MNI DAILY TECHNICAL ANALYSIS - Bonds Near Cycle Lows at Year-End

Price Signal Summary – Bonds Near Cycle Lows at Year-End

• In the equity space, S&P E-minis hold the entirety of the rally triggered on Dec 20, as prices recovered off the 100-dma at 4537.57. The resulting alltime high at 4798.00 sits just below psychological resistance of 4800. EUROSTOXX 50 futures hold the bulk of the pre-Christmas rally, and have nicely narrowed the gap with the November highs posted at 4409.50. This marks a further improvement in the short-term bullish condition.
• In FX, EURUSD is holding onto the bulk of recent gains. Price remains in a range though and is holding above initial support at 1.1222, the Dec 15 low. Key resistance at 1.1383 is also intact, Nov 30 high. A break of this hurdle is required to signal potential for a stronger recovery towards 1.1404 the 50-day EMA. USDJPY trades higher again early Thursday, extending the strength triggered by the breach of resistance at 114.26, Dec 15 high as well as 114.38, the 61.8% Fibonacci retracement of the Nov 24 - 30 downleg.
• On the commodity front, Gold maintains a bullish focus and is approaching recent highs. The yellow metal is still showing signs of base building following the recent false break of the channel base drawn from the Aug 9 low. WTI futures are holding the sizeable Dec27 rally, putting prices at the best level since late November. The rally has so far stalled at the 76.4% retracement of the Oct-Dec downleg at $77.44, which becomes the next key upside level.
• In the FI space, Bund futures trade lower into year-end, extending weakness through the 172.00 handle to touch new December lows headed into the new year. Support at the Nov26 and Nov24 lows has given way, putting prices at 171.31 - the lowest level since Nov04. On the resumption of trade, Gilt futures returned lower, printing new December lows at 124.35 as global bond markets sold off.

FOREIGN EXCHANGE

EURUSD TECHS: Firmer But Still Inside Its Range

• RES 4: 1.1513 Bear channel top from Jun 1 high
• RES 3: 1.1514 Low Nov 5
• RES 2: 1.1401 50-day EMA
• RES 1: 1.1369/83 High Dec 29 / High Nov 30
• PRICE: 1.1316 @ 07:21 GMT Dec 30
• SUP 1: 1.1222 Low Dec 15
• SUP 2: 1.1186/85 Low Nov 24 / Low Jul 1, 2020
• SUP 3: 1.1128 1.764 proj of the Jan 6 - Mar 31 - May 25 price swing
• SUP 4: 1.1040 76.4% retracement of the Mar ‘20 - Jan ‘21 uptrend

EURUSD is holding onto the bulk of recent gains. Price remains in a range though and is holding above initial support at 1.1222, the Dec 15 low. Key resistance at 1.1383 is also intact, Nov 30 high. A break of this hurdle is required to signal potential for a stronger recovery towards 1.1404 the 50-day EMA. The trend remains down though and the trigger for a resumption of bearish activity is 1.1186/85 where a break would open 1.1128, a Fibonacci projection.

GBPUSD TECHS: Rallying into Year End

• RES 4: 1.3698 High Nov 4
• RES 3: 1.3607 High Nov 9
• RES 2: 1.3514 High Nov 18 and a key resistance
• RES 1: 1.3505 High Dec 30
• PRICE: 1.3469 @ 07:22 GMT Dec 30
• SUP 1: 1.3297 Low Dec 22
• SUP 2: 1.3240/3163 Low Dec 22 / Low Dec 08 and the bear trigger
• SUP 3: 1.3145 1.0% 10-dma envelope
• SUP 4: 1.3135 Low Dec 11 2020

GBPUSD traded solidly Wednesday and has cleared the week’s high ahead of the Thursday open. This puts the pair clear of the 50-day EMA at 1.3417. The rally on Dec 22 eased recent bearish pressure and the break of resistance at 1.3374 suggests potential for an extension higher. A clear break of the 50-day EMA would open 1.3514, the Nov 18 high. A return lower would signal a resumption of the recent bearish trend and attention would turn to support at 1.3163, Dec 8 low.

EURGBP TECHS: Extending Bear Leg

• RES 4: 0.8658 High Sep 29 and a key resistance
• RES 3: 0.8624 High Oct 1
• RES 2: 0.8600 High Dec 8 and the bull trigger
• RES 1: 0.8500/53 50-day EMA / High Dec 10 / 14 and key resistance
• PRICE: 0.8399 @ 07:26 GMT Dec 30
• SUP 1: 0.8398 Low Dec 30
• SUP 2: 0.8384 1.0% 10-dma envelope
• SUP 3: 0.8381 Low Nov 22 and the bear trigger
• SUP 4: 0.8356 Low Feb 26, 2020

EURGBP traded sharply lower on Dec 23 and extended the sell-off following the holiday break. This puts the cross below support at 0.8411 and has strengthened the short-term bearish condition. The move lower opens 0.8384, the 1.0% 10-dma envelope and the key support at 0.8381, Nov 22 low. Initial firm resistance is unchanged at 0.8553, Dec 10 / 14 high. Clearance of this level is required to reinstate the recent bullish theme.

USDJPY TECHS: Bull Cycle Extension

• RES 4: 116.09 1.764 proj of Apr 23 - Jul 2 - Aug 4 price swing
• RES 3: 115.52 High Nov 24 and the bull trigger
• RES 2: 115.37 High Nov 26
• RES 1: 115.20 High Dec 30
• PRICE: 115.18 @ 07:28 GMT Dec 30
• SUP 1: 113.81/14 20-day EMA / Low Dec 17
• SUP 2: 112.53 Low Nov 30 and the bear trigger
• SUP 3: 112.08 High Sep 30 and a recent breakout level
• SUP 4: 111.32 61.8% retracement of the Aug - Nov rally

USDJPY trades higher again early Thursday, extending the strength triggered by the breach of resistance at 114.26, Dec 15 high as well as 114.38, the 61.8% Fibonacci retracement of the Nov 24 - 30 downleg. This signals potential for a stronger rally toward 115.37, the Nov 26 high. A reversal lower would instead expose key support at 112.53, Nov 30 low. Watch initial firm support at 113.14, the Dec 17 low.

EURJPY TECHS: Strengthens Through Key Resistance

• RES 4: 131.59 High Nov 5
• RES 3: 131.15 61.8% retracement of the Oct 20 - Dec 3 downleg.
• RES 2: 131.14 3.0% Upper Bollinger Band
• RES 1: 130.59 High Dec 30
• PRICE: 130.37 @ 07:29 GMT Dec 30
• SUP 1: 128.74/127.52 20-day EMA / Low Dec 20
• SUP 2: 127.39 Low Dec 3 / 6 and the bear trigger
• SUP 3: 127.28 1.00 proj of the Jun 1 - Sep 22 - Oct 20 price swing
• SUP 4: 127.04/126.65 Low Feb 15 / Low Feb 10

EURJPY is trading at December highs just a few days from the end of 2021. Strength followed the initial breach of 129.64 resistance as well as 130.43, a Fibonacci retracement. This opens gains toward 131.14 vol-based resistance and 131.59 above. Key support is at 127.39, the Dec 3 / 6 low. A break would resume the downtrend. Initial support is at 128.74, the 20-day EMA.

AUDUSD TECHS: Key Resistance Breached

• RES 4: 0.7341 61.8% retracement of the Oct 28 - Dec 3 downleg
• RES 3: 0.7312 Former channel base drawn from the Aug 20 low
• RES 2: 0.7275 61.8% of the Oct 28 - Dec 3 downleg
• RES 1: 0.7272 High Dec 29
• PRICE: 0.7252 @ 07:30 GMT Dec 30
• SUP 1: 0.7173 20-day EMA
• SUP 2: 0.7082/7040 Low Dec 20 / Low Dec 7
• SUP 3: 0.6993/91 Low Dec 3 / Low Nov 2 2020 and a key support
• SUP 4: 0.6963 Low Jul 16 2020

AUDUSD breached the Dec 16 high of 0.7224 ahead of the holiday break and has strengthened since, triggering a resumption of bullish activity. The 50-day EMA at 0.7233 has alsos been cleared, strengthening bullish conditions and the focus is on 0.7275, a Fibonacci retracement. Key short-term support has been defined at 0.7082, the Dec 20 low. A break would reinstate a bearish theme and open the key support zone at 0.6993/91.

USDCAD TECHS: Watching Support

• RES 4: 1.3173 High Nov 13, 2020
• RES 3: 1.3091 High Nov 24, 2020
• RES 2: 1.3024/39 38.2% Mar ‘20-Jun ‘21 downleg / 2.0% 10-dma env
• RES 1: 1.2964 High Dec 20 and the bull trigger
• PRICE: 1.2803 @ 07:31 GMT Dec 30
• SUP 1: 1.2764 Dec 16 and key S/T support
• SUP 2: 1.2706 Low Dec 13
• SUP 3: 1.2608 Low Dec 8 and key support
• SUP 4: 1.2585 Low Nov 19

USDCAD is trading near recent lows. The pair traded higher Dec 20, confirming a resumption of its uptrend and probed 1.2949, Aug 20 high. Pre-holiday price action negates the recent shooting star reversal pattern and reinforces the bull cycle. A clear break of 1.2949 would open 1.3024, a Fibonacci retracement. 1.2764, the Dec 16 low is the support to watch. Dips are currently considered corrective. A break of 1.2764 would alter the picture.

FIXED INCOME

BUND TECHS: (H2) Weakening into Year-End

• RES 4: 176.00 Round number resistance
• RES 3: 175.57 1.618 proj of the Nov 11 - 22 - 24 price swing
• RES 2: 175.29 1.50 proj of the Nov 11 - 22 - 24 price swing
• RES 1: 174.44/75.02 High Dec 21 / High Dec 8 and the bull trigger
• PRICE: 171.40 @ 07:32 GMT Dec 30
• SUP 1: 171.31 Low Dec 30
• SUP 2: 171.23 1.0% 10-dma envelope
• SUP 3: 170.68 76.4% retracement Nov - Dec Upleg
• SUP 4: 170.72 Low Nov 4

Bund futures trade lower into year-end, extending weakness through the 172.00 handle to touch new December lows headed into the new year. Support at the Nov26 and Nov24 lows has given way, putting prices at 171.31 - the lowest level since Nov04. This opens weakness toward 171.23, vol-based support, as well as 170.72 - the Nov04 low. On the upside, key resistance and the bull trigger is unchanged at 175.02, the Dec 8 high.

BOBL TECHS: (H2) Through Key Support

• RES 4: 135.126 1.382 pro of the Nov 11 - 22 - 23 price swing
• RES 3: 134.978 1.236 pro of the Nov 11 - 22 - 23 price swing
• RES 2: 134.740 1.00 pro of the Nov 11 - 22 - 23 price swing
• RES 1: 134.400/530 High Dec 13 / High Nov 30 and the bull trigger
• PRICE: 133.320 @ 07:39 GMT Dec 30
• SUP 1: 133.250 Low Dec 29
• SUP 2: 133.200 Low Nov 3
• SUP 3: 133.150 Low Nov 02
• SUP 4: 133.078 76.4% Fib Retracement for Nov - Dec Upleg

Bobl futures traded lower into the Wednesday close, putting prices at new monthly lows ahead of the new year. Support layered between 133.410 - 610 gave way, putting prices on a soft footing and opening markets for further losses. Support at 133.078 takes focus going forward, marking the 76.4% retracement for the November-December upleg. For bulls, key resistance is at 134.530, the Nov 30 high. A break of this hurdle is required to resume bullish activity and pave the way for a climb towards 134.740, a Fibonacci projection.

SCHATZ TECHS: (H2) Nearing Contract Lows

• RES 4: 112.375 1.382 proj of the Nov 16 - 26 - Dec 1 price swing
• RES 3: 112.350 1.236 proj of the Nov 16 - 26 - Dec 1 price swing
• RES 2: 112.305 High Nov 26 and the bull trigger
• RES 1: 112.265 High Dec 20
• PRICE: 112.035 @ 07:43 GMT Dec 30
• SUP 1: 112.020 Low Dec 29
• SUP 2: 112.007 1.382 proj of the Nov 26 - Dec 1 - Dec 3 price swing
• SUP 3: 111.957 3.0% Lower Bollinger Band
• SUP 4: 111.870 Low Oct 29 and key support

Schatz futures edged lower Wednesday, extending the pullback from the mid-December highs. This puts prices at their lowest levels of the month into year-end and raises the risk of a test on the contract low at 111.870. Support at 112.055 has given way, marking the return of bearish pressure which initially targets 112.007 and 111.957. To the upside, Focus remains on resistance at 112.235, the Dec 2 / 3 high. A clear break would be a bullish development and open the key resistance hurdle at 112.305, Nov 26 high.

GILT TECHS: (H2) Fresh December Lows

• RES 4: 127.94/128.00 61.8% of Aug - Oct move (cont) / High Aug 31
• RES 3: 127.47/67 High Dec 20 / High Dec 8
• RES 2: 126.76 High Dec 21
• RES 1: 125.93 High Dec 22
• PRICE: 124.50 @ Close Dec 29
• SUP 1: 124.35 Low Dec 29
• SUP 2: 124.17 Low Nov 24 and a key support
• SUP 3: 123.77 3.0% Lower Bollinger Band
• SUP 4: 123.66 Low Nov 01

On the resumption of trade, Gilt futures returned lower, printing new December lows at 124.35 as global bond markets sold off. This puts prices through nearby support layered between 124.48-94 and turns focus to 124.17 - the Nov24 low and key support level. Firm resistance is at 126.76, the Dec 21 high. Initial resistance is at 125.93, the Dec 22 high.

BTP TECHS: (H2) Through Key Support

• RES 4: 152.71 1.00 proj of the Nov 1 - 22 - 24 price swing
• RES 3: 151.45 0.764 proj of the Nov 1 - 22 - 24 price swing
• RES 2: 151.00 Round number resistance
• RES 1: 149.47/150.66 20-day EMA / High Dec 6 and the bull trigger
• PRICE: 147.30 @ 07:54 GMT Dec 30
• SUP 1: 147.05 Low Dec 29
• SUP 2: 146.94 Low Dec 27
• SUP 3: 146.55 76.4% retracement of the Nov 1 - 22 rally
• SUP 4: 145.29 Low Nov 1 and the bear trigger

BTP futures remain heavy following the pre-Christmas sell-off. The contract has breached support at 148.25, Dec 1 low as well as 147.36, the key support intersecting with the Nov24 low. The contract’s print at 146.94 narrows the gap with the 76.4% retracement of the Nov 1 - 22 rally at 146.55. Key resistance is at 150.66, the Dec 6 high. A clear break of this hurdle is required to reinstate a bullish theme and open the 151.00 handle.

EQUITIES

EUROSTOXX 50 TECHS: (H2) Narrows Gap with November Highs

• RES 4: 4409.50 High Nov 23
• RES 3: 4343.68 3.0% 10-dma envelope
• RES 2: 4311.68 76.4% retracement of the Nov 18 - 30 sell-off
• RES 1: 4306.00 High Dec 28
• PRICE: 4270.50 @ 07:58 GMT Dec 30
• SUP 1: 4108.50/4026.00 Low Dec 21 / Low Dec 20
• SUP 2: 3980.00 Low Nov 30 and the bear trigger
• SUP 2: 3935.00 Low Oct 6
• SUP 4: 3857.50 1.00 proj of the Nov 18 - 30 - Dec 8 price swing

EUROSTOXX 50 futures hold the bulk of the pre-Christmas rally, and have nicely narrowed the gap with the November highs posted at 4409.50. This marks a further improvement in the short-term bullish condition, which takes further positive signs from the rally through the 50-day EMA. 4306 marks the next upside level. On the downside, the first key short-term support has been defined at 4026.00, the Dec 20 low.

E-MINI S&P (H2): Strength Persists Post-Holidays

• RES 4: 4863.55 123.6% Fib Extension for the Dec 20 - 28 Upleg
• RES 3: 4854.19 0.764 proj of the Oct 1 - Nov 22 - Dec 3 price swing
• RES 2: 4800.00 Round number resistance
• RES 1: 4798.00 High Dec 28 and the ATH
• PRICE: 4784.75 @ 08:14 GMT Dec 30
• SUP 1: 4595.14/4520.25 50-day EMA / Low Dec 20
• SUP 2: 4485.75 Low Dec 3 and bear trigger
• SUP 3: 4493.88 61.8% retracement of the Oct 1 - Nov 22 rally
• SUP 4: 4436.97 76.4% retracement of the Oct 1 - Nov 22 rally

S&P E-minis hold the entirety of the rally triggered on Dec 20, as prices recovered off the 100-dma at 4537.57. The resulting alltime high at 4798.00 sits just below psychological resistance of 4800 - a recovery beyond which opens 4854.20 and 4863.6. Should prices turn lower, the 100-dma provides initial support ahead of the Dec20 lows of 4520.25.

COMMODITIES

BRENT TECHS: (G2) Testing $80/bbl Handle

• RES 4: $82.34 - High Nov 11
• RES 3: $81.88 - High Nov 24
• RES 2: $80.42 - High Nov 26
• RES 1: $80.17 - High Dec 29
• PRICE: $79.02 @ 08:15 GMT Dec 30
• SUP 1: $73.62 - Low Dec 22
• SUP 2: $69.28 - Low Dec 20
• SUP 3: $65.72 - Low Dec 2 and the bear trigger
• SUP 4: $62.95 - Low Aug 23 and a key support

Brent futures maintain the post-Christmas bullish theme following the reversal from $69.28, the Dec 20 low. The Dec27 rally puts a test of the $80/bbl handle within range, with an extension through here opening 80.42 and 81.88. Note too that the contract is trading above the 50-day EMA. Key support is $69.25.

WTI TECHS: (G2) Holds Recent Rally

• RES 4: $78.59 - High Nov 24
• RES 3: $77.59 - High Nov 26
• RES 2: $77.44 - 76.4% retracement of the Oct - Dec sell-off
• RES 1: $77.37 - High Dec 29
• PRICE: $76.31 @ 08:17 GMT Dec 30
• SUP 1: $68.56/66.12 - Low Dec 21 / Low Dec 20
• SUP 2: $65.45 - Low Dec 3
• SUP 3: $62.26 - Low Dec 2 and the bear trigger
• SUP 4: $60.52 - Low Aug 20 and a key support

WTI futures are holding the sizeable Dec27 rally, putting prices at the best level since late November. The rally has so far stalled at the 76.4% retracement of the Oct-Dec downleg at $77.44, which becomes the next key upside level. Clearance here opens Nov26 high at 77.59.

GOLD TECHS: Base Building

• RES 4: $1877.2/1900.5 High Nov 16 / Bull channel top
• RES 3: $1849.1 - High Nov 22
• RES 2: $1830.0 - 61.8% retracement of the Nov 16 - Dec 15 downleg
• RES 1: $1820.3 - High Dec 28
• PRICE: $1800.3 @ 08:22 GMT Dec 30
• SUP 1: $1784.9/1773.9 - Low Dec 21 / Channel base from Aug 9 low
• SUP 2: $1753.7 - Low Dec 15 and a key support
• SUP 3: $1746.0 - Oct 6 low
• SUP 4: $1721.7 - Low Sep 29

Gold maintains a bullish focus and is approaching recent highs. The yellow metal is still showing signs of base building following the recent false break of the channel base drawn from the Aug 9 low. Attention is on $1820.3, the Dec 29 high. A break would strengthen the bullish theme and suggest scope for a move higher near term. This would open $1830.0, a Fibonacci retracement. Initial firm support to watch is at $1773.9, the channel base.

SILVER TECHS: Maintains A Bullish Tone

• RES 4: $23.886 - 61.8% retracement of the Nov 16 - Dec 15 sell-off
• RES 3: $23.772 - High Nov 24
• RES 2: $23.436 - High Dec 28
• RES 1: $23.369/429 - 100- / 50-DMA
• PRICE: $22.690 @ 08:23 GMT Dec 30
• SUP 1: $22.182/21.918 - Low Dec 21 / Low Dec 16
• SUP 2: $21.427/423 - Low Dec 15 / Low Sep 29 and key support
• SUP 3: $20.871 - 50.0% retracement of the Mar ‘20 - Feb ‘21 rally
• SUP 4: $20.000 - Psychological round number

Silver maintains a firmer tone having rebounded from $21.427 on Dec 15. In pattern terms, price action on Dec 15 is a bullish hammer formation and subsequent gains have reinforced this reversal signal. Attention is on the 100- and 50-dmas at $23.369/429. A clear break would strengthen the developing bullish condition and signal scope for an extension higher. Key support lies at $21.427 and $21.423.