Daily Global Macro Technicals Trend Bias/Key Levels (Wed 21 Feb)

Mix bag for FX. Major stock indices are still holding above their respective key short-term support while S&P 500 may see a residual push down to test 2690 before a potential upleg materialises. Further weakness in Gold & WTI Crude.

FX – Mix bag

  • EUR/USD – Broke below the 1.2385/2369 key short-term support which invalidated the bullish scenario.  The on-going decline from last Fri, 16 Feb 2018 high of 1.2555 has led the pair to hover a whisker above the 14 Feb 2018 low of 1.2276 (post U.S. Jan CPI data release) which is also confluences with a medium-term ascending trendline support from 18 Dec 2017 low & close to the 23.6% Fibonacci retracement of the current intermediate degree bullish impulsive wave cycle in place since 07 Nov 2017 low to 16 Feb 2018 high). In addition, the 4 hour Stochastic oscillator has traced out a bullish divergence signal at its oversold region. Mix elements for now, prefer to turn neutral between 1.2276 & 1.2435. A break above 1.2435 is likely to revive the bulls to kick start another up leg to target 1.2575 resistance next (1.618 Fibonacci projection of the up move from 10 Feb 2018 low to 14 Feb 2018 minor swing high projected from 14 Feb 2018 low of 1.2276). On the hand, failure to hold above 1.2276 should see a further drift down to test 1.2200 (the neckline support of an impending “Double Top” forming since 01 Feb 2018 high).
  • GBP/USD – Managed to inch higher above the 1.3915 key short-term support (former minor swing high of 13 Feb 2018 + 61.8% Fibonacci retracement of the recent up move from 10 Feb low to 16 Feb 2018 high). Maintain bullish bias above 1.3915 support with 1.4030 as the upside trigger (minor range resistance in place since 20 Feb 2018) to reinforce a further potential push up to target the 1.4270/4310 range resistance in place since 25 Jan 2018 in the first step. On the flipside, failure to hold above 1.3915 should invalidate the upleg scenario for a slide back to retest 14 Feb 2018 low of 1.3800.
  • AUD/USD – Broke below the 0.7890 key short-term support which invalidated the residual push up scenario towards 0.8045.  Now at risk of shaping another minor degree bearish impulsive downleg similar in scale with the previous down move from 27 Jan 2018 high to 09 Feb 2018 low.  Turn bearish below 0.7905 key short-term resistance (today, 21 Feb Asian session current intraday high + minor descending trendline from 16 Feb 2018 high) for a further slide to retest 14 Feb 20187 low of 0.7773 in the first step. On the other hand, a clearance above 0.7905 should reinstate the bulls to eye the recent 16 Feb 2018 swing  high area of 0.7990 before 0.8045 next.
  • NZD/USD – Traded sideways above the 0.7330 adjusted key short-term support (former minor swing high area of 14 Feb 2018 + pull-back support of the former descending trendline from 25 Jan 2018 high + minor ascending channel support from 08 Feb 2018 low).  No change, maintain bullish bias above 0.7330 support with 0.7382 as the upside trigger (minor descending trendline from 16 Feb 2018 high) to reinforce  a further potential push up to target the major resistance of 0.7485/7500 (multi-month range top in place since Sep 2016 + 1.618 Fibonacci projection of the  08 Feb 2018 low to 14 Feb 2018 minor high projected from yesterday low of 0.7240). On the flipside, failure to hold above 0.7330 should invalidate the recovery scenario for a deeper slide to retest the 14 Feb 2018 low of 0.7240 in first step.
  • USD/JPY – Cleared above 106.85 upper limit of the short-term neutrality zone (refer to yesterday report) and squeezed up towards the next near-term resistance zone/target of 107.40/60. Right now, it is coming close the upper boundary of a descending channel in place since 08 Jan 2018 now acting as a resistance at 108.30 which also confluences with the former minor range support from 27 Jan 2018 low & the 0.382% Fibonacci retracement of the recent decline from 08 Jan 2018 high to 16 Feb 2018 low at the 108.50 level.  In addition, the 4 hour Stochastic oscillator has reached an extreme overbought level. Flip back to a bearish stance below 108.50 resistance with 107.05 as the downside trigger (20 Feb 2018 European session low + close to the minor ascending trendline from 16 Feb 2018 low) to reinforce another potential downleg to retest the recent swing low of 105.55. However, a clearance above 108.50 should invalidate the bearish scenario for an extension of the mean reversion rebound to target the next resistance at 110.25 (02 Feb 2018 swing high) in the first step.

Stock Indices (CFD) – Still holding above supports, watch 2690 on the S&P 500

  • US SP 500 – Declined lower in yesterday, 20 Feb U.S. session and challenged the 2720 key short-term support. Yesterday’s lacklustre performance was triggered by a 10% drop in Walmart’s stock as its Q4 earnings missed expectations which led the Consumer Staples to be the worst underperforming sector against the S&P 500 (-2.27% versus -0.58%). Interestingly, the high beta Technology sector had managed to outperform the S&P 500 and even squeezed out a marginal gain of 0.09%.  Short-term momentum indicator, the hourly Stochastic oscillator advocates the risk of shaping a further minor slide in the Index to test the next near-term support at 2690 (minor swing low area of 15 Feb 2018 U.S. session + Fibonacci cluster). Prefer to turn neutral first between 2690 and 2735. A break above 2735 is required to revive the bullish tone for another potential upleg to target  the 2745 resistance (61.8% Fibonacci retracement of the decline from 29 Jan high to 06 Feb 2018 low).
  • Japan 225 – No change, maintain bullish bias above 21570 key short-term support (former minor swing high area of 15 Feb 2018 + minor ascending channel support from 10 Feb 2018 low) for a further potential push up to target the next resistances at 22250 (minor swing high area of 07 Feb 2018) follow by 22800 next (close to 61.8% Fibonacci retracement of the up move from 23 Jan 2018 high to 09 Feb 2018 U.S. session low). However, a break below 21570 should negate the bullish tone for a slide back to retest the 21000 minor swing low areas of 13/14 Feb 2018.
  • Hong Kong 50 – No change, maintain bullish bias in any dips above 30160 key short-term support (minor swing low of 14 Feb 2018 + minor ascending trendline from 09 Feb 2018 low) and a break above 31400 is likely to reinforce another upleg to target the next near-term resistance at 31800/32000 (gapped down formed on 06 Feb 2018 + 61.8%  Fibonacci retracement of the decline from 29 Jan high to 09 Feb 2018 U.S. session low). However, failure to hold above 30160 should negate the bullish tone for a deeper slide to retest  29400/29070 key medium-term support.
  • Australia 200 – No change, maintain bullish bias in any dips above 5870 key short-term support (former minor swing high area of 14 Feb 2018 + minor asecending trendline from 10 Feb 2018) for a further potential push up to target the next near-term resistance at 5990 (pull-back resistance from the minor swing low of 15 Nov 2017 + 61.8% Fibonacci retracement of the recent decline from 09 Jan 2018 high to 09 Feb 2018 U.S. session low). On the flipside, failure to hold above 5870 should negate the bullish tone for a slide back to retest the 5780 key medium-term support set for this week (see latest weekly technical outlook)
  • Germany 30 – Challenged the 12370 key short-term support (printed a low of 12331) before it staged a minor bounce and recorded an hourly close above 12370. Tolerate the excess and maintain bullish bias above 12370/330 support for a potential push up to test the 12650/12845 resistance in the first step (neckline of the minor “Double Bottom” in place since 06 Feb 2018 low + 61.8% Fibonacci retracement of the steep decline from 23 Jan 2018 high). However, failure to hold at 12370/330 should negate the bullish tone for a slide back to retest 14 Feb 2018 swing low area of 12110/12070.

 Commodities – Further potential weakness in Gold & WTI Crude

  • Gold – Broke below 1336 short-term support which has invalidated the upleg scenario towards 1365/1378 major upside trigger level (the neckline resistance of the “Bottoming” configuration in place since Nov 2015 low). Now at risk of shaping a further slide below 1345 key short-term resistance to test the recent 08 Feb 2018 low of 1309. Above 1345 should reinstate the bullish tone for a push up towards 1365/1378.
  • WTI (Apr 2018) – Broke below the 61.60 key short-term support which has invalidated the further minor corrective rebound scenario towards 63.15/63.85 resistance zone (61.8% Fibonacci retracement of the decline from 25 Jan 2018 high to 10 Feb 2018 low + minor swing high area of 06/07 Feb 2018). Turn bearish below key short-term resistance now at 62.17 (20 Feb 2018 U.S. session minor swing high + descending trendline from 20 Feb 2018 low) for a further potential push down to test the next near-term support at 59.60 (15 Feb 2018 minor swing low) in the first step.

*Levels are obtained from City Index Advantage TraderPro platform



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