Daily FX Technical Trend Bias Key Levels Tues 21 May

EUR/USD – Further potential slide in progress

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• Continued to drift lower as expected (click here for a recap on our previous report). Short-term elements remain negative, maintain bearish bias below tightened key short-term pivotal resistance at 1.1200 for a push down to retest 1.1120 and a break below it opens up scope for a further potential decline to target the next near-term support at 1.1060/1040 (Fibonacci retracement/expansion cluster).
•  On the other hand, a break with an hourly close above 1.1200 negates the bearish tone for a corrective bounce towards 1.1245/1260 (range resistance in place since the recent FOMC meeting held on 01 May).

GBP/USD – Further potential slide towards major support

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• The pair has broken below the 1.2750 lower limit of the short-term neutrality zone as per highlighted in our previous report on the backdrop of a fresh “Brexit crisis” resurgence. Flip back to a bearish bias with 1.2790 as the key short-term pivotal resistance for a further potential push down to target 1.2660 (also the 76.4% Fibonacci retracement of the previous multi-month up move from 03 Jan 2019 low to 13 Mar 2019 high) with a maximum limit set at 1.2600 (also the primary ascending range support in place since 07 Oct 2016 low).
• On the other hand, a break with an hour close above 1.2790 sees a squeeze up towards the 1.2990 intermediate resistance (former minor swing low areas of 03/10 May 2019 & the upper boundary of the descending channel from 13 Mar 2019 high)

USD/JPY – Mix elements, watch 110.35 and 109.75

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• Inched higher above the 110.05 short-term pivotal resistance that has negated the preferred bearish scenario as per highlighted in our previous report. Despite the higher price actions seen in the last two sessions, the pair has ended yesterday, 20 May U.S. session with a second consecutive daily “Spinning Top” candlestick pattern which suggests indecisiveness by the current bulls to push prices higher.
• Mix elements, prefer to turn neutral now between 110.35 and 109.75 (also the minor ascending support from 13 May 2019 low. Only an hourly close below 109.75 reignites the bears for a potential push down to target 108.95 and the 108.65 major support (also the primary ascending range support from Jun 2016 low).
• On the flipside, a clearance above 110.35 sees a further corrective rebound sequence towards the key medium-term resistance zone of 110.90/111.10 (also the pull-back resistance of the former ascending support from 03 Jan 2019 low).

AUD/USD – 0.6945 remains the key resistance to watch

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• The AUD/USD gapped up by 70 pips yesterday, 20 May after the results of the AU election where current incumber PM Scott Morrison and his party had retained power in AU parliament. Prior to the election results, the pair had inched lower as expected to print a 3-month low of 0.6865 as seen in last Fri, 17 May U.S. session.
• The post-election rally has fizzled right below the 0.6945 key short-term pivotal resistance as per highlighted in our previous report (also the upper boundary of a descending channel from 17 Apr 2019 high). Thus, maintain bearish bias with 0.6880 as the downside trigger (gap support formed post-election) and a break below it reinforces the potential push down to target the significant support at 0.6830 before risk of a corrective rebound occurs.
• On the other hand, a break with an hourly close above 0.6945 invalidates the bearish scenario to kickstart the corrective rebound sequence towards the next intermediate resistance at 0.7045 (formed after the recent RBA meeting on 07 May)

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