FX – USD/JPY’s down move overextended, risk of a short-term rebound
- EUR/USD – Trend bias: Down move extension remains intact. The initial bounce seen in the pair had managed to stall right below the predefined 1.1770 key short-term resistance as per highlighted in yesterday report (printed a high of 1.1750 in yesterday, 24 May European session). No change, maintain bearish bias below key short-term resistance at 1.1770 (former minor swing low of 22 May 2018 + 61.8% Fibonacci retracement of the recent slide from 22 May high to 23 May low of 1.1675) for a further potential push down to target the upper limit of the key medium-term support 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). However, a clearance above 1.1770 negates the bearish tone for a squeeze up to retest 1.1820/1850 (the upper boundary of the medium-term descending channel from 19 Apr 2018 high + minor swing high area of 22 May 2018 high).
- GBP/USD - Trend bias: Down move extension remains intact. The earlier bounce seen in the pair (printed a high of 1.3421 in yesterday, 24 May European session) had managed to stall below the 1.3470/90 key short-term resistance as per highlighted in yesterday report. No change, maintain bearish bias below the 1.3470/90 key short-term resistance (former minor swing low areas of 10/15/16 May 2018 + minor descending trendline from 14 May 2018 high) 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). On the other hand, a reintegration back above 1.3490 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).
- AUD/USD - Trend bias: Short-term mean reversion rebound phase remains intact. The pair had continued to inch higher in “babysteps” above the 0.7520 key short-term support. No change, maintain bullish bias aobve the 0.7520 key short-term suppoprt (now the lower boundary of a minor bearish “Ascending Wedge” range configuration in play since 09 May 2018 low + former minor swing high area of 21 Mar 2018) for a further potential push up to retest the recent 22 May minor swing high of 0.7605 before targeting 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 0.7522 invalidates the mean reversion rebound scenario for a continuation of the medium-term down move in place since 26 Jan 2018 high to retest the 0.7450 follow by 0.7415 swing low area of 09 May 2018.
- 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: Down move overextended, risk of a short-term rebound. The pair had continued to plummet below the predefined key short-term resistance at 110.05 as the earlier bounce seen in yesterday, 24 May European session stalled at 109.75 before it dropped towards the support/target of 109.20/108.90 zone (minor swing low areas of 11 May/08 May 2018 + 0.618/0.764 Fibonacci projection of the down move from 21 May 2018 high to 23 May 2018 low projected from 23 May 2018 U.S. session high of 110.32). It printed a low of 108.95 in yesterday, 24 May U.S. session due to a negative knee-jerk reaction from U.S. White House’s announcement to opt out off the upcoming U.S./North Korea Summit. Right now, the 4 hour Stochastic oscillator has flashed out a bullish divergence signal at its oversold region which indicates a slow down in the recent downside momentum price action. In addition, Elliot Wave/fractal analysis suggest that a potential short-term rebound to retrace a completed 5-wave minor degree down move cycle from 21 May 2018 high of 111.40. Therefore, flip to a bullish bias in any dips with 108.90 as the key short-term support for a potential short-term rebound to retest the 110.15/30 intermediate resistance (minor swing high area of 24 May 2018 + minor descending trendline from 21 May 2018 + 50% Fibonacci retracement of the on-going decline from 21 May high to yesterday, 24 May low of 108.95). However, failure to hold at 108.90 sees a continuation of the down move to target the next support at 108.00/107.75 (former medium-term swing high areas of 22/21 Feb/13 Apr 2018 + 50% Fibonacci retracement of the up move from 26 Mar low to 21 May 2018 high).
Stock Indices (CFD) – Medium-term uptrend remains intact
- US SP 500 – Trend bias: Push up within range configuration. The Index had a negative knee-jerk reaction in first 2 hours of yesterday, 24 May U.S. session as it broke below a tightened 2715 key short-term support to print a low of 2707 which was closed to the minor range support of 2700/2690 in place since 16 May 2018 after White House’s announcement to opt out off the upcoming U.S./North Korea Summit. It ended the U.S. session at 2727 and almost recovered it initial losses. In addition, the higher beta stocks outperformed the S&P 500 where the Semiconductor sector (SOX) and NYSE FANG+ managed a small gain of 0.35% and 0.10% respectively over a loss of -0.20% seen in the S&P 500. Therefore, the recent price action of the S&P 500 is more likely a minor range consolidation within a medium-term uptrend phase that is still in play since 03 May 2018 low. Since the Index is still evolving in the aforementioned minor range configuration with its corresponding resistance at 2741, the key short-term support will be at 2700/2690 for now unless we see a clear breakout above 2741 (an hourly close above it), the key short-term support will be adjusted to 2724 (minor congestion area seen in yesterday, 24 May mid U.S. session) for a further potential push up to target the next intermediate resistance at 2760/65 (minor swing high area of 15/16 Mar 2018 + 1.236 Fibonacci projection from 03 May 2018 low).
- Japan 225 – Trend bias: Down move overextended, a short-term rebound looms. The Index had plummeted as expected and hit the support/target of 22290/22200 (minor swing low area of 04 May 2018 + 0.618/0.764 Fibonacci projection of the down from 21 May to 23 May projected from 24 May current intraday high of 22640) as per highlighted in yesterday report. It printed a low of 22079 in yesterday, 24 May U.S. session which is closed to the next medium-term support at 22000 (the former swing high areas of 13 Mar/05 Apr 2018 + 38.2% Fibonacci retracement of the up move from 23 Mar low to 21 May 2018 high). In addition, the 4 hour Stochastic oscillator has flashed a bullish divergence signal at its oversold region which indicates a slowdown in the recent downside momentum of price action. Flip back to a bullish bias in any dips with key short-term support now at 22320 (former minor swing high area of 24 May, U.S. session) for a further potential push up to retest the intermediate resistance at 22680/710 (61.8% Fibonacci retracement of the down move from 21 May high to yesterday, 24 May U.S. session low of 22079 + former minor swing low area of 16 May 2018). On the other hand, failure to hold at 22320 negates the bullish tone for another slide to retest 22079/22000.
- Hong Kong 50 – Trend bias: Unclear. The Index continued to trade sideways after it printed a low of 30437 in yesterday, 24 May U.S. session but still below the minor descending trendline from 21 May 2018 high now acting as a resistance at 30830 which also coincides with the former minor range support from 16/18 May 2018. Mix elements now with a bullish divergence signal seen in the hourly Stochastic oscillator at its oversold region, prefer to turn neutral now between 30830 and 30430. Only a break above 30830 (an hourly close above it) sees a potential push up to retest the recent minor gap resistance (seen on 23 May) at 31200 in the first step. On the flipside, failure to hold at 30430 sees an extension of the on-going slide from 21 May high to target the next intermediate support at 30200 (minor swing high area of 07 May 2018 + minor ascending trendline from 04 Apr 2018 low).
- Australia 200 – Trend bias: Pull-back target met, potential start of new uleg within a medium-term uptrend in play since 04 Apr 2018. The Index had continued to slide down as expected and almost met the support/target of 5980 as per highlighted in yesterday report (it printed a low of 5983 in yesterday, 24 May U.S. session). The 5980 is considered a medium-term support which is defined by the former medium-term “Ascending Wedge” resistance from 09 Jan 2018 high where the Index ended yesterday’s U.S. session with a daily “Long-legged “Doji” candlestick pattern coupled with a bullish divergence signal seen in the 4 hour Stochastic oscillator. These observations suggest that the recent downside momentum of price action has started to abate. Flip back to a bullish bias with key support at 5980 in any dips for a potential push up to retest the 6080 intermediate resistance in the first step (minor descending trendline from 14 May 2018 high + 61.8% Fibonacci retracement of the decline from 14 May high to yesterday, 24 May U.S. session low of 5983). However, failure to hold at 5980 sees an extension of the down move to target the next support at 5900/870 (the former swing high areas of 18/19 Apr 2018 + 61.8% Fibonacci retracement of the up move from 04 Apr low to 10 May 2018 high).
- Germany 30 – Trend bias: Pull-back target met, potential start of new uleg within a medium-term uptrend. The Index had dropped as expected and met the key medium-term support/target of 12850 as per highlighted in yesterday report (printed a low of 12800 in yesterday, 24 May opening U.S. session before it reversed up above 12850 in the mid U.S session). Positive elements have started to surface where the daily RSI oscillator had manged to hold at its corresponding support at the 50% level coupled with a bullish divergence signal seen in the 4 hour Stochastic oscillator. These observations suggest a slowdown in the recent downside momentum of price actions. Flip back to a bullish bias above in any dips above the 12850 key medium-term support for a further potential push up to retest the 13050/60 intermediate resistance in the first step (the former minor swing low areas of 18/22 May 2018 + 61.8% Fibonacci retracement of the recent drop from 22 May high to yesterday, 24 May low of 12800). On the other hand, failure to hold at 12850 opens up scope for an extension of the pull-back towards the next support at 12630 (the former neckline resistance of a “bottoming” configuration that was formed in early Feb 2018 + 38.2% Fibonacci retracement of the 3-month up move from 26 Mar low to 22 May 2018 high).
*Levels are obtained from City Index Advantage TraderPro platform
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