Daily Global Macro Technicals Trend Bias/Key Levels (Wed 14 Mar)
Kelvin Wong March 14, 2018 3:49 AM
USD weakness has resurfaced except against the JPY. Yesterday's sell-off in the S&P 500 has not alter bullish technical picture as the short-term uptrend in place since 02 Mar 2018 remains intact.
FX – USD weakness has resurfaced except against the JPY
- EUR/USD – Broke above the 1.2365 upper limit of the short-term neutrality range that was defined in yesterday’s report. The bullish breakout above 1.2365 was reinforced by the latest U.S. CPI data for Feb that came in within expectations (1.8% y/y for ex food & energy). The CPI data and lacklustre wage growth (based on last Fri, 02 Mar NFP data) has indicated a “not too hot” inflationary environment that will allow the Fed to go slow & steady in its interest rate hikes. We turn bullish now for the pair in any dips holding above 1.2340 key short-term support (former minor range resistance of 12/13 Mar 2018 + minor ascending trendline from 09 Mar 2018 low) for a push up towards 1.2460 (76.4% Fibonacci retracement level of the recent decline from 16 Feb 2018 high to the 1.2153 low of 01 Mar 2018). A clearance above 1.2460 shall trigger a potential bullish breakout from the “triangle range” configuration in shape since 16 Feb 2018 high to eye the 16 Feb 2018 high of 1.2555 and even the lower limit of the major resistance zone at 1.2630 (Fibonacci projection cluster + secular descending channel resistance from Jul 2008). However, failure to hold above 1.2430 should damage the bullish tone for another round of choppy down move to retest 1.2310 (lower limit of the “triangle range” in place since 01 Mar 2018 low.
- GBP/USD – Clearance above the 1.3930 upper limit of the short-term neutrality range that was defined in yesterday’s report has indicated a bullish breakout from the “Flag” that was in place since 25 Jan 2018 high (a bullish continuation chart configuration). Turn bullish now in any dips above 1.3910 key short-term support (pull-back support of the “Flag” bullish breakout + former minor range resistance of 06/13 Mar 2018) for a further potential push up to retest 1.4140 in the first step (16 Feb 2018 minor swing high + close to 61.8% Fibonacci retracement of the recent decline from 25 Jan high to 01 Mar 2018 low). On the flipside, failure to hold above 1.3910 should indicate a failure bullish breakout for a slide back to retest 1.3780 (minor swing low of 09 Mar 2018).
- AUD/USD – Rise in progress. No change, maintain bullish bias above 0.7840 key short-term support (former minor range resistance of 06/08 Mar 2018) for a further potential push up to target the 0.7920/7935 near-term resistance (minor swing high areas of 16/20 Feb 2018 + descending trendline from 27 Jan 2018 + Fibonacci cluster). However, failure to hold above 0.7870 should negate the bullish tone for a further slide to retest the lower boundary of the minor ascending channel in place since 01 Mar 2018 low now acting as a support at 0.7800.
- NZD/USD – Continued to push up as expected and almost hit the short-term resistance/target of 0.7370/80 (printed a high of 0.7355 in yesterday, 13 Mar U.S. session). Mix elements now as the 4 hour Stochastic has started to trace out a bearish divergence signal at its overbought region which indicates that the short-term upside momentum of price action has started to abate. Prefer to turn neutral now between 0.7380 & 0.7320 (yesterday, 13 Mar U.S. session low). A break below 0.7320 opens up scope for a deeper pull-back to retest the minor ascending channel support at 0.7280 (in place since 01 Mar 2018).
- USD/JPY – Rallied as expected and hit the first short-term resistance/target of 107.00 (printed a high of 107.29 in yesterday, 13 Mar early U.S. session before it staged a pull-back). Current price action is now hovering above the lower limit of the minor ascending channel from 02 Mar 2018 low which also confluences closely with the key short-term support zone of 106.35/20 (50% Fibonacci retracement of the recent up move from 07 Mar 2018 low to yesterday, U.S. session high of 107.29 + former minor swing high area of 06 Mar 2018). Maintain bullish bias above 106.35/20 support for another round of potential upleg (within medium-term corrective rebound phase) to target 107.50/60 next (range resistance area of mid Feb to 27 Feb 2018). On the other hand, a break below 106.20 support should invalidate the corrective rebound scenario for another round of decline to retest the 105.50 support in the first step.
Stock Indices (CFD) – S&P 500 pull-backed towards key short-term support
- US SP 500 – Yesterday’s earlier gains seen at the start of the U.S. session was wiped out and printed a marginal new minor low of 2758 at the closing hour of the U.S. session which is still above our predefined key pivotal short-term support of 2755/40. The decline is more likely to be reinforced by a media report that the U.S. administration could announce steep tariffs and investment restrictions on China as soon as next week where the narrative of a looming trade war spooked the market. Overall, the short-term uptrend in place since 07 Mar 2018 low remains intact as yesterday’s decline has fulfilled the requirements of a minor degree corrective wave 4 (based on Elliot Wave/fractal analysis) where price actions have retraced 38.2%/50% retracement of the recent up move from 07 Mar 2018 low to yesterday, 13 Mar U.S. session high of 2802). In addition, the 4 hour Stochastic oscillator has dipped into an extreme oversold region coupled with a bullish divergence signal seen in the shorter-term 1 hour Stochastic oscillator . Thus, the decline has reached a significant inflection zone where a new potential upleg may start to materialise. Maintain bullish bias above 2755/35 key short-term support (also now the lower boundary of the minor ascending channel from 02 Mar 2018 low) for a potential up move to retest 2800 before targeting the next intermediate resistance at 2835 in the first step. (minor range resistance from 31 Jan/02 Feb 2018 + upper boundary of the aforementioned minor ascending channel). However, failure to hold above 2740 should see a deeper pull-back towards the next support at 2700/2680 (key medium-term support + lower boundary of the medium-term ascending channel from 06 Feb 2018 low).
- Japan 225 – No change, maintain bullish bias above 21680 key short-term support for a further potential push up to target the intermediate resistance of 22510 (neckline of “Double Bottom” + upper boundary of the minor ascending channel). On the flipside, a break below 21680 should negate the bullish tone to trigger a deeper pull-back to test the next support at 21200/21180 (minor swing low area of 07 Mar 2018).
- Hong Kong 50 – Recalled that we had turn neutral yesterday due to mix elements. Indeed, the Index has shaped the pull-backed below the 31800 medium-term upside trigger level. Right now , it has retraced 38.2% of the recent up move from 07 Mar 2018 low to 13 Mar 2018 high) at 31070 and also right above the minor ascending trendline from 05 Mar 2018 low now acting as a support at 30880 (also the 50% Fibonacci retracement of the up move from 07 Mar 2018 low to 13 Mar 2018 high). In addition, both the hourly & 4 hour Stochastic oscillators have dipped into their respective extreme oversold levels. Flip back to a bullish bias above 30880 key short-term support for a new potential upleg to target the 31800 intermediate resistance in the first step. However, failure to hold above 30880 should invalidate the recovery for a deeper slide to retest the 30100/30070 key medium-term support (refer to latest weekly technical outlook for details).
- Australia 200 – Declined in yesterday, 13 Mar U.S. session and challenged the 5940 key short-term support (printed a low of 5921 in today, Asian session). Interestingly, the hourly Stochastic has shaped a bullish divergence signal at its oversold region which indicates a slow-down in downside momentum of price action. Tolerate the excess and maintain bullish above 5920 support for a potential recover to retest 5990 (yesterday U.S. session high) before 6030 (minor swing of 12 Mar 2018). Below 5920 exposes a further slide to retest the 5880 key medium-term support (refer to latest weekly technical outlook for details).
- Germany 30 – Continued to underperform as it broke below the 12260 key short-term support in yesterday, 13 Mar U.S. session without any negative key Eurozone related economic data releases. Yesterday’s decline is likely to be triggered by a resurgence of EUR strength. Mix elements now, prefer to turn neutral between 11900/800 (major support zone) & 12300 (former minor support of 09 Mar 2018 that was broken down yesterday). A clearance above 12300 is likely to see a revival of the bulls to seek a push up towards the 12600/750 intermediate resistance (neckline of the impending “Double Bottom” in shape since 06 Feb 2018 low).
Commodities – Gold further potential upside towards range resistance
- Gold – Broke above 1326 has invalidated the bearish scenario for a retest on the 1303/1300 support reinforced by USD weakness. Flip back to a bullish bias in any dips above 1317 short-term support (minor swing low area of 13 Mar + ascending trendline support from 01 Mar 2018 low) for a potential push up to retest the minor range resistance of 1340 where recent rallies have been capped on 26 Feb/07 Mar 2018. A break below 1317 reinstates the bears for a slide towards 1303/1300.
- WTI Crude (Apr 2018) - Continued to evolve in a choppy range configuration. No change, maintain neutrality stance between 60.15 (minor swing low areas of 02/09 Mar 2018) & 62.60 (descending trendline from 27 Feb 2018 high + minor swing high of 07 Mar 2018). Failure to hold above 60.15 opens up scope for a deeper slide to retest the medium-term support of 58.30/57.90 (swing low areas of 09 Feb/14 Feb 2018).
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