  (former medium-term range resistance from 15 May 2015/02 May 2016 + lower boundary of medium-term descending channel from 19 Apr 2018 high + Fibonacci projection cluster). However, a clearance above 1.1770 negates the bearish tone for a squeeze up to retest 1.1820/1850 (the upper boundary of the medium-term descending channel from 19 Apr 2018 high + minor swing high area of 22 May 2018 high).
  • GBP/USD – Trend bias: Down move in progress. The pair had continued its downward spiral as expected and printed a new minor lower low of 1.3305 in yesterday, 23 May European session. The 4 hour Stochastic oscillator has just staged an exit from its oversold region where a minor bounce towards 1.3420/3460 cannot be ruled out at this juncture. Maintain bearish bias in any bounce with key short-term resistance remains at 1.3470/90   former minor swing low areas of 10/15/16 May 2018 + minor descending trendline from 14 May 2018 high) for a further potential push down 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). On the other hand, a reintegration back above 1.3490 negates the bearish tone for a squeeze back up to retest the minor range resistance of 1.3590/3607 (swing high areas of 09/14 May 2018).
  • AUD/USD - Trend bias: Short-term mean reversion rebound phase remains intact. Yesterday, 23 May, the pair had challenged the 0.7540 key short-term support (printed a low of  0.7522 in the European session) before it staged a rebound back above 0.7540.  Tolerate the excess and maintain bullish bias with key short-term support remains at 0.7540/7522 (excess) for a potential push up to retest the recent 22 May minor swing high of 0.7605 before targeting the 0.7625/7655 resistance zone (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). However, a break below 0.7522 invalidates the mean reversion rebound scenario for a continuation of the medium-term down move in place since 26 Jan 2018 high to retest the 0.7450 follow by 0.7415 swing low area of 09 May 2018.
  • NZD/USD – Trend bias: Sideways.  Continued to churn within the short-term neutrality zone as it challenged the lower limit at 0.6900 (printed a low of 0.6884 in yesterday, 23 May U.S. session) before it staged a bounce back above 0.6900. No change, maintain neutrality stance between 0.6900/6880 and 0.6980. A break (an hourly close) below 0.6880 opens up scope for an extension of the down move to towards the next support at 0..6800 (the medium-term swing low areas of 11 May/17 Nov 2017 + psychological). On the flipside, bulls need to break above 0.6980 (an hourly close above it) to reinstate the mean reversion rebound scenario towards 0.7045/7060 intermediate resistance (minor swing high area of 03/07 May 2018 + 38.2% Fibonacci retracement of the down move from 13 Apr high to 16 May 2018 low). 
  • USD/JPY – Trend bias: Corrective decline in progress to retrace the medium-term uptrend from 26 Mar 2018 low. The pair had continued its slide from the 21 May 2018 high of 111.40 and broke below the 110.00 support (former minor swing high areas of 02/10 May 2018 + medium-term ascending channel support from 24 Mar 2018 low) in yesterday, 23 May European session). Current price action suggests that on-going slide has developed into a more pronounced potential multi-week corrective decline to retrace the medium-term uptrend from 26 Mar low to 21 May 2018 high. Turn bearish in any bounce below 110.05 key short-term resistance (the minor descending trendline from 23 May 2018 high + close to the 23.6%  Fibonacci retracement of the on - going decline from 21 May 2018 high to today, 24 May current Asian session intraday low of 109.40) for a further potential push down to target the next intermediate support at 109.20/108.90 (minor swing low areas of 11 May/08 May 2018 + 0.618/0.764 Fibonacci projection of the down move from 21 May 2018 high to 23 May 2018 low projected from 23 May 2018 U.S. session high of 110.32). On the flipside, a clearance above 110.05 negates the bearish tone for a squeeze up to retest 110.30 (23 May U.S. session swing high area ) and even 110.60/70 next (the minor descending trendline from 21 May 2018 high + 61.8%  Fibonacci retracement of the on - going decline from 21 May 2018 high to today, 24 May current Asian session intraday low of 109.40.

Stock Indices (CFD) – Mix bag with underperformance in Nikkei 225

  • US SP 500 – Trend bias: Push up within range configuration. The Index had broken below the 2720 adjusted key short-term support and declined towards the minor range support of 2700/2690 in place since 16 May 2018 (printed a low of 2705 in yesterday, 23 May European session) before it staged a strong rebound of 1% in the U.S. session from the 2705 low  to print a high of 2733.  Therefore,  yesterday’s slide is likely a minor pull-back/consolidation within a medium-term uptrend that is still in progress from 03 May 2018 low of 2593. Maintain bullish bias with key short-term support at 2715 (minor ascending trendline from 23 May 2018 low + 61.8% Fibonacci retracement of yesterday’s recovery from 2705 low to 2733 high) for a further potential push up to retest the 2741 range resistance in place since 14 May 2018). On the flipside, failure to hold at 2715 sees another slide towards the 2700/2690 range support.
  • Japan 225 – Trend bias: Corrective decline in progress to retrace the medium-term uptrend from 24 Mar 2018 low. The Index had broken below the 22550 key medium-term support set for this week which suggests that on-going slide has developed into a more pronounced potential multi-week corrective decline to retrace the medium-term uptrend from 24 Mar low to 21 May 2018 high reinforced by the on-going weakness seen in the USD/JPY. Turn bearish in any bounce below 22640 key short-term resistance (today, 24 May Asian session current intraday high) for a further potential push down to target the next intermediate support at 22290/22200 (minor swing low area of 04 May 2018 + 0.618/0.764 Fibonacci projection of the down from 21 May to 23 May projected from 24 May current intraday high of 22640). On the other hand, a clearance above 22640 negates the bearish tone for a squeeze up to retest 22800 (former minor swing low of 18 May 2018 + 61.8% Fibonacci retracement of the on-going decline from 21 May high to today, 24 May Asian session current intraday low of 22396).
  • Hong Kong 50 – Trend bias: Push down within range configuration. Broke below 30860 that invalidated the push up within range scenario. Turn bearish in any bounce below 31180 key short-term resistance (minor descending trendline from 21 May 2018 high + gap) for a further potential push down to target the next support at 30250 (minor swing high area of 07 May 2018 + minor ascending trendline from 04 Apr 2018 low). On the flipside, a clearance above 31180 negates the bearish tone for a squeeze up towards the minor range resistance of 31500/600 in place since 14 May 2018.
  • Australia 200 – Trend bias: Deeper minor pull-back remains in progress. No change, maintain bearish bias with an adjusted key short-term resistance now at 6042 (today, 24 May Asian session current intraday high) for a  potential residual push down to target the 5980 support (pull-back of the former “Symmetrical Triangle” range resistance from 09 Jan 2018 high + 38.2% Fibonacci retracement of the on-going medium-term up move from 04 Apr low to 10 May 2018 high) before a potential new upleg materialises. On the other hand, a clearance above 6042 negates the bearish tone for a squeeze up to retest 6090 (minor descending trendline resistance from 14 May 2018 high + 61.8% Fibonacci retracement of the on-going slide from 14 May high to yesterday, 23 May U.S. session low of 5997).
  • Germany 30 – Trend bias: Deeper minor pull-back in progress. Broke below the 13060 support that invalidated the direct rise scenario. Right now, it is likely that the Index is undergoing a deeper pull-back within its medium-term uptrend that remains intact since 26 Mar 2018 low. The shorter-term hourly Stochastic oscillator has reached its oversold region which suggests a possibility of a minor bounce to retest 13000/13060 intermediate resistance (former minor swing low area of 22 May 2018 + Fibonacci retracement/projection cluster) before another potential downleg materialises. Thus, flip to a bearish bias in any bounce below key short-term resistance at 13100/13150 (61.8% Fibonacci retracement of the on-going slide from 22 May high to yesterday, 23 May U.S. session low of 12929) for a further potential slide to target the 12850 key medium-term support (range support from 10/15 May 2018 + 23.6% Fibonacci retracement of the on-going up move from 26 Mar low to 22 May 2018 high of 13206). On the flipside, a clearance above 13150 negates the bearish tone to see a continuation of the up move towards 13245/75 (Fibonacci projection cluster + minor swing high area of 01 Feb 2018 before the previous steep decline of 12% occurred).

*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.