Daily Global Macro Technicals Trend Bias/Key Levels (Tues 15 May)

Short-term USD strength setback scenario remains intact. Stock indices residual push up before minor pull-back/consolidations within medium-term bullish configurations.

FX –  Short-term USD strength setback scenario remains intact

  • EUR/USD – Trend bias: Short-term mean reversion rebound phase remains intact. The pair had inched higher and met the short-term resistance/target of 1.1990/1.2000, refer to previous report (printed a high of 1.1996 in yesterday, 14 May U.S. session) before it staged a slide of 76 pips to end the U.S. session with a low of 1.1920. Based on Elliot Wave/fractal analysis, the pair is likely to have completed the first phase of the short-term minor reversion rebound from 09 May 2018 low of 1.1821 as it had completed a 5  wave structure of the minor degree wave at the 1.1990/1.2000 intermediate resistance and yesterday’s slide is likely to be a wave b retracement (still in progress) before another minor degree wave c materialises (potential second phase of the mean reversion rebound). Maintain bullish bias in any dips with key short-term support now at 1.1885 (the former minor swing high area of 096 May 2018 that had been tested and held on 11 May 2018 + 61.8% Fibonacci retracement of the up move from 09 May low to 14 May 2018 high) for another potential upleg to retest 1.1996 before targeting the next intermediate resistance at 1.2050/2070 (38.2% Fibonacci retracement of the decline from 17 Apr high to 09 May 2018 low + former medium-term swing high areas of 29 Aug/08 Sep 2017/04 Jan 2018). On the other hand, failure to hold at 1.1885 will put the mean reversion rebound scenario at risk for a further slide to retest the 09 May 2018 low of 1.1822.
  • GBP/USD - Trend bias: Short-term mean reversion rebound scenario remains intact.  The pair had staged another push up attempt (the 3rd time) at the 1.3607 upside trigger level as it printed a high of 1.3608 without an hourly close above 1.3607 and staged a pull-back to print a low of 1.3553 in yesterday, 14 May U.S. session. Yesterday’s price action has started to traced out a minor bullish reversal chart pattern; “Inverse Head & Shoulders” in place since 08 May 2018 low with its neckline resistance at 1.3607. No change, maintain bullish bias  with 1.3430 remains as key short-term support (swing low area of 11 Jan 2018 + 38.2% Fibonacci retracement of the 16-month up move from 16 Jan 2017 high to 17 Apr 2018 high) and 1.3607 as the upside trigger (an  hourly close above it) to reinforce a potential push up to target the next intermediate resistance at 1.3700/3760 (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 other hand, failure to hold at 1.3430 sees an extension of the down move towards 1.3280/3200 support next (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: Short-term mean reversion rebound remains intact. Pull-backed from last Fri, 11 May high of 0.7566 and continued to hold above the 0.7520 key short-term support after the latest RBA monetary policy meeting minutes that indicated that inflationary pressures remained subdued due to sluggish wage growth in AU. No change, maintain bullish bias with 0.7520 remains the key short-term support for a potential push up to retest the recent minor swing high area of 0.7560 before targeting the medium-term resistance of 0.7600/7640 (the former swing low areas of 29 Mar/09 Apr 2018 + 50% Fibonacci retracement of the down move from 19 Apr high to 01 May 2018 low + pull-back resistance of the former major bearish “Ascending Wedge” support from Jan 2016 low).  On the other hand, a break below 0.7520 negates the bullish tone for a deeper pull-back towards the 0.7490/7470 (50%/61.8% Fibonacci retracement of the on-going rebound from 09 May low to 11 May high).
  • NZD/USD - Trend bias: Unclear. No change, maintain neutrality stance between 0.70000 and 0.6900. Only a break above 0.7000 (an hourly close above it) puts the mean reversion rebound scenario into play for a push up to retest the next intermediate resistance at 0.7095 (the minor swing high areas of 26/28 Apr 2018 + 38.2% Fibonacci retracement of the on-going decline from 13 Apr high to 10 May 2018 low).
  • USD/JPY - Trend bias: Minor consolidation within medium-term uptrend in place since 26 Mar 2018 low. The pair has continued to evolve within a potential minor bullish continuation/consolidation chart pattern; “Ascending Triangle” in place since 02 May 2018 high with the upper limit of the triangle acting as a near-term resistance at 110.00.  No change, maintain neutrality stance between 109.35/20 and 110.00. On a break above 110.00 (an hourly close above it) is likely to open up scope for another potential upleg to target 110.85/111.00 resistance next (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).  On the other hand, failure to hold at 109.35/20 triggers a deeper slide back to retest the 108.70 minor range support in place since 04 May 2018 low.

Stock Indices (CFD) – Potential residual push up before risk of pull-back/consolidation

  • US SP 500 – Trend bias: Residual push up before risk of pull-back/consolidation. Pushed up higher as expected in yesterday, 14 May early U.S. session to print a high of 2741 before it pull-backed to a low of 2725. The first short-term resistance/target of 2743 almost met ((1.00 Fibonacci projection of the up move from 03 May 2018 low + minor swing high area of 22 Mar 2018). The 4 hour Stochastic oscillator is coming close to its oversold region coupled with a bullish divergence signal seen in the hourly Stochastic oscillator at its oversold region. These observation from momentum indicators suggest that the downside momentum of yesterday’s slide in price action has started to abate. Maintain bullish bias with an adjusted key short-term support now at 2716 (minor swing low areas of 11/12 May 2018 + minor ascending channel support from 03 May 2018 low + 23.6% Fibonacci retracement of the recent up move from 9 May low to 14 May 2018 high) for a potential residual push up to target the next intermediate resistance at 2760/65 (minor swing high area of 15/16 Mar 2018 + 1.236 Fibonacci projection from 03 May 2018 low). On the other hand, failure to hold at 2716 triggers the start of a deeper pull-back to retest 2700/2690 (the pull-back support of former medium-term “Symmetrical Triangle” range resistance from 29 Jan 2018 high).
  • Japan 225 – Trend bias: Residual push up before risk of pull-back/consolidation. Maintain bullish bias in any dips with adjusted key short-term support now at 22700 (minor ascending channel support from 03 May 2018 low + 23.6% Fibonacci retracement of the on-going up move from 03 May low to today, 15 May current Asian session high of 22906) for a potential residual push up to target the intermediate resistance zone of 23000/23090 (psychological + former minor swing low area of 31 Jan 2018 + minor ascending channel resistance from 03 May 2018 low). However, failure to hold at 22700 triggers a deeper pull-back to retest the 22550 support (former minor swing high areas of 02/08 May 2018 + ascending channel support from 03 Apr 2018 low).
  • Hong Kong 50 – Trend bias: Push up towards medium-term range resistance in progress. Today, 15 May Asian session drop in price action from yesterday, 14 May U.S. session high of 31628 is now coming close to the 30970/800 short-term support. No change, maintain bullish bias in any dips above key short-term support at 30970/800 (former minor range resistance from 20 Apr/10 May 2018 + 23.6% Fibonacci retracement of the on-going up move from 04 May low to 14 May U.S. session high of 31628 ) for a further potential push up to target the 31800 medium-term range resistance (the failure bullish breakout that occurred on 21 Mar 2018). However, a break below 30800 shall invalidate the further push up scenario for another round of choppy decline towards the next support at 30500/400 (former minor swing high area of 08 May 2018 + 61.8% Fibonacci retracement of the on-going up move from 04 May low to today, 11 May U.S. session high of 31346).
  • Australia 200 – Trend bias: Residual push up before risk of pull-back/consolidation. No change, maintain bullish bias with key short-term support remains at 6087 (minor range bottom in place since 08 May 2018) for a further potential push up to retest the 6150 intermediate resistance (swing high area of 09 Jan 2018 that has been retested again recently on last Thurs, 10 May). However, failure to hold at 6087 triggers 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: Residual push up before risk of pull-back/consolidation. No change, maintain bullish bias with 12930/900 remains at the key short-term support (minor swing low of 10 May 2018 + close to the 23.6% Fibonacci retracement of the on-going up move from 01 May 2018 low to 10 May U.S. session high of 13037) for a further potential push up to target the next intermediate resistance at 13140/150 (76.4% Fibonacci retracement of the steep down move from 23 Jan high to 06 Feb 2018 low). However, failure to hold at 12930/900 negates the bullish tone for a deeper pull-back to retest the 12830/800 support (minor swing low area of 07 May 2018 + ascending channel support from 04 Apr 2018 low).

Commodities – WTI Crude still at risk of undergoing a deeper pull-back

  • WTI Crude (Jun 2018) – Trend bias: Unclear. Staged another attempt to break below 70.46 as it printed a low of 70.27 in yesterday, 14 May European session before it traded back up. No change, maintain neutrality stance between 70.27 and 71.63 (minor swing high area of 11 May 2018).  Only a break above 71.63 (an hourly close) is likely to reinstate the bullish tone for 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: Unclear. Continued to trade sideways, maintain neutral stance between 1326 and 1300. Only a break above 1326 (an hourly close above it) sees a potential push up towards the next intermediate resistance at 1341/50(50%/61.8% Fibonacci retracement of the recent decline from 11 Apr high to 01 May 2018 low + minor congestion area of 16/19 Apr 2018) within a major sideways range configuration in place Jul 2016.

*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.