Daily Global Macro Technicals Trend Bias/Key Levels (Tues 20 Mar)
Kelvin Wong March 20, 2018 3:52 AM
Mix bag in FX spance ahead of FOMC. Further potential USD weakness against GBP. Major stock indices in short-term choppy configurations within longer-term bullish configurations. S&P 500 may see an intraday corrective rebound to retrace yesterday's steep decline. Gold remains under pressure below 1321 resistance while WTI Crude may see a further push up within range configuration.
FX – Mix bag with further potential USD weakness against GBP
- EUR/USD – Broke above 1.2320 short-term resistance has invalidated the short-term push down scenario to target 1.2220/2200 (the former swing low area of 08/10 Mar 2018 – a failure bearish breakdown that occurred on 01 Mar 2018 + Fibonacci projection cluster). Right now, it is likely to be evolving in the middle of a choppy range configuration. Prefer to turn neutral first between 1.2380 (descending trendline from 16 Feb 2018 high + 76.4%v Fibonacci retracement of the prior slide from 14 Mar high to 19 Mar 2018 low) & 1.2290 (former minor swing high area of 17 Mar 2018). Only a break below 1.2290 shall reinstate the short-term bearish tone for a minor decline towards the 1.2220/2200 range support.
- GBP/USD – Broke above the 1.4000 upside trigger level which reinstates the bullish bias of the previous bullish breakout from the “Bullish Flag” continuation configuration from 25 Jan 2018 high reinforced by positive breakthroughs in Brexit talks between EU & U.K. Adjusted the key short-term support to 1.3970 (former minor swing high of 16 Mar 2018 + 61.8% Fibonacci retracement of the on-going up move from 19 Mar 2018 Asia session low to yesterday, European session high) for a further potential push up to target the next intermediate resistance at 1.4145 in the first step (minor swing high of 16 Feb 2018. However, failure to hold above 1.3970 shall negate the bullish tone for a deeper slide back to retest 1.3945/3910 (19 Mar swing low area + minor ascending channel support from 02 Mar 2018 low).
- AUD/USD - Undergoing a minor corrective rebound to retrace the recent steep decline from 14 Mar 2018 high of 0.7916. No change, maintain bullish bias in any bounce below 0.7760/7770 key short-term resistance (former minor congestion areas of 02/06 Mar 2018 + 38.2% Fibonacci retracement of the slide from 14 Mar high to 19 Mar 2018 low) for a further potential push down to target the next near-term support at 0.7655/7640 (former minor range resistance of 27 Nov/05 Dec 2017 + Fibonacci projection cluster). On the flipside, a break above 0.7770 should invalidate the bearish bias for a potential deeper corrective rebound towards the next intermediate resistance at 0.7820/7840 (former minor range resistance from 06/08 Mar 2018 + 61.8% Fibonacci retracement of the slide from 14 Mar high to 19 Mar 2018 low).
- NZD/USD – Rebounded towards the 0.7260 short-term neutrality zone upper limit before it inched back down in yesterday, 19 Mar U.S. session. Mix elements still prevail. No change, maintain neutrality stance between 0.7200/7180 & 0.7260 (former minor swing low of 09 Mar 2018 that capped last Fri, 16 Mar pushed up + 38.2% Fibonacci retracement of the slide seen from 13 Mar high to 16 Mar 2018 low). Only a break below 0.7180 shall validate a further potential direct drop towards the next intermediate support zone at 0.7100/7060 (medium-term ascending trendline from 17 Nov 2017 + Fibonacci projection cluster).
- USD/JPY - Continued to churn within the minor bearish “descending triangle” range configuration in shape since 21 Feb 2018 high. The 4 hour Stochastic oscillator still has potential room to manoeuvre to the upside before it reaches an extreme overbought level of 95%. Therefore as long as the 105.80 short-term support holds (yesterday, 19 Mar U.S. session low), the pair may see a further push up to test 107.00 (aforementioned “descending triangle” range resistance). On the flipside, a break below 105.80 sees a slide back to retest the 106.50/25 key medium-term support (also the ascending trendline from Jun 2016 low)
Stock Indices (CFD) – Potential minor corrective rebound after yesterday steep sell-off in S&P 500
- US SP 500 –In our latest weekly technical outlook (1-3 weeks horizon) published yesterday, we have warned that the prior rally from its 2540/30 major support zone is losing upside momentum below 2800 “Symmetrical Triangle” range resistance. The Index faces the risk of entering into a choppy sideways movement inside the range of 2800 & 2600 as the start of another bullish impulsive upleg of the melt-up phase is being placed on hold. Indeed, our cautious stance is being realised as the Index broke below 2733 and sell-off to print a low of 2693 (a decline of 2.1% from yesterday, 19 Mar Asian session high. As declines do not go all the way down in a straight line fashion plus the Index is still evolving within a medium-term range bound configuration rather than a bearish impulsive downtrend, thus it is likely to see some minor corrective bounces within the aforementioned medium-term “ “Symmetrical Triangle”. Based on Elliot Wave/fractal analysis in conjunction with short-term momentum indicators, yesterday fall has reached a minor inflection level of 2700 (61.8% Fibonacci retracement of the prior up move from 02 Mar low to 13 Mar 2018 high + 1.00 Fibonacci projection of the decline from 13 Mar high to 15 Mar 2018 minor low projected from 16 Mar 2018 minor high of 2761) with the 4 hour Stochastic oscillator that has just started to inch up from its oversold region. Therefore, the Index may see a minor corrective rebound at this juncture holding above 2693 key short-term support towards the near-term resistances of 2750/60 (minor congestion zone formed from 15/16 Mar 2018 + 50%/61.8% Fibonacci retracement of the on-going decline from 13 Mar high to yesterday, 19 Mar U.S. session low). On the flipside, a break below 2693 opens up scope for a further slide towards the next support at 2660 (minor swing low area of 02 Mar 2018).
- Japan 225 – Mix elements in short-term. Prefer to stay neutral between 21100 (yesterday, 19 Mar U.S. session low) & 21700 (minor descending trendline in place since 13 Mar 2018 high). Only a break above 21700 is likely to see a minor rebound towards the next near-term range resistance of 21870 (minor swing high areas of 14/16 Mar 2018 + 76.4% Fibonacci retracement of the slide seen from 13 Mar high to yesterday, 19 Mar U.S. session low).
- Hong Kong 50 – Declined by 1.8% in yesterday, 19 Mar U.S session to print a low of 31128 but still holding above the 31060 key short-term support (38.2% Fibonacci retracement of the up move from 07 Mar 2018 low to 13 Mar 2018 high). No change, maintain bullish bias above 31060 support for a potential rebound towards the 31800 key medium-term upside trigger level (refer to latest weekly technical outlook for details). However, failure to hold above 31060 should invalidate the recovery for a deeper slide to retest the 30100/30070 key medium-term support.
- Australia 200 – Broke below 5934 which invalidated the short-term push up scenario. The Index continues to evolve in a choppy range configuration in place since 27 Feb 2018 high. Since the Index is in the “middle of this range”, prefer to turn neutral now between 5880 (the range support) & 5995 (range resistance – descending trendline from 27 Feb 2018 high).
- Germany 30 – Broke below 12290 and declined towards the lower limit of the minor range configuration at 12115. The 4 hour Stochastic oscillator has just started to inch up from its oversold region which indicates a potential rebound in price action of the Index at this juncture. As long as the 12115 minor range support holds, the Index may see a push up towards the range resistance of 12450. However, failure to hold at 12115 opens up scope for a deeper slide to retest the 11900/800 major support zone.
Commodities – WTI managed to hold at its short-term support
- Gold – Yesterday’s bounce has managed to stall below the 1321 key short-term resistance (also the descending trendline from 16 Feb 2018) coupled with the 4 hour Stochastic oscillator that has floated back up to its overbought region. Maintain bearish bias below 1321 resistance for a potential push down to test the 1303/1300 medium-term range support (lower limit of an impending bullish “Descending Wedge” configuration that is taking shape since 16 Feb 2018 high). On the flipside, a break above 1321 should see a squeeze up to retest minor range resistance of 1327/30 (swing high areas of 08/14 Mar 2018) follow by 1340 (swing high areas of 26 Feb/07 Mar 2018).
- WTI Crude (May 2018) – Yesterday’s fall seen in the U.S. session (19 Mar) has managed to stall right at the predefined 61.44 key short-term support before it reversed up (the former minor swing high area of 15 Mar 2018 + minor ascending trendline from 14 Mar 2018 low as per highlighted in the previous report) No change, maintain bullish bias above 61.44 support for further potential push up to retest the 64.00/64.20 swing high area of 27 Feb 2018 within a medium-term range configuration in place since 25 Jan 2018. However, failure to hold above 61.44 should invalidate the short-term bullish scenario to see another round of choppy decline to retest the 60.15 intermediate range support (minor swing low areas of 02/09 Mar 2018)
*Levels are obtained from City Index Advantage TraderPro platform
StoneX Financial Ltd (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.