Daily Global Macro Technicals Trend Bias Key Levels Wed 03 Jan

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By :  ,  Financial Analyst

FX – Risk of a mean reversion USD rally to retrace 3 weeks of USD weakness

  • EUR/USD – Risk of minor pull-back to retrace the recent rally in place since 12 Dec 2017 where both the 4 hour RSI & Stochastic oscillators have reached extreme overbought levels. In addition, Elliot Wave/fractal analysis suggests that a minor degree bullish impulsive wave iii since 22 Dec 2017 low of 1.1815 is coming to  its potential end target at 1.2085 (1.1618 Fibonacci projection) which also coincides with the 1.2090 medium-term swing high printed on 08 Sep 2017. Turn bearish below 1.2090 key short-term resistance for a potential mean reversion decline towards the near-term support of 1.1995/1980 (Fibonacci retracement cluster + minor ascending trendline from 18 Dec 2017 low).
  • GBP/USD – Up move from 26 Dec 2017 low is now coming close to a significant short-term resistance of 1.3615 (upper boundary of the minor ascending channel from 26 Dec 2017 low +  Fibonacci projection cluster) coupled with extreme overbought readings seen in both the 4 hour RSI & Stochastic oscillators. Turn bearish below 1.3615 for a potential short-term mean reversion decline towards the near-term support of 1.3540/20 (lower boundary of the aforementioned minor ascending channel).
  • AUD/USD – Risk of minor pull-back  with the 4 hour Stochastic oscillator has started to flash a bearish divergence signal at its overbought region.  Turn bearish below key short-term resistance at 0.7845/7850 towards near-term support at 0.7780/60 follow by 0.7740/10 (former minor swing high area of 26 Dec 2017 + Fibonacci retracement cluster).
  • NZD/USD – Recent rally has reached the former major ascending channel support from 24 Aug 2015 low now turns pull-back resistance at 0.7130 that confluences with a Fibonacci projection cluster as well. Turn bearish below 0.7130 resistance for a potential short-term decline towards the near-term supports of 0.7025 (former minor swing high areas of 14/18 Dec 2017) follow by 0.6960 (minor swing low of 20 Dec 2017 + 50% Fibonacci retracement of the on-going up move from 17 Nov 2017 low).
  • USD/JPY – Recent decline from 21 Dec 2017 high of 113.64 is now coming close to a short-term support of 112.00 (swing low areas of 06/15 Dec 2017) coupled with a bullish divergence signal seen in the 4 hour Stochastic  oscillator at is oversold region. Risk of a minor mean reversion rally, turn bullish above 112.00 support for a potential short-term push up to target the near-term resistance zone of 112.77/113.00 (61.8% Fibonacci retracement of the decline from 28 Dec 2017 high to yesterday, 02 Jan U.S. session low + minor descending trendline from 21 Dec 2017).

Commodities – Gold at risk of minor corrective decline

  • Gold – Recent steep rally from 12 Dec 2017 at risk of a short-term mean reversion decline. Based on Elliot Wave/fractal analysis, a potential minor degree bullish impulsive wave iii target has been met at 1320 (2.618 Fibonacci projection from 18 Dec 2017 low) coupled with extreme overbought reading seen in the 4 hour Stochastic oscillator. Turn bearish below 1321 resistance for a  potential short-term decline towards the near-term support of 1300/1295 (former swing high areas of  18/27 Nov 2017 + 38.2% Fibonacci retracement of decline from 18 Dec 2017 low to yesterday, 02 Jan U.S. session high).
  • WTI Crude (Feb 2018) – Mix elements, prefer to turn neutral now between 61.00 & 59.40 (minor ascending trendline from 14 Dec 2017 low + minor swing low area of 29 Dec 2017).

Stock Indices (CFD) – Mix bag with risk of a minor decline in Hong Kong 50

  • US SP 500 -  Mix elements as yesterday’s up move has erased last Fri, 29 Dec losses.  Mix elements now, prefer to turn neutral between 2697/2700 & 2668. An hourly close below 2668 is likely to trigger a further minor corrective decline towards the next support at 2650  lower boundary of the medium-term ascending channel from 21 Aug 2017 low).
  • Japan 225 No change, continued to evolve within a “triangle range” configuration since 09 Nov 2017. Right now, price action is right below the “triangle range” upper boundary at 23010. Maintain bearish bias below 23010 resistance for a potential push down to retest last week low of 22570/22500 with a maximum limit set at 22400 (triangle range lower boundary).
  • Hong Kong 50 - The 3 weeks of rally from 15 Dec 2017 low of 28760 is now coming close to a significant intermediate resistance zone of 30700/900  (see latest weekly technical outlook published yesterday). In addition, the hourly Stochastic oscillator has flashed a bearish divergence signal at its overbought region. Risk of a short-term mean reversion decline, turn bearish below 30900 resistance for a potential minor push down towards the 29700 near-term support.
  • Australia 200 – Managed to hold above the 6027 short-term support (see latest weekly technical outlook published yesterday).  Maintain bullish bias above 6027 for a potential push up to retest last week high of 6097 follow by the next resistance at 6150 (upper boundary of a minor ascending channel from 06 Dec 2017 low).
  • Germany 30 – No clear break below 12800 downside trigger level (printed an intraday low of 12740 in yesterday, 02 Jan European session before it recovered back above 12800). Mix elements coupled with risk of a minor corrective decline in EUR/USD (the DAX has an inverse correlation with EUR/USD). Prefer to turn neutral between 12800/740 & 13020.

*Levels are obtained from City Index Advantage TraderPro platform


The material provided herein is general in nature and does not take into account your objectives, financial situation or needs. While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments. City Index recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets. It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com.au, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. GAIN Capital Australia Pty Ltd (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.


Related tags: Forex Commodities Indices

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