Daily Global Macro Technicals Trend Bias/Key Levels (Thurs 31 May)

USD strength setback except in JPY. Potential recovery process in the making for major stock indices.

FX –  USD strength setback except in JPY

  • EUR/USD – Trend bias: Short-term recovery in progress. The pair had indeed staged the expected rebound right above the lower limit of the key major support zone at 1.1430 (the former resistance of a basing configuration that occurred in  May 2015/Jun 2016 + lower boundary of a  major ascending channel from Jan 2017 low + 50% Fibonacci of the multi-year up move from Jan 2017 low to 16 Feb 2018 high of 1.2555) and broke above the 1.1590 upper limit of the short-term neutrality zone as it printed a high of 1.1676 in yesterday, 30 May U.S session  (refer to yesterday report). It ended yesterday’s U.S. session with a bullish “Marubozu” liked candlestick pattern that has the longest body since the start of the recent steep decline from 17 Apr 2018. This observation suggest a change in sentiment and further reinforced the potential short-term recovery view, together with the elements as per highlighted in yesterday’s report. Based on current readings from the hourly Stochastic oscillator (inching down from its overbought region) and Elliot Wave/fractal analysis, the pair now faces the risk of a pull-back to retest 1.1590/1570 (yesterday, 30 May U.S. session low + 61.8% Fibonacci retracement of the  on-going up move from 29 May low to yesterday high of 1.1676). Thus, flip back to a bullish bias in any dips above key short-term support now at 1.1510 (29 May 2018 swing low) for a further potential push up to target the next intermediate resistance at 1.1730/1760 (former minor swing low areas of 21 Nov/12 Dec 2017 + 23.6% Fibonacci retracement of the decline from 16 Feb 2018 high to 29 May 2018 low).  However, failure to hold at 1.1510 sees a further residual decline to test the 1.1430 major support.
  • GBP/USD - Trend bias: Risk of short-term mean reversion rebound remains intact. The pair had inched higher and tested the 1.3300 upper limit of the short-term neutrality zone as per highlighted in yesterday report. It printed a high of 1.3307 in yesterday, 30 May European session without any hourly close above 1.3300 before it retreated back and traded in a tight range of 31 pips throughout the U.S. session.  No change, watch the 1.3300 level and an hourly close above it shall validate a potential short-term rebound towards the 1.3480 intermediate resistance (former minor range congestion support from 04/18 May 2018 + 23.6% Fibonacci retracement of the on-going down move from 17 Apr 2018 high to 29 May low of 1.3205) in the first step. On the flipside, failure to hold at 1.3200/3160 opens up scope for a continuation of the down move to target the next support at 1.3000/2880 in the first step (swing low area of 06 Oct/03 Nov 2017 + 61.8% Fibonacci retracement of the multi-year up move from Oct 2016 low to 17 Apr 2018 high of 1.4377).
  • AUD/USD – Trend bias: Revival of short-term mean reversion rebound. The pair did a “flip flop” behaviour where it reintegrated back above the 0.7530 level (the former minor ascending trendline from 09 May 2018 low that was  broken down on Tues, 29 May) and ended yesterday’s U.S. session with a daily bullish candlestick that managed to have a close that reversed the losses seen in the prior 3 days of bearish candlesticks from 25 May to 29 May 2018.  Flip back to a bullish bias in any dips above the key short-term support at 0.7520/7500 (the 61.8% Fibonacci retracement of the on-going push up from 30 May 2018 low to yesterday, 30 May 2018 high of 0.7584) for a further potential push up to target 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). A break below 0.7500 reinstates the bearish tone for a slide towards the next intermediate supports at 0.7450 (minor swing lows of 15/16 May 2018) follow by 0.7410 (swing low of 09 May 2018).
  • NZD/USD – Trend bias: Short-term mean reversion rebound.  The pair had managed to stage a breakout with an hourly close above the 0.6980 upper limit of the short-term neutrality zone that validated a potential short-term rebound scenario within a major complex range configuration in place since Jul 2017 high of 0.7558. Flip to a bullish bias in any dips above 0.6925 key short-term support (61.8% Fibonacci retracement of the on-going push from 30 May 2018 low to 30 May 2018 high of 0.6998 + former minor swing high areas of 17 May/21 May 2018) for a further potential push up to target the next intermediate resistance at 0.7050/7060 (former minor swing high area of 04 May 2018 + Fibonacci projection/retracement cluster).
  • USD/JPY - Trend bias: Risk of short-term mean reversion rebound remains intact. The pair had managed to hold above the 107.80 upper limit of a key medium-term support zone and inched higher towards the 109.10 upper limit of the short-term neutrality zone as per highlighted in yesterday report (printed a high of 109.07 in yesterday, 30 May U.S. session). No change, watch the 109.10 level and an hourly close above it shall validate a potential short-term rebound towards the intermediate resistance at 109.80 (minor swing high of 28 May 2018 + descending trendline from 21 May 2018 high) in the first step. On the flipside, failure to hold at 107.80 sees an extension of the down move to target the lower limit of the key medium-term support zone at 107.35/17 (former congestion resistance from 27 Feb/05 Apr 2018 + Fibonacci retracement/projection cluster).

Stock Indices (CFD) – Potential recovery in progress

  • US SP 500 – Trend bias: Push up within minor range configuration. The Index had managed to hold right at the 2680 key medium-term support (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) as expected and broke above the 2710 upper limit of the short-term neutrality zone which validated the minor push up scenario (refer to yesterday report). Interestingly, the risk sensitive small caps index, the Russell 2000 outperformed the S&P 500 as it recorded a gain of 1.5% in yesterday, 30 May U.S. session versus a gain of 1.27% seen in the S&P 500) and it recorded another fresh all-time high daily close of 1648. This latest observation from Russell 200 coupled with the elements highlighted in yesterday’s report do not translate the a major “risk off” movement yet. Flip back to a bullish bias in any dips with 2696 as the key short-term support for today (61.8% Fibonacci retracement of the on-going up move from 29 May low of 2676 to its intraday high of 2729 + minor congestion zone seen in 29 May, late U.S. session) for a further potential push up to retest the 2738/41 minor range resistance in place since 14 May 2018. An hourly close above 2741 shall trigger a potential fresh impulsive up move to target the next intermediate resistance at 2760/65 in the first step (minor swing high areas of 15/17 Mar 2018 + Fibonacci projection/retracement cluster). However, failure to hold at 2696 negates the bullish tone for a slide back to retest 2680
  • Japan 225 – Trend bias: Short-term recovery in progress. Managed to hold at the 22000 key medium-term support as expected and recorded an hourly close above the 22190 upper limit of the short-term neutrality zone as per highlighted in yesterday report. Flip back to a bullish bias with 22000 as the key support for a further potential push up to target the next intermediate resistance at 22500/620 (minor swing high areas of 25/28 May + descending trendline from 21 May 2018 high). On the other hand, a daily close below 22000 opens up scope for an extension of the down move to target the next support at 21360 (61.8% Fibonacci retracement of the up move from 24 Mar low to 21 May 2018 high + primary ascending channel support from Jun 2016 low).  
  • Hong Kong 50 – Trend bias: Push up within range configuration.  The Index had manged to test and staged a rebound right at the 30000/29900 minor range support of 26 Apr/07 May 2018 which also confluences with an ascending trendline from the medium-term swing low of 09 Feb 2018. Flip back to a bullish bias in any dips above the key short-term support at 29900 for a further potential push up to retest the intermediate resistances of 30500 follow by 30790 (minor swing high areas of 24/28 May 2018). However, failure to hold at 29900 opens up scope for a further down move towards the medium-term range support of 29070 in place since 10 Feb 2018 low.
  • Australia 200 – Trend bias: Short-term recovery in progress.  Managed to hold at the 5980 key medium-term support as expected (support (pull-back support of the former “Symmetrical Triangle” resistance from 09 Jan 2018 + 38.2% Fibonacci retracement of the up move from 04 Apr low to 10 May 2018 high) and broke above the 5990 upper limit of the short-term neutrality zone as per highlighted in yesterday report that validated a short-term push up scenario. Flip back to a bullish bias in any dips above 5988 key short-term support (the minor congestion resistance seen in yesterday, 30 May Asian session + 50% Fibonacci retracement of the on-going up move from 29 May U.S. session low of 5943 to yesterday, 30 May U.S. session high of 6034) for a further potential push up to target the next intermediate resistance at 6068 (minor descending trendline from 14 May 2018 high + 61.8% Fibonacci retracement of the recent decline from 14 May high to 29 May U.S. session low of 5943). Failure to hold at 5988 negates the recovery process for a slide to retest 5943.
  • Germany 30 – Trend bias: Short-term recovery in progress. Managed to hold at the 12630/600 support (former range resistance of a medium-term “bottoming” configuration from early Feb 2018/26 Mar 2018) and staged a breakout with an hourly close above the 12800 upper limit of the short-term neutrality zone as per highlighted in yesterday report (recorded an hourly close of 12825 in the U.S. session). Flip back to a bullish bias in any dips above the 12630/600 key support for a further potential push up to retest the 13000/13050 intermediate resistance (minor swing high area of 28 May 2018 before the recent steep decline occurred) in the first step. On the other hand, an hourly close below 12600 opens up scope for a further potential decline to target the next support at 12400/12300 (61.8% Fibonacci retracement of the up move from 26 Mar low to  22 May 2018 high + primary ascending trendline from Feb 2016 low).

*Levels are obtained from City Index Advantage TraderPro platform




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