MNI DAILY TECHNICAL ANALYSIS - AUD Tops 0.80 as Bull Run Rolls On

Tech Focus: AUD/USD Tops 0.80 as Reflationary Theme Rolls On

- The reflationary theme persists across currencies this week, with AUD/USD the latest pair to top a notable historical level and hit a new multi-year high.
- This secures AUD/USD's bullish posture, although a now overbought RSI measure suggests progress could slow from here.
- Thursday's move higher raises the risk of a major test on key double top resistance from 2017/2018 at 0.8136.

• RES 4: 0.8296 50% 2011 – 2020 Pullback
• RES 3: 0.8164 High May 15, 2015
• RES 2: 0.8136 2017/2018 Double Top and Major Resistance
• RES 1: 0.8006 High Feb 25

Price Signal Summary - Commodity Surge Tilts Risk Outlook Higher

• Equity indices outlook remains bullish, with the e-mini S&P recovering well off the mid-week lows. E-mini S&P futures still target the 4000.00 handle.
  • An initial objective is at 3988.40, 2.236 projection of the Sep 24 - Oct 12 - Oct 30 price swing last year.
  • Support lies at 3804.75, the Tuesday low.
• In the FX space, EURUSD ebbed lower into the Wednesday close, but steered clear of any test on nearby supports. Earlier this week, markets topped 1.2169, the Feb 16 high, which has helped the outlook. This confirms a resumption of the recovery from the Feb 5 low and opens 1.2190 initially. GBPUSD remains firm following Wednesday's break to new multi-year highs, but overbought conditions appear to have slowed progress. 1.4377 remains critical resistance.
• On the commodity front, Gold found some support Monday, bouncing back above the 1,800 level to narrow the gap with key resistance at the 20-day EMA. Nonetheless, the outlook remains fragile after trading through support at $1785.00, Feb 4 low last week. The bull run is still firmly in control as Brent crude futures topped out at - again - new cycle highs of $67.30 on Wednesday. Markets are defying overbought signals, with the RSI once again climbing toward February's multi-decade peak. The focus is on $70.30 next, a clearance of which raises the risk of a test on the 2020 highs at $71.75.
• In the FI space, Bund futures traded wholly inside the Monday range on both Tuesday and Wednesday, but remains vulnerable with a bearish cycle dominating. For Gilts, further weakness is likely with a bearish cycle continuing to dominate. The focus is on a clean break of the 130.00 psychological level, opening the Mar 19 2020 low of 127.99.

FOREIGN EXCHANGE

EURUSD TECHS: Lower, But Within Ranges

• RES 4: 1.2237 1.0% 10-dma Envelope
• RES 3: 1.2223 High Jan 13
• RES 2: 1.2190 High Jan 22 and a key resistance
• RES 1: 1.2180 High Feb 22
• PRICE: 1.2138 @ 16:36 GMT Feb 24
• SUP 1: 1.2082 Low Feb 19
• SUP 2: 1.2023 Low Feb 17
• SUP 3: 1.1952 Low Feb 5 and the bear trigger
• SUP 4: 1.1945 23.6% retracement March - Jan rally

EURUSD ebbed lower into the Wednesday close, but steered clear of any test on nearby supports. Earlier this week, markets topped 1.2169, the Feb 16 high, which has helped the outlook. This confirms a resumption of the recovery from the Feb 5 low and opens 1.2190 initially, Jan 22 high. Importantly too, this break higher negates the bearish shooting candle pattern from Feb 16. The key S/T support is at 1.2023. A break would be bearish and expose 1.1952, Feb 5 low.

GBPUSD TECHS: Bullish Binge Extends

• RES 4: 1.4377 2018 High and Major Resistance
• RES 3: 1.4344 High April 18 2018
• RES 2: 1.4246 2.0% 10-dma envelope
• RES 1: 1.4237 High Feb 24
• PRICE: 1.4092 @ 16:44 GMT Feb 24
• SUP 1: 1.4079 23.6% Fib of February Rally
• SUP 2: 1.3952 High Feb 16
• SUP 3: 1.3776 Low Feb 12 and Key near-term support
• SUP 4: 1.3737 Low Feb 9

Another day, another high for GBP/USD as the pair ripped higher in Asia-Pac hours to touch new cycle and multi-year highs of 1.4237. This clears out all near-term resistance but does put the pair firmly in technically overbought territory. In contrast, moving average studies are solidly in bull mode. Next upside levels rest at 1.4246 vol band resistance and the 1.4344 high last posted in 2018.

EURGBP TECHS: Downside Persists With 0.8700 Cleared

• RES 4: 0.8840 High Feb 4
• RES 3: 0.8797 High Feb 9
• RES 2: 0.8739 Low Feb 5
• RES 1: 0.8700 Feb 18 high
• PRICE: 0.8610 @ 17:21 GMT Feb 24
• SUP 1: 0.8541 Low Feb 24
• SUP 2: 0.8517 3.0% Lower Bollinger Band
• SUP 3: 0.8508 2.0% 10-dma Envelope
• SUP 4: 0.8469 38.2% 2015 - 2016 Rally

EURGBP moved sharply lower in early Asia-Pac hours, hitting new cycle lows down at 0.8541 before recovering well into the Wednesday US close. Bears need to reinforce the move through 0.86 support to cement any further weakness, which would initially expose 0.8517 vol band support. Initial resistance is at 0.8700, Feb 18 high.

USDJPY TECHS: Corrective Pullback Complete

• RES 4: 106.95 High Aug 28, 2020
• RES 3: 106.55 High Sep 3, 2020
• RES 2: 106.26 1.50 projection of Jan 6 / 11 / 21 price swing
• RES 1: 106.22 High Feb 17
• PRICE: 105.91 @ 16:59 GMT Feb 24
• SUP 1: 104.92 Low Feb 23
• SUP 2: 104.74 Trendline drawn off the Jan 6 low / Low Feb 10
• SUP 3: 104.41 Low Feb 10
• SUP 4: 104.07 Low Jan 28

USDJPY maintains a bullish tone and the recent pullback is considered a correction. The Feb 16 climb resulted in a break of resistance at 105.77, Feb 5 high. This confirms a resumption of the uptrend that started Jan 6 and reinforces the significance of the recent key technical break - the breach on Jan 27 of the bear channel resistance drawn off the Mar 2020 high. The focus is on 106.26 next, a Fibonacci projection. Support is seen at 104.74.

EURJPY TECHS: Hits Bull Trigger

• RES 4: 129.47 1.00 proj of the Jun - Aug - Oct 2020 price swing
• RES 3: 129.26 High Dec 13, 2018
• RES 2: 129.04 1.0% 10-dma Envelope
• RES 1: 128.80 High Feb 24
• PRICE: 128.62 @ 17:01 GMT Feb 24
• SUP 1: 127.31 Low Feb 17
• SUP 2: 127.04 Low Dec 15
• SUP 3: 126.40 50-day EMA
• SUP 4: 126.10 Low Feb 4

The cross firmed further Wednesday, topping the bull trigger of 128.46 and touching the best levels since late 2018 in the process. This opens the cross for further gains toward the Dec 13, 2018 high at 129.26, although technically overbought conditions are now present, which may slow progress from here.

AUDUSD TECHS: Tops 0.80 as Reflationary Theme Rolls On

• RES 4: 0.8296 50% 2011 – 2020 Pullback
• RES 3: 0.8164 High May 15, 2015
• RES 2: 0.8136 2017/2018 Double Top and Major Resistance
• RES 1: 0.8006 High Feb 25
• PRICE: 0.7936 @ 09:38 GMT Feb 25
• SUP 1: 0.7718 20-day EMA
• SUP 2: 0.7651 Low Feb 8
• SUP 3: 0.7583/64 Low Feb 5 / Low Feb 2 and the bear trigger
• SUP 4: 0.7557 Low Dec 28

The reflationary theme persists across currencies this week, with AUD/USD the latest pair to top a notable historical level and hit a new multi-year high. This secures AUD/USD's bullish posture, although a now overbought RSI measure suggests progress could slow from here. Thursday's move higher raises the risk of a major test on key double top resistance from 2017/2018 at 0.8136.

USDCAD TECHS: Bears Still in Control

• RES 4: 1.2915 High Dec 23
• RES 3: 1.2845/81 High Feb 4 / High Jan 28
• RES 2: 1.2763/78 High Jan 12 / 50-day EMA
• RES 1: 1.2746 High Feb 17
• PRICE: 1.2530 @ 17:20 GMT Feb 24
• SUP 1: 1.2451 Low Feb 16, 2018 Low
• SUP 1: 1.2480 Downtrendline Drawn of
• SUP 3: 1.2393 2.0% 10-dma envelope
• SUP 4: 1.2251 2018 Low

USDCAD found support last week at 1.2610, Feb 16 low, but this gave way into the Friday close. The recent move lower is seen as a deeper corrective pullback however price has cleared 1.2686, Jan 27 low and a key S/T level. This is a bearish development and exposes the Jan 21 low of 1.2590 that also marks a bear trigger. Clearance of this level would resume the underlying downtrend. A 1.2881 break, Jan 28 high is required to reinstate bullish activity. 1.2763 is a firm resistance.

FIXED INCOME

BUND TECHS: (H1) Inside Monday Range

• RES 4: 176.64 High Feb 11
• RES 3: 176.33 50-day EMA
• RES 2: 175.70 High Feb 15
• RES 1: 175.45 High Feb 16
• PRICE: 173.95 @ 06:42 GMT Feb 25
• SUP 1: 173.58 2.236 proj of Jan 4 - 12 sell-off from Jan 27 high
• SUP 2: 173.06 Low Sep 10, 2020 (cont)
• SUP 3: 172.95 1.0% 10-dma envelope
• SUP 4: 172.49 Lower 3.0% Bollinger band

Bund futures traded wholly inside the Monday range on both Tuesday and Wednesday, but remains vulnerable with a bearish cycle dominating. The Feb 15 move lower resulted in price trading through 175.61, Feb 8 low. This confirmed a resumption of the downtrend that started mid-December. Momentum and moving average studies remain in a bear mode, reinforcing current conditions. Attention is on 173.58 next, 2.236 proj of Jan 4 - 12 sell-off from Jan 27 high. Initial resistance is at the Dec 16 high of 175.45.

BOBL TECHS: (H1) Bearish Cycle Dominates

• RES 4: 135.150 High Feb 11 and key resistance
• RES 3: 134.850 High Feb 15
• RES 2: 134.781 20-day EMA
• RES 1: 134.790 Low Feb 5 and Feb 18 high
• PRICE: 134.460 @ 06:46 GMT Feb 25
• SUP 1: 134.400 Low Feb 22 / 24
• SUP 2: 134.319 76.4% retracement of the Jun - Nov 2020 rally
• SUP 3: 134.417 1.236 proj of Dec 11-Jan 12 sell-off from Jan 27 high
• SUP 4: 133.790 Low Jun 5, 2020 (cont)

Bobl futures continue to maintain a bearish tone after markets registered a fresh low print at 134.400 on Monday. Early last week, prices traded below through key support and bear trigger at 134.790, Feb 5 low. The break strengthens a bearish argument and confirms a resumption of the underlying downtrend. Attention is on 134.319 next, a Fibonacci retracement. Initial resistance is seen at 134.790. The Feb 11 high of 135.150 marks the key trend resistance.

SCHATZ TECHS: (H1) Needle Still Points South

• RES 4: 112.365 High Jan 27
• RES 3: 112.282/112.290 50-day EMA/High Feb 11 and key resistance
• RES 2: 112.245 20-day EMA
• RES 1: 112.245 High Feb 18
• PRICE: 112.210 @ 06:47 GMT Feb 25
• SUP 1: 112.200 Low Feb 18 / 19
• SUP 2: 112.185 50.0% retracement of the Jun - Nov 2020 rally (cont)
• SUP 3: 112.150 1.00 proj of Dec 11 -28 sell-off from Jan 27 high
• SUP 4: 112.145 High Sep 3 and 4, 2020 (cont)

Schatz futures maintain a bearish stance. On Feb 15, the contract cleared key support at 112.235, Dec 23 low and 112.240, Jan 2, 21 and 22 low. The break negated a recent triple bottom reversal and instead confirms a resumption of the downtrend that started early November 2020. Attention is on further bearish pressure towards 112.185 next, a Fibonacci retracement. Trend resistance has been defined at 112.290, Feb 11 high.

GILT TECHS: (H1) Bears In Control

• RES 4: 133.55 Low Dec 1 and a recent breakout level
• RES 3: 132.67 High Feb 11
• RES 2: 131.73 Low Feb 8/12 and gap high on the daily chart
• RES 1: 131.49 High Feb 16 and gap low on the daily chart
• PRICE: 128.43 @ Close Feb 24
• SUP 1: 128.82 Low Feb 24
• SUP 2: 127.99 Low Mar 19, 2020 (cont)
• SUP 3: 127.26 2.0% 10-dma envelope
• SUP 4: 126.61 3.0% Lower Bollinger Band

Bears remain solidly in control Wednesday, with the technical outlook deteriorating further. A combination of contract rolls and bullish GBP prices sent prices to new 2021 lows of 128.82. Further weakness is likely with a bearish cycle continuing to dominate. The focus is on a clean break of the 130.00 psychological level, opening the Mar 19 2020 low of 127.99.

BTP TECHS: (H1) Finds Support at Last Week's Low

• RES 4: 154.00 Round number resistance
• RES 3: 153.82 High Feb 12 and the bull trigger
• RES 2: 152.89 High Dec 15
• RES 1: 152.06 High Feb 17
• PRICE: 150.55 @ Close Feb 24
• SUP 1: 150.27 Low Feb 24
• SUP 2: 150.00 Round number support
• SUP 3: 149.57 Low Jan 22 and key support
• SUP 4: 147.85 200-dma

BTP futures ebbed lower Wednesday, hitting new February lows of 150.27 and falling through the 100-dma in the process. This affirms the fragile outlook, which began on the break of 151.19, 61.8% of the Jan 22 - Feb 12 rally. The focus shifts to 149.57 key support, the Jan 22 low. Initial resistance is at 152.06, Feb 17 high.

EQUITIES

EUROSTOXX 50 Techs: Inside Session

• RES 4: 3867.28 High Feb 20, 2020
• RES 3: 3858.79 1.50 proj of Dec 21 - Jan 8 rally from Jan 28 low
• RES 2: 3798.19 0.764 proj of Mar - Jul - Oct 2020 swing
• RES 1: 3742.53 High Feb 15
• PRICE: 3705.99 @ Close Feb 24
• SUP 1: 3659.35 20-day EMA
• SUP 2: 3643.33 Low Feb 23
• SUP 3: 3628.47 Low Feb 10
• SUP 4: 3594.18 50-day EMA

Despite early weakness, the EUROSTOXX 50 staged a decent bounce into the Tuesday close, and markets maintained these levels throughout Wednesday trade. This keeps the contract bullish despite the corrective pullback in the middle of last week. The focus is on 3798.19 further out, a Fibonacci projection. Moving average studies remain in a bull mode reinforcing underlying conditions. On the downside, the index needs to close below the 20-day EMA to reinstate a bearish theme. The bull trigger is the Feb 15 high of 3742.53.

COMMODITIES

BRENT TECHS: (J1) Defies Overbought Signals

• RES 4: $71.75 - High Jan 8, 2020 (cont)
• RES 3: $70.30 - 23.6% Projection of February Rally
• RES 2: $67.74 - 2.0% Upper Bollinger Band
• RES 1: $67.30 - High Feb 24
• PRICE: $67.07 @ 19:09 Feb 24
• SUP 1: $62.09 - Low Feb 19
• SUP 2: $60.35 - Low Dec 12
• SUP 3: $60.02 - 20-day EMA
• SUP 4: $58.43 - Bull channel base drawn off the Nov 2, 2020 low

The bull run is still firmly in control as Brent crude futures topped out at - again - new cycle highs of $67.30 on Wednesday. Markets are defying overbought signals, with the RSI once again climbing toward February's multi-decade peak. The focus is on $70.30 next, a clearance of which raises the risk of a test on the 2020 highs at $71.75.

WTI TECHS: (J1) Uptrend Firms Further

• RES 4: $65.66 - 1.764 proj of Apr - Aug rally from the Nov 2 low
• RES 3: $64.00 - Round number resistance
• RES 2: $63.38 - 5.0% 10-dma Envelope
• RES 1: $63.37 - High Feb 24
• PRICE: $63.16 @ 19:14 Feb 24
• SUP 1: $58.59 - Low Feb 19
• SUP 2: $57.31 - Low Feb 12
• SUP 3: $56.63 - 20-day EMA
• SUP 4: $54.94 - Bull channel base drawn off the Nov 2, 2020 low

The uptrend regathered momentum Wednesday, helping WTI hit new cycle highs of $63.37 in the process. After the bull run paused slightly at the tail-end of last week, WTI futures have resumed their rally to maintain the bullish price sequence of higher highs and higher lows. The focus is on $63.17 next, a Fibonacci projection. On the downside, the near-term firm support lies at $57.31, the Feb 12 low. Initial support is at $58.59, Friday's low.

GOLD TECHS: Bouncing Off Key Support

• RES 4: $1855.5 - High Feb 10 and a key resistance
• RES 3: $1830.8 - High Dec 12
• RES 2: $1823.3 - 20-day EMA
• RES 1: $1816.0 - High Feb 23
• PRICE: $1804.3 @ 19:21 GMT Feb 23
• SUP 1: $1760.7 - Low Feb 19
• SUP 2: $1757.8 - Low Jul 2, 2020
• SUP 3: $1747.6 - Low Jun 26, 2020
• SUP 4: $1742.5 - Low Jun 22, 2020

Gold found some support Monday, bouncing back above the 1,800 level to narrow the gap with key resistance at the 20-day EMA. Nonetheless, the outlook remains fragile after trading through support at $1785.00, Feb 4 low last week. This reinforces the current bearish theme with the reversal from $1855.5, Feb 10 high clearly weighing on the yellow metal. MA studies are also in a bear mode highlighting the current path of least resistance. At the tail-end of last week, $1764.8, Nov 30 low had been probed. A clear break would open $1757.8, Jul 2, 2020 low.

SILVER TECHS: Volatile, Outlook Remains Bearish

• RES 4: $30.100 - High Feb 1
• RES 3: $29.053 - High Feb 2
• RES 2: $28.498 - 61.8% retracement of the Feb 1 - 4 sell-off
• RES 1: $28.003 - 50.0% retracement of the Feb 1 - 4 sell-off
• PRICE: $27.507 @ 19:22 GMT Feb 23
• SUP 1: $26.139 - Low Feb 19
• SUP 2: $25.905 - Low Feb 4
• SUP 3: $25.483 - 76.4% retracement of the Jan 18 - Feb 1 rally
• SUP 4: $24.700 - Low Jan 27

Silver had a volatile finish last week, having trading sharply lower early Friday before staging a decent recovery. The metal remains vulnerable following the sell-off on Feb 2. Recent gains are considered a correction and a resumption of weakness is seen likely near-term. A move lower once again would refocus attention on $25.905, Feb 4 low. Clearance of this support would set the scene for a deeper pullback. Resistance is seen at $28.003 and $28.498, Fibonacci retracement levels.