Daily Global Macro Technicals Trend Bias/Key Levels (Wed 30 May)

EUR/USD is now testing the lower limit of a key medium-term major support zone at 1.1430 with S&P 500 back at key medium-term support zone of 2680.

FX –  EUR/USD at major support zone

  • EUR/USD – Trend bias: Risk of short-term mean reversion rebound. The pair had continued to extend its expected down move and hit the upper limit of a major support/target at 1.1590/70  (former medium-term range resistance from 15 May 2015/02 May 2016 + lower boundary of medium-term descending channel from 19 Apr 2018 high + Fibonacci projection cluster -  refer to previous report) reinforced by the on-going political crisis in Italy and Spain that drew similarities with the 2011 European sovereign debt crisis triggered by Greece. Technically, the pair is now hovering just above the lower limit of the key major support zone at 1.1430 (the former resistance of a basing configuration that occurred in  May 2015/Jun 2016 + lower boundary of a  major ascending channel from Jan 2017 low + 50% Fibonacci of the multi-year up move from Jan 2017 low to 16 Feb 2018 high of 1.2555) with the daily RSI oscillator coming close to an extreme oversold level of 16% last seen in Mar 2015 that coincided with lower limit of the “basing configuration” formed in May 2015/Jun 2016. These observations suggest an extended down move in the making, thus prefer to turn neutral first between 1.1430 and 1.1590 (yesterday, 29 May U.S. session high). An hourly close above 1.1590 is likely to trigger a short-term rebound towards 1.1730 intermediate resistance (minor swing high areas of 25/28 May 2018 + minor descending channel from 19 Apr 2018 high). On the other hand, failure to hold at 1.1430 opens up scope for a continuation of the down move to target the next support at 1.1340/1315 in the first step (swing low area of 04 Jul 2017 + 1.00 Fibonacci projection of the down move from 27 Mar 2018 high to 09 May 2018 low projected from 14 May 2018 high).
  • GBP/USD - Trend bias: Risk of short-term mean reversion rebound. The pair tumbled and hit the expected supports/targets at 1.3280/1.3200 (refer to previous report) as printed a low of 1.3205 in yesterday, 29 May European session.  Elements are mix now as the daily RSI oscillator is now coming close to an extreme oversold level of 15% last seen in 11 Oct 2016 which suggests that the recent down move may be overextended. Prefer to turn neutral now between 1.3200/31600 (50% Fibonacci retracement of the multi-year up move from Oct 2016 low to 17 Apr 2018 high of 1.4377) & 1.3300 (former minor swing low areas of 23/26 May 2018). An hourly close above 1.3300 is likely to trigger a short-term rebound towards the 1.3480 intermediate resistance (former minor range congestion support from 04/18 May 2018 + 23.6% Fibonacci retracement of the on-going down move from 17 Apr 2018 high to yesterday, 29 May low of 1.3205). On the other hand, failure to hold at 1.3160 opens up scope for a continuation of the down move to target the next support at 1.3000/2880 in the first step (swing low area of 06 Oct/03 Nov 2017 + 61.8% Fibonacci retracement of the multi-year up move from Oct 2016 low to 17 Apr 2018 high of 1.4377).
  • AUD/USD – Trend bias: Medium-term down move resumes. Broke below the 0.7520 key short-term support in yesterday, 29 May European session that invalidated the residual upleg of the short-term mean reversion rebound phase in place since 09 May 2018 low. The pair continued to drift lower in today, 30 May Asian session to print a current intraday low of 0.747 reinforced by U.S. President Trump signalled his intention to push ahead to impose tariffs on US$ 50 billion in China imports which out the on-going U.S./China trade negotiations in jeopardy. Flip back to a bearish bias in any bounce below key short-term resistance at 0.7530 (former minor swing low of 23 May 2018 + minor descending trendline from 28 May 2018 high) for a further potential push down to target the next intermediate supports at 0.7450 (minor swing lows of 15/16 May 2018) follow by 0.7410 (swing low of 09 May 2018). However, a clearance above 0.7530 reinstates the short-term mean reversion rebound scenario towards 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).
  • NZD/USD – Trend bias: Sideways.  Continued to churn within the short-term neutrality zone. No change, maintain neutrality stance between 0.6900/6880 and 0.6980. A break (an hourly close) below 0.6880 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). On the flipside, bulls need to break above 0.6980 (an hourly close above it) to reinstate the mean reversion rebound scenario towards 0.7045/7060 intermediate resistance (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). 
  • USD/JPY – Trend bias: Risk of short-term mean reversion rebound. The pair broke below the 108.90 key short-term support after the rebound failed to hit the 110. 15/30 zone (printed a high of 109.83 on 28 May) before it tumbled to a low of 108.11 seen in yesterday, 30 May 2018 U.S. session. Technically, the pair is now coming close to the upper limit of a key medium-term support zone at 107.80 (the former swing high area of 21 Feb 2018 + 50% Fibonacci retracement of the up move from 26 Mar 2018 low to 21 May 2018 high) with a bullish divergence signal seen in the 4 hour Stochastic oscillator at its oversold region. Thus, prefer to turn neutral first between 107.80 and 109.10 (yesterday, 29 May high that was rejected right at the former minor swing low area of 24 May 2018). An hourly close above 109.10 is likely to trigger a short-term rebound towards the 1.3480 intermediate resistance at 109.80 (minor swing high of 28 May 2018 + descending trendline from 21 May 2018 high).

Stock Indices (CFD) –  S&P 500 back at key medium-term support of 2680

  • US SP 500 – Trend bias: Sideways. The Index had tumbled towards the 2680 key medium-term support (the pull-back support of the former “Symmetrical Triangle” range resistance from 29 Jan 2018 high) and manged to hold at the level towards the end of yesterday, 29 May U.S. session.  In addition, the higher beta S&P Technology sector continued to fare better than the benchmark S&P 500 where its ETF (XLK) recorded a loss of -0.57% versus a wider loss of -1.16% seen in the S&P 500 in yesterday, 29 May U.S. session, not a typical usual sector performance as high beta stocks should underperform the general market in a major risk off environment.  Prefer to turn neutral first between 2680 and 2710 (yesterday, 29 May U.S. session high).  An hourly close above 2710 is likely to trigger a potential short-term rebound to retest the 2738/41 minor range resistance in place since 14 May 2018. A daily close below 2680 shall see another round of  down leg extension towards the 2585 support of the 4-month range configuration in place since early Feb 2018.
  • Japan 225 – Trend bias: Sideways. The Index had tumbled and it is now testing the 22000 key medium-term support (38.2% Fibonacci retracement of the up move from 23 Mar to 21 May 2018 high &former congestion range resistance from 13 Mar/16 Apr 2018) in line with overnight weakness seen in the USD/JPY. The 4 hour Stochastic oscillator has traced out an impending bullish divergence signal at its oversold region which suggests overextended downside momentum. Prefer to turn neutral now between 22000 and 22190 (yesterday, 29 May U.S. session high) for the Index with the USD/JPY that is also hovering above the upper limit of a key medium-term support zone at 107.80. An hourly close above 22190 is likely to trigger a potential short-term rebound to retest the 22500/620 intermediate resistance (minor swing high areas of 25/28 May + descending trendline from 21 May 2018 high). A daily close below 22000 opens up scope for an extension of the down move to target the next support at 21360 (61.8% Fibonacci retracement of the up move from 24 Mar low to 21 May 2018 high + primary ascending channel support from Jun 2016 low).  
  • Hong Kong 50 – Trend bias:  Sideways. The Index had broken below the lower limit of the short-term neutrality zone at 30430 and tumbled straight towards the 30000/29900 range support of 26 Apr/07 May 2018.  Mix elements now as the 4 hour Stochastic oscillator has flashed an impending bullish divergence signal at its oversold region. Prefer to remain neutral between 29900 & 30460 (former minor swing low of 24 May 2018 + minor descending trendline from 21 May 2018 high). An hourly close above 30460 reinstates a potential short-term rebound towards 30830/900 (minor swing high areas of 24/28 May). On the other, failure to hold at 29900 opens up scope for a further down move towards the medium-term range support of 29070 in place since 10 Feb 2018 low.
  • Australia 200 – Trend bias:  Sideways.  The Index is now testing the 5980 key medium-term support (pull-back support of the former “Symmetrical Triangle” resistance from 09 Jan 2018 + 38.2% Fibonacci retracement of the up move from 04 Apr low to 10 May 2018 high) with mix elements. It printed an intraday low of 5944 in today, 30 May Asian session before it staged a bounce back towards 5980.  Prefer to turn neutral first between 5980 and 5990 (former minor swing low areas of 24/28 May 2018 + 23.6% Fibonacci retracement of the on-going slide from 14 May 2018 high to today, 30 May current intraday low of 5944).  An hourly close above 5990 sees a potential short-term rebound towards the intermediate resistance zone of 6045/60 (minor swing high area of 24 May 2018 + 50% Fibonacci retracement of the on-going slide from 14 May 2018 high to today, 30 May current intraday low of 5944).  A daily close below 5980 invalidates the medium-term uptrend and opens up scope for further decline towards the next support at 5870/50 (the former minor swing high areas of 27 Mar/10 Apr 2018 & 61.8% Fibonacci retracement of the up move from 04 Apr low to 10 May 2018 high).
  • Germany 30 – Trend bias: Sideways. The Index broke below the 12800 key medium-term support which put the on-going medium-term uptrend in place since 26 Mar 2018 low in jeopardy reinforced by the on-going political crisis in Italy and Span. The on-going decline from 28 May 2018 high of 13040 has led the Index to test the former range resistance of a medium-term “bottoming” configuration from early Feb 2018/26 Mar 2018 now turns pull-back support at 12630/600. Mix elements now, prefer to turn neutral first between 12600 and 12800. An hourly close below 12600 opens up scope for a further potential decline to target the next support at 12400/12300 (61.8% Fibonacci retracement of the up move from 26 Mar low to  22 May 2018 high + primary ascending trendline from Feb 2016 low). A clearance above 12800 sees a potential short-term rebound to retest  13000/13050 intermediate resistance (minor swing high area of 28 May 2018 before the recent steep decline occurred).

*Levels are obtained from City Index Advantage TraderPro platform



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