Daily Global Macro Technicals Trend Bias/Key Levels (Wed 09 May)

USD strength resumes except in GBP. Stock Indices are still holding above supports while S&P 500 had shaped the expected minor pull-back.

FX –  USD strength resumes except in GBP

  • EUR/USD – Trend bias: Downtrend extends. The pair had broken below the 1.1890 key short-term support and invalidated the short-term mean reversion rebound scenario (printed a low of 1.1838 in yesterday, 08 May U.S. session). Flip back to a bearish bias in any bounce below 1.1940 key short-term resistance (former minor swing low area of 03/04 May 2018 + close to 23.6% Fibonacci retracement of the on-going decline from 19 Apr high to 08 May 2018 low) for a further potential down move to target the next support at 1.1740/1700 next the swing lows area of 21 Nov/12 Dec 2017 + 38.2% Fibonacci retracement of the 1 year of up move from 03 Jan 2017 low to 16 Feb 2018 high + 2.618 Fibonacci projection of the down move from 27 Mar 2018 high). However, a clearance above 1.1940 brings back the mean reversion rebound into play for a push up towards 1.2030 and an hourly close above 1.2030 is likely to reinforce a further up move to target the next intermediate resistance at 1.2130/2180.
  • GBP/USD - Trend bias: Holding above short-term support, risk of mean reversion rebound/consolidation (low conviction). The pair had managed to hold above the 1.3430 key short-term support s and ended yesterday, 08 May U.S. session with a daily “Long-legged Doji” candlestick pattern. This observation in sentiment indicates an indecisiveness in the bears to push prices lower. Maintain bullish bias but with a low conviction due to USD strength seen in the rest of the major pairs with 1.3430 remains as the 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 added 1.3590 as an upside trigger level (minor range top from 04/05 May 2018) for 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 + 23.6% Fibonacci retracement of the on-going slide from 17 Apr high to 04 May 2018 low). On the other hand, failure to hold at 1.3430 sees an extension of the down move towards 1.3280/3200 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: Downtrend extends. The pair had staged a bearish breakdown from the lower limit of the neutrality zone at 0.7490. Flip back to a bearish bias in any bounce below 0.7495 key short-term resistance (former minor ascending trendline from 01 May 2018 low + minor descending trendline from 04 May 2018 high) for a further potential down move to target the next intermediate support at 0.7370/0.7330 next (the swing low areas of 08 May/01 Jun 2017 + 61.8% Fibonacci retracement of the up move from 15 Jan 2016 low to 26 Jan 2018 high). However, a clearance above 0.7495 sees a push up to retest 0.7550 (04 May 2018 minor swing high formed from the recent rebound from 01 May low) and an hourly close above 0.7550 is likely to see the start of a potential mean reversion rebound towards the next intermediate resistance at 0.7600/7640 (the former swing low areas of 29 Mar/09 Apr 2018 + 38.2%/50% Fibonacci retracement of the down move from 19 Apr high to 01 May 2018 low).
  • NZD/USD - Trend bias: Downtrend extends. The pair had staged a bearish breakdown from the lower limit of the neutrality zone at 0.6985. Flip back to a bearish bias in any bounce below 0.7000 key short-term resistance (former minor swing low areas from 02/07 May 2018 low + minor descending trendline from 28 Apr 2018 high) for a further potential down move to target the next intermediate support at 0.6930/6910 next (former swing high area of 09 Nov 2017 + 76.4% Fibonacci retracement of the up move from 17 Nov 2017 low to 16 Feb 2018 high) A break below 0.6910 sees a further downside extension towards the medium-term support of  0.6820 (swing low areas of 11 May/17 Nov 2017). However, a clearance above 0.7000 puts the mean reversion rebound scenario into play for a push up to retest 0.7095/71185 (the minor swing high areas of 26/28 Apr 2018 + 38.2% Fibonacci retracement of the on-going decline from 13 Apr high to 08 May 2018 low).
  • USD/JPY - Trend bias: Up move resumes.  The pair has stage a bullish breakout from the upper limit of the neutrality zone at 109.40. Flip back to a bullish bias in any dips above 109.20 key short-term support (former minor swing high area of 08 May 2018 + 50% Fibonacci retracement of the current push up from yesterday, 08 May low of 108.81 to today, 09 May current Asian session high of 109.64) for a further potential up move to target the 110.85/111.00 resistance the 110.85/111.00 resistance (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 109.40 negates the bullish tone for a slide back to retest the 108.70 minor range support in place since 04 May 2018 low and only a break below 108.70 (an hourly close below it) triggers a deeper pull-back towards the key medium-term support zone of 107.80/40 (former medium-term swing high area of 21 Feb 2018 + 50% Fibonacci retracement of the on-going up move from 26 Mar low to 02 May 2018 high).  

Stock Indices (CFD) – Holding above supports

  • US SP 500 – Trend bias: Minor pull-back met the 2656/48 targeted zone, push up to resume. The Index had pull-backed as expected towards the 2656/48 zone (the minor ascending trendline from 03 May 2018 low + 38.2%/50% Fibonacci retracement of the on-going up move from 04 May 2018 low to yesterday, 07 May high of 2683) before it staged a rebound at the last hour of yesterday, 08 May U.S. session to close at 2672 which was just 0.4% away from this Mon, 07 May high of 2683 before the pull-back started. In addition, the hourly Stochastic oscillator has flashed a bullish divergence signal at its oversold region. Maintain bullish bias with an adjusted key short-term support now at 2654 (yesterday, 08 May U.S. session low). for another potential upleg to retest 2685/90 before targeting the 2720 key “Symmetrical Triangle” range resistance. However, a break below 2654 negates the bullish tone for a deeper pull-back towards the 2634 support (former minor swing high area of 04 May 2018, the first rebound from the 03 May2018 low of 2593).
  • Japan 225 Trend bias: Push up towards range resistance/key medium-term upside trigger. No change, maintain bullish bias with 22340 remains the key short-term support for a further potential push up to target the 22710 range resistance/medium-term upside trigger level (61.8% Fibonacci retracement of the decline from 23 Jan high to 23 Mar 2018 low). However, failure to hold at 22340 see a slide back to retest last week  low of 22088.
  • Hong Kong 50Trend bias: Pushed up towards range resistance in progress. Maintain bullish bias with an adjusted key short-term support now at 30200 (yesterday, 08 May U.S. session low + minor ascending trendline from 07 May 2018 low) for a further potential push up to retest the minor range resistance of 30760/830 follow by 31100 (minor swing high area of 12 Apr 2018). On the flipside, failure to hold at 30200 sees another round of choppy decline to retest the minor range support of 30000/29900 in place since 18 Apr 2018.
  • Australia 200 – Trend bias: Uptrend remains intact. Traded sideways above 6078 key short-term support (refer to yesterday report). No change, maintain bullish bias for a further potential push up to target the next intermediate resistance at 6150 (09 Jan 2018 swing high area). On the other hand, a break below 6078 negates the bullish tone for a pull-back to retest 6054 (minor range support in place since 03 May 2018 low).
  • Germany 30Trend bias: Uptrend remains intact. Pull-back had managed to hold right above the 12808 predefined adjusted key short-term support (printed a low of 12855 in yesterday, 08 May European session). No change, maintain bullish bias for a further potential push up to target 13020 before 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 + upper boundary of a minor ascending channel from 04 Apr 2018 low). However, failure to hold at 12808 negates the bullish tone for a deeper pull-back to retest the 12700/12620 support (minor swing low area of 03 May 2018 + lower boundary of a minor ascending channel from 04 Apr 2018 low).

Commodities – Wild swing in WTI Crude but managed to hold above its range support of its recent minor consolidation phase before the bullish breakout

  • WTI Crude (Jun 2018) – Whipsawed around the 69.40/30 first short-term support as it broke below 69.30 after the announcement of that U.S will leave the Iran nuclear deal that lead to uncertainty in the geopolitics scene in Middle East.  Interestingly, the sell-off stalled right above the second short-term support of 67.15 (minor range bottom from 23 Ap/02 May 2018) as it printed a low of 67.65 and reversed back up above the 70.00 handle.  Technically, the short-term uptrend from 04 Apr 2018 low remains intact after the bullish breakout from the 3-weeks of minor range consolidation triggered on last Fri, 04 May. No change, tolerate the excess and maintain bullish bias above 67.15 key short-term support 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). However, a break below 67.15 shall negate the bullish tone for another round of choppy decline towards the next support at 60.18/58.95 (the swing low areas of 01 Mar/09 Feb 2018).
  • Gold - Trend bias: Unclear. No change, maintain neutrality stance between 1300 and 1323 (former minor swing low areas of 29 Mar/23 Apr 2018). Only a break above 1323 (an hourly close above it) sees a potential push up towards the next intermediate resistance at 1334/41 (the minor descending resistance from 11 Apr 2018 high + former minor swing low of 13 Apr 2018) within a major sideways range configuration in place since 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.