Daily Global Macro Technicals Trend Bias/Key Levels (Tues 22 May)

Mix bag in FX space prevails with AUD/USD & NZD/USD see further potential short-term mean reversion rebound. Major stock indices remain in bullish configurations while ASX 200 at risk of undergoing a deeper minor pull-back within its medium-term uptrend.

FX –  Mix bag with further potential short-term mean reversion rebound in AUD/USD & NZD/USD

  • EUR/USD – Trend bias: Sideways with risk of a mean reversion rebound. Yesterday,21 May,  the pair staged a further push down to print a new minor lower low of 1.1717 in the European session in the absence of related economic data releases. The pair is now hovering just above the lower limit of the 1.1730/1700 key short-term support zone when elements that still highlight the possibility of a mean reversion rebound. It ended yesterday U.S. session with a daily bullish  “Hammer” candlestick pattern coupled with a bullish divergence signal seen in its daily RSI oscillator at its oversold which continues to indicate a slowdown in downside momentum of price action. No change, maintain neutrality stance between 1.1700 and 1.1830 (former minor swing low areas of  09/15 May 2018 + minor descending trendline from 19 Apr 2018 high).  A break above 1.1830 (an hourly close above it) is likely to open up scope for a short-term rebound to retest the next intermediate resistance at 1.1970/95  (minor swing high areas of 07/15 May 2018 + 38.2% Fibonacci retracement of the on-going decline from the 17 Apr high to yesterday, 21 May low of 1.1717). On the other hand, failure to hold at 1.1700 sees an extension of the down move to target the key medium-term support zone at 1.1570/1480 (former medium-term range resistance from 15 May 2015/02 May 2016 + medium-term ascending channel support from 03 Jan 2017 low + close to 50% Fibonacci retracement of the 1 year of up move from 03 Jan 2017 low to 16 Feb 2018 high).
  • GBP/USD – Trend bias: Down move extends. A break with an hourly close below the lower limit of the short-term neutrality zone at 1.3430 opens up scope for an extension of the short-term impulsive down move in place since 17 Apr 2018 high. Flip back to a bearish bias with key short-term resistance now at 1.3470 (former minor swing low areas of 10/15/16 May 2018) 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). However, a reintegration back above 1.3470 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 + close to 23.6% Fibonacci retracement of the on-going decline from 17 Apr high to 21 May 2018 low).
  • AUD/USD - Trend bias: Short-term mean reversion rebound in progress. Recalled that in the previous reports we had turned cautious on the short-term downtrend in place since 19 Apr 2018 high where elements that advocated for a mean reversion rebound had surfaced (see yesterday’s report). Indeed, the pair has staged a breakout with an hourly close above the upper limit of the short-term neutrality range at 0.7560. Turn bullish in any dips with key short-term support now at 0.7540 (former minor swing high area of 17 May 2018 + pull-back support of the former minor descending trendline resistance from 11 May 2018 high) 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). However, a break below 0.7540 negates the bullish tone for a deeper pull-back to retest the minor ascending trendline from 09 May 2018 now acting as a support at 0.7510/0.7500.
  • NZD/USD – Trend bias: Short-term mean reversion rebound in progress. The pair staged a breakout with an hourly close above the upper limit of the short-term neutrality range at 0.6938 which increased the probability of  a short-term mean reversion rebound to retrace the 4-weeks of down move from 13 Apr 2018 high to 16 May 2018 low. Turn bullish in any dips with 0.6900 as the key short-term support (minor ascending trendline from 16 May 2018 low) for a further potential push up to target the intermediate resistances of 0.6980 follow by 0.7045/7060 (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).  However, failure to hold at 0.6900 invalidates the short-term mean reversion rebound scenario for a slide back to retest the 16 May 2018 swing low area at 0.6850 and an hourly close below 0.6850 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).
  • USD/JPY - Trend bias: Uptrend remains intact.  Pushed up to hit the intermediate resistance/target of 111.40 as expected before it pull-backed to print a low of 110.95 in yesterday, 21 May U.S. session. No change, maintain bullish bias with adjusted key short-term support now at 110.60 (yesterday, 21 May low + close to 23.6% Fibonacci retracement of the recent up move from 04 May low to yesterday, 21 May high of 111.40) for a further potential push up to retest 111.40 before targeting the lower limit of a major resistance at 112.00 (the major descending trendline from Jun 2015 high + former swing low). However, a break below 110.60 negates the bullish tone for a deeper pull-back towards the 110.00/109.90 support (former range resistance from 03/10 May 2018 + medium-term ascending channel support from 26 Mar 2018 low).  

Stock Indices (CFD) – Bullish configurations remain intact while ASX 200 sees risk of a deeper minor pull-back

  • US SP 500 – Trend bias: Up move likely to have resume. The Index had managed to hold above 2724 minor support  in yesterday, 21 May U.S. session (former minor descending trendline resistance from 14 May 2018 high) after its initial bullish breakout seen in the Asian session. The Russell 2000 (small caps) continued to outperform the S&P 500 as it printed another fresh all-time high daily close of 1637 while the higher beta Technology sector displayed a slight outperformance where its respective sector ETF (XLK) recorded a gain of 0.87% versus a gain of 0.74% seen in the S&P 500 in yesterday, U.S. session.  No change, maintain bullish bias with an adjusted key short-term support now at 2720 (minor ascending trendline from 16 May 2018 low + yesterday’s gapped up) with 2741 (minor swing high of 14 May) as the upside trigger level where an hourly close above it shall reinforce a further potential impulsive upleg to target the next intermediate resistance at 2760/65 next in the first step (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 2720 negates the bullish tone that put the minor consolidation scenario back into play for a slide down to test the 2700/2690 support (pull-back support area of the former medium-term “Symmetrical Triangle” range resistance from 29 Jan 2018).
  • Japan 225 – Trend bias: Up move remains intact. No change, maintain bullish bias in any dips with an adjusted key short-term support now at 22930 (former minor swing high area of 18 May 2018 + minor ascending channel support from 03 May 2018 low) for a further potential push up to target the next intermediate resistances at 23100 follow by 23280 next (Fibonacci projection/retracement cluster + upper boundary of minor ascending channel from 03 May 2018 low). However, failure to hold at 22930 shall negate the bullish tone for another round of pull-back to retest the 22700/620 support (16 May 2018 minor swing low + medium-term ascending channel support from 23 Mar 2018 low).
  • Hong Kong 50 – Trend bias: Push up towards medium-term range resistance. The Index had broken above the upper limit of the short-term neutrality range at 31320 with an hourly close in yesterday, 21 May Asian session before it pull-backed to print a low of 31221.  Turn bullish in any dips with key short-term support at 30860 (18 May, U.S. session swing low area) for a further potential push up  to target 14 May 2018 minor swing high area of 31600 before 31800 (medium-term range resistance where a failure bullish breakout occurred on 21 Mar 2018). On the flipside, failure to hold at 30860 sees a deeper pull-back towards the next intermediate support at 30500/400 (61.8% Fibonacci retracement of the up move from 04 May low to 14 May 2018 high).
  • Australia 200 – Trend bias: Deeper minor pull-back in progress The Index had staged a weak opening in today, 22 May Asian session as it traded lower to challenge the 6054/40 key medium-term support (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). It printed a current intraday low of 6029 and had an hourly close below 6040. The Index is now likely to be underdoing a deeper pull-back within a medium-term uptrend that is still intact from 04 Apr 2018 low. Key short-term resistance now stands at 6064 (former minor swing low areas from 06 May/19 May 2018) for a further potential push down to retest 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). On the other hand, a clearance above 6064 reinstates the bullish tone for a retest on 6098 (18 May 2018 minor swing high) before the range resistance of 6150 in place since 10 May 2018.  
  • Germany 30 – Trend bias: Up move remains intact.  No change, maintain bullish bias with key short-term support remains at 13020 (the former minor range resistance from 11/17 May 2018) for a further potential push up to target the next intermediate resistance at 13245/75 (Fibonacci projection cluster + minor swing high area of 01 Feb 2018 before the previous steep decline of 12% occurred). On the other hand, a reintegration back below 13020 negates the bullish tone for a deeper pull-back to retest the 12900/830 support (lower boundary of the medium-term ascending channel from  04 Apr 2018 low + minor range support from 10/15 May 2018).

*Levels are obtained from City Index Advantage TraderPro platform


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