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Daily FX & Stock Indices Technical Trend Bias/Key Levels (Fri 07 Dec)

FX – Mix bag

  • EUR/USD – Trend bias: Sideways. Continued to evolve in a range bound movement. No change, maintain neutrality stance between 1.1300 (the lower limit of a potential “triangle range” consolidation structure that is taking form since the 13 Nov 2018 low of 1.1214) & 1.1420. Only a break above 1.1420 sees a further potential push up to test the 1.1470/1500 resistance. On the flipside, failure to hold at 1.1300 sees a push down to retest the 12 Nov 2018 low of 1.1216 (2018 current low).
  • GBP/USD – Trend bias: Push up within range configuration. Maintain bullish bias with upside trigger level remains at 1.2845 (the minor swing high areas of 28 Nov/04 Dec 2018 + close to a minor descending trendline from 07 Nov 2018 high that has been capping the recent rallies). An hourly close above 1.2845 is likely to reinforce the push up scenario towards 1.3000/3050 resistance (upper limit of the “Descending Triangle” +  Fibonacci retracement/projection cluster).  However, a daily close below 1.2700  triggers a bearish breakdown from the “Descending Triangle”  range configuration to open up scope for a fresh impulsive downleg to target the next support at 1.2135 (the 09/14 Mar 2017 swing low + exit target of the “Descending Triangle” bearish breakdown).
  • USD/JPY – Trend bias: Sideways.  Inched down lower as expected and hit the first target/support at 112.30 (printed a low of 112.20 in yesterday, 06 Dec U.S. session). 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. In addition, major stock indices are now showing risk of a minor mean reversion rebound phase to retrace the recent steep decline post G20 Trump-Xi dinner date (see below for details). Mix elements, prefer to turn neutral now between 112.20 and 113.20 (the minor descending trendline from 29 Nov 2018 high + minor swing high area of 06 Dec 2018). A clearance above 113.20 sees a squeeze up to retest the 114.00 (the descending trendline that has been capping previous rallies since 04 Oct 2018 high. On the flipside, failure to hold at 112.20 opens up scope for a further decline to target the medium-term range support at 111.60/40 (the swing low areas of 15/26 Oct 2018 + pull-back support of a major former descending resistance from Jun 2015 high).
  • AUD/USD – Trend bias: Sideways. The pair continued to trade lower as expected and almost hit the upper limit of the target/support of 0.7170/7140 (printed a low of 0.7190 in yesterday, 06 Dec). Mix elements now, prefer to turn neutral first between 0.7190 and 0.7240. A clearance above 0.7240 sees a minor mean reversion rebound to retest 0.7280/90 resistance (the 50% Fibonacci retracement of the on-going decline from 04 Dec high to 06 Dec low + pull-back resistance of the former ascending trendline from 26 Oct 2018 low). On the flipside, failure to hold at 0.7190 sees a further push down towards the next support at 0.7100/7070 (the pull-back support of the former major descending channel resistance from 26 Jan 2018 high + ascending trendline from 05 Oct 2018 low).
  • NZD/USD   Trend bias: Down. No change, maintain bearish bias below key short-term resistance at 0.6915 (the minor descending trendline from 04 Dec 2018 high + 50% Fibonacci retracement of the on-going slide from 04 Dec 2018 high to today, 06 Dec Asian session intraday low of 0.6855) with 0.6850 remains as the downside trigger level (the ascending trendline support in place since 26 Oct 2018 low). An hourly close below 0.6850 reinforces the a further potential slide to target the next near-term support at 0.6710 (the former congestion area of 02 Jul/21 Sep 2018). However, a clearance above 0.6915 put the corrective rebound scenario back in shape for a push up to retest 0.6969 swing high area of 04 Dec 2018 and even the medium-term resistance of 0.7050 (07 Jun 2018 swing high + former major ascending range support from 24 Aug 2015 low + 61.8% Fibonacci retracement of the downtrend from 16 Feb 2018 high to 08 Oct 2018 low).     

Stock Indices (CFD) – Second leg of potential minor mean reversion rebound looms

  • US SP 500 – Trend bias: Up.  Since our last short-term update, the Index had plummeted as expected and below the target/support of 2690/70. Yesterday, 06 Dec, it continued its downward spiral in the first half of the U.S. session and hit our first medium-term downside target support zone at 2625/03 as per highlighted in our weekly outlook report published earlier on Mon.(click here for the details).  It printed a low of 2620 in yesterday U.S. session before it reversed up by 2.8% to print an intraday high of 2698.  The rebound has retraced close to 38.2% of the decline seen from the post G20 Trump – Xi dinner date on 03 Dec high of 2813 to yesterday, 06 Dec low coupled with a prior bullish divergence signal seen in the 4-hour Stochastic oscillator at its oversold region. Elliot Wave/fractal analysis and momentum indicator (4-hour Stochastic) suggest to risk of a further minor mean reversion rebound to retrace the current steep decline seen from 03 Dec high to 06 Dec low. Flip to a bullish bias in any dips with key short-term support at 2620 (yesterday swing low + range support in place since 26 Oct 2018 low) for a further potential push up to target the next intermediate resistance at 2718/26 (the minor swing high area of 05 Dec 2018 + 50% Fibonacci retracement of the decline from 03 Dec high to 06 Dec low). On the other hand, failure to hold at 2620 opens up scope for another round of impulsive downleg to retest 30 Oct 2018 swing low of 2603 before targeting the key long-term downside trigger level at 2540/30.
  • Japan 225 – Trend bias: Up. Pushed down as expect since the bearish breakdown of the 22060 downside trigger level as per highlighted in our latest weekly outlook. The Index has now dropped towards the first medium-term downside target/support of 21220 (printed a low of 21074 in yesterday, 06 Dec U.S. session). Thereafter, it has started to reverse up by 2.9% to print a current intraday high of 2698 in today, 07 Dec early Asian session. The 4-hour Stochastic oscillator has flashed a bullish divergence signal at its oversold region and still has potential room to manoeuvre  to the upside before it reaches an extreme overbought level. These observations suggest a slowdown in the recent downside momentum of price action. Flip to a bullish bias in any dips for a further potential extension of the on-going minor mean reversion rebound with key short-term support at 21070 for a further push up to target the next intermediate resistance at 21915/22030 (the minor swing high area of 05/06 Dec 2018 + 50% Fibonacci retracement of the decline from 03 Dec high to 06 Dec low). On the other hand, failure to hold at 21070  opens up scope for another round of impulsive downleg to retest 26 Oct 2018 swing low of 20800 in the first step.
  • Hong Kong 50 - Trend bias: Up. Push down as expected to hit the short-term downside target/support at 26560 as per highlighted in the previous report. It printed a low of 25780 in yesterday, 06 Dec U.S. session and the decline stalled right at a pull-back support of a former minor descending resistance from 02 Nov 2018 high. In addition, the 4-hour Stochastic oscillator has just exited from its oversold region. Flip to a bullish bias with key short-term support at 25780 for a further potential push up to target the next intermediate resistance at 26540/700 (the gapped down formed on 06 Dec 2018 + 50%/61.8% Fibonacci retracement of the decline from 03 Dec to 06 Dec low). On the other hand, failure to hold at 25780 sees another round of slide towards the next near-term supports at 25480 follow by 25000 (former minor swing high area of 29 Oct 2018 that managed to retest & held on 13 Nov 2018).
  • Australia 200 – Trend bias: Sideways. Declined as expected through the bearish break of the lower limit of the minor “Expanding Wedge” range configuration as per highlighted in the previous report to hit the short-term target/support of 5595. It printed a low of 5577 in yesterday, 06 U.S. session before it reversed up by 2.3% to print a current intraday high of 5708 in today, 07 Dec Asian session. The current push up is now right at the pull-back resistance of the minor “Expand Wedge” lower limit bearish breakdown at 5708. Mix elements, prefer to turn neutral first between 5708 and 5590 (the swing low of 20 Nov 2018 that was managed to hold again yesterday). A break above 5708 sees an extension of the on-going mean reversion rebound towards 5780 (the minor range resistance of 29 Nov/03 Dec 2018). On the other hand, failure to hold at 5590 sees a further impulsive downleg to target the medium-term support at 5470 as per highlighted in our weekly outlook (click here for the details).                   
  • Germany 30 – Trend bias: Up. Declined as expected and hit the medium-term target/support of 10800/700 set for this week (printed a low of 10759 yesterday, 06 Dec). 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. In addition, Elliot Wave/fractal analysis suggest the potential end of a minor degree impulsive down move cycle from 03 Dec 2018 high to yesterday, 06 Dec 2018 low where the risk of mean reversion rebound increases. Flip to a bullish bias in any dips with key short-term support at 10700 for a further push up to target the next intermediate resistance at 11060/160 (38.2%/50% Fibonacci retracement of the on-going decline from 03 Dec high to 06 Dec low + former range support of 25 Oct/20 Nov 2018 low). On the other hand, failure to hold at 10700 sees a continuation of the impulsive down move towards the next support at  10400/300 (Fibonacci projection cluster + lower boundary of a descending channel in place since 04 Oct 2018 high). 

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