MNI DAILY TECHNICAL ANALYSIS - Bonds Start Year on Soft Note

Price Signal Summary – Bonds Starting Year On Soft Note

• In the equity space, S&P E-minis printed a fresh all-time high Dec 30 of 4799.75. Trend conditions remain bullish and the 4800.00 is still exposed. A break higher would confirm a resumption of the uptrend and pave the way for a climb towards 4854.19, a Fibonacci projection. EUROSTOXX 50 futures remain in an uptrend and continues to push higher. The recent break of resistance at 4270.00, the Dec 8 high strengthened bullish conditions and attention is on the key resistance at 4392.50, the Nov 18 high.
• In FX, EURUSD started the year on a softer note, pulling away from recent highs yesterday. The pullback means resistance at 1.1383/86 stays intact and price continues to trade inside the past month's range. A deeper pullback would expose support at 1.1222, the Dec 15 low. USDJPY has started the year on a firm note and today’s gains have resulted in a break of key resistance at 115.52, the Nov 24 high. The breach confirms a resumption of both the short and medium-term trends
• On the commodity front, Gold traded sharply lower yesterday. In terms of price patterns, the sell-off appears to be a bearish engulfing candle but it remains to be seen whether this pattern is an early sign of a stronger bearish reversal. WTI futures are holding the sizeable Dec27 rally and remain in an uptrend. Recent weakness is considered corrective. Yesterday’s low of $74.27 represents a key short-term support.
• In the FI space, Bund futures have started the year on a soft note, extending the current bearish cycle yesterday. Last week’s breach of support at 171.77, Nov 24 low strengthened the bearish case, paving the way for a move towards 170.19, Nov 2 low ahead of the major support at 169.34. Gilt futures remain in a downtrend and have started today’s session on a bearish note. The contract has cleared support at 124.35, Dec 29 low and 124.17, Nov 24 low.

FOREIGN EXCHANGE

EURUSD TECHS: Still Inside Its Range

• RES 4: 1.1608 High Nov 9
• RES 3: 1.1514 Low Nov 5
• RES 2: 1.1464/68 High Nov 15 / Bear channel top from Jun 1 high
• RES 1: 1.1383/86 High Nov 30 / High Dec 31
• PRICE: 1.1301 @ 06:16 GMT Jan 4
• SUP 1: 1.1274/22 Low Dec 29 / Low Dec 15
• SUP 2: 1.1186/85 Low Nov 24 / Low Jul 1, 2020 and the bear trigger
• 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 started the year on a softer note, pulling away from recent highs yesterday. The pullback means resistance at 1.1383/86 stays intact and price continues to trade inside the past month's range. A deeper pullback would expose support at 1.1222, the Dec 15 low. Clearance of this level would open the bear trigger at the 1.1186/85 zone. For bulls, a clear breach of 1.13783/86 is required to suggest scope for a stronger recovery.

GBPUSD TECHS: Trend Remains Up

• RES 4: 1.3697 2.0% 10-dma envelope
• RES 3: 1.3607 High Nov 9
• RES 2: 1.3562/78 100-dma / 61.8% of the Oct - Dec sell-off
• RES 1: 1.3550 High Dec 31 and a key resistance
• PRICE: 1.3461 @ 06:29 GMT Jan 4
• SUP 1: 1.33431 Low Jan 3
• SUP 2: 1.3391 20-day EMA
• SUP 3: 1.3343 Low Dec 23
• SUP 4: 1.3240 Low Dec 22

GBPUSD traded higher last week but gains have so far stalled at 1.3550, the Dec 31 high. The pair remains above its 50-day EMA at 1.3427 - the recent breach of this average reinforced bullish conditions. A resumption of strength would clear the way for 1.3578, a Fibonacci retracement and 1.3607, the Nov 9 high. Note that 1.3562 the 100-dma also represents an important resistance. Firm support to watch is at 1.3391, the 20-day EMA.

EURGBP TECHS: Approaching Major Support

• RES 4: 0.8498 High Dec 23
• RES 3: 0.8478 50-day EMA
• RES 2: 0.8454 20-day EMA
• RES 1: 0.8419 High Jan 3
• PRICE: 0.8390 @ 06:39 GMT Jan 4
• SUP 1: 0.8368 Low Dec 31
• SUP 2: 0.8356 Low Feb 26, 2020
• SUP 3: 0.8348 1.0% 10-dma envelope
• SUP 4: 0.8282/77 Low Feb’20 / Dec’19 and key bear trigger

EURGBP remains acutely weak following last week’s fresh multi-year low print of 0.8368 on Dec 31. The move has resulted in a breach of key support at 0.8381, the Nov 22 low to confirm a resumption of the broader downtrend. This opens the major support and bear trigger at 0.8282/77. Note that the 0.8300 area is the base of a broad multi-year range and marks a major support. Initial resistance is at 0.8419, yesterday’s high.

USDJPY TECHS: Resumes Its Primary Uptrend

• RES 4: 118.66 High Dec 15, 2016
• RES 3: 118.07 2.236 proj of Apr 23 - Jul 2 - Aug 4 price swing
• RES 2: 117.08 2.00 proj of Apr 23 - Jul 2 - Aug 4 price swing
• RES 1: 116.09 1.764 proj of Apr 23 - Jul 2 - Aug 4 price swing
• PRICE: 115.78 @ 06:53 GMT Jan 4
• SUP 1: 114.95 Low Jan 3
• SUP 2: 114.40 20-day EMA
• SUP 3: 113.81 50-day EMA
• SUP 4: 113.33 Low Dec 20

USDJPY has started the year on a firm note and today’s gains have resulted in a break of key resistance at 115.52, the Nov 24 high. The breach confirms a resumption of both the short and medium-term trends, paving the way for a climb towards 116.09 next, a Fibonacci projection. Moving average conditions remain in bull mode, reinforcing the current bullish sentiment. Initial firm support is seen at 114.40, the 20-day EMA.

EURJPY TECHS: Holding Onto Recent Gains

• RES 4: 132.04 76.4% retracement of the Oct 20 - Dec 3 downleg
• RES 3: 131.59 High Nov 5
• RES 2: 131.15/20 61.8% Oct 20 - Dec 3 move / 1% Upper Boll Band
• RES 1: 131.04 High Dec 31
• PRICE: 130.74 @ 07:04 GMT Jan 4
• SUP 1: 130.02 Low Jan 3
• SUP 2: 129.55/51 50- and 20-day EMA levels
• SUP 3: 129.20 Low Dec 27
• SUP 4: 128.57 Low Dec 22

EURJPY is trading near the December highs and maintains a bullish tone. A positive theme follows the strong recovery in the second half of December and with the cross holding onto gains, scope is seen for an extension higher. The focus is on 131.15, a Fibonacci retracement and 131.20, a vol-based resistance. A break of this zone would open 132.04. On the downside, firm support is seen at 129.55/51, the 50- and 20-day EMA levels.

AUDUSD TECHS: Key Short-Term Resistance Defined At 0.7278

• RES 4: 0.7371 High nov 15
• RES 3: 0.7341 61.8% retracement of the Oct 28 - Dec 3 downleg
• RES 2: 0.7328 Former channel base drawn from the Aug 20 low
• RES 1: 0.7278 High Dec 31
• PRICE: 0.7204 @ 07:13 GMT Jan 4
• SUP 1: 0.7184 Low Jan 3
• SUP 2: 0.7121 Low Dec 22
• SUP 3: 0.7082 Low Dec 20 and a key support
• SUP 4: 0.7040 Low ec 7

AUDUSD sold off sharply yesterday. Key short-term resistance has been defined at 0.7278, the Dec 31 high where a break is required to confirm a resumption of the recent uptrend and pave the way for a climb towards 0.7328/41, a former channel base drawn from the Aug 20 low and a Fibonacci retracement. A resumption of weakness would threaten a bullish theme and expose 0.7082, the Dec 20 low.

USDCAD TECHS: Bullish Engulfing Candle

• RES 4: 1.2964 High Dec 20 and the bull trigger
• RES 3: 1.2924 High Dec 22
• RES 2: 1.2848 High Dec 27 and a key near-term resistance
• RES 1: 1.2779 High Jan 4
• PRICE: 1.2736 @ 07:22 GMT Jan 4
• SUP 1: 1.2621 Low Dec 31
• SUP 2: 1.2608 Low Dec 8 and key support
• SUP 3: 1.2585 Low Nov 19
• SUP 4: 1.2546 Low 61.8% retracement of the Oct - Dec rally

USDCAD traded higher yesterday and reversed the sharp sell-off on Dec 31. From a candlestick perspective, yesterday’s rally appears to be a bullish engulfing candle. If correct, this signals a potential base at 1.2621, last week’s low. A resumption of strength would open 1.2848, the Dec 27 high and a key near-term resistance. On the downside, a break of 1.2621 would cancel the reversal pattern and instead open 1.2608, the Dec 8 low.

FIXED INCOME

BUND TECHS: (H2) Bearish Extension

• RES 4: 173.52 High Dec 22
• RES 3: 173.19 High Dec 23
• RES 2: 172.84 20-day EMA
• RES 1: 171.77 Low Nov 24 and recent breakout level
• PRICE: 170.61 @ 05:14 GMT Jan 4
• SUP 1: 170.19 Low Nov 2
• SUP 2: 169.48 Low Nov 1
• SUP 3: 169.34 Low Oct 29 and major support
• SUP 4: 169.08 3.618 projection of the Dec 8 - 20 price swing

Bund futures have started the year on a soft note, extending the current bearish cycle yesterday. Last week’s breach of support at 171.77, Nov 24 low strengthened the bearish case, paving the way for a move towards 170.19, Nov 2 low ahead of the major support at 169.34, the Oct 29 low. On the upside, initial resistance is seen at 171.77 where a break is required to ease bearish pressure. Short-term gains though would be considered corrective.

BOBL TECHS: (H2) Bears Remain In Charge

• RES 4: 133.723 20-day EMA
• RES 3: 133.710 Low Dec 8 and recent breakout level
• RES 2: 133.530 High Dec 29
• RES 1: 133.260 High Jan 3
• PRICE: 133.040 @ 05:17 GMT Jan 4
• SUP 1: 133.00 Low Jan 3
• SUP 2: 132.954 1.764 proj of the Nov 30 - Dec 8 - 20 price swing
• SUP 3: 132.760 2.00 proj of the Nov 30 - Dec 8 - 20 price swing
• SUP 4: 132.566 2.236 proj of the Nov 30 - Dec 8 - 20 price swing

Bobl futures remains bearish and yesterday’s extension lower has strengthened the bearish case. The recent breach of support at 133.710, Dec 8 low confirmed a resumption of bearish activity and bears haven’t looked back. Scope is seen for an extension lower with the focus on 132.954 and 132.760 next, Fibonacci projection levels. On the upside, initial firm resistance is seen at 133.530, the Dec 29 high.

SCHATZ TECHS: (H2) Bearish Theme

• RES 4: 112.155 High Dec 23
• RES 3: 112.120 High Dec 27
• RES 2: 112.118 20-day EMA
• RES 1: 112.080 High Dec 29
• PRICE: 112.025 @ 05:41 GMT Jan 4
• SUP 1: 111.985 Low Jan 3
• SUP 2: 112.956 1.764 proj of the Nov 26 - Dec 16 - 20 price swing
• SUP 3: 111.935 3.0% Lower Bollinger Band
• SUP 4: 111.920 1.382 proj of the Nov 26 - Dec 16 - 20 price swing

Schatz futures remain soft following last week’s extension of the downleg that started Dec 20. Support at 112.055 has recently given way, reinforcing a bearish theme and this has opened 111.956, a Fibonacci projection. Further out, weakness below the 111.90 handle is also likely. On the upside, initial firm resistance is seen at the 20-day EMA that intersects at 112.118. A break would ease bearish pressure.

GILT TECHS: (H2) Starting 2022 On A Bearish Note

• RES 4: 126.76 High Dec 21
• RES 3: 125.93 High Dec 22
• RES 2: 125.73 20-day EMA
• RES 1: 125.18 High Dec 31
• PRICE: 124.09 @ 09:25 GMT Jan 4
• SUP 1: 124.00 Intraday low
• SUP 2: 123.79 2.764 proj of the Dec 8 - 16 - 20 price swing
• SUP 3: 123.48 3.00 proj of the Dec 8 - 16 - 20 price swing
• SUP 4: 123.24 3.0% Lower Bollinger Band

Gilt futures remain in a downtrend and have started today’s session on a bearish note. The contract has cleared support at 124.35, Dec 29 low and 124.17, Nov 24 low. The break of this latter support strengthens bearish conditions and opens 123.48, a Fibonacci projection. On the upside, resistance is seen at 125.18, the Dec 31 high and 125.73, the 20-day EMA. Clearance of this zone is required to ease bearish pressure.

BTP TECHS: (H2) Heading South

• RES 4: 150.08 High Dec 21
• RES 3: 149.22 High Dec 22
• RES 2: 148.50 20-day EMA
• RES 1: 148.02 High Dec 29
• PRICE: 146.83 @ Close Jan 3
• SUP 1: 146.50 Low Jan 3
• SUP 2: 146.00 Round number support
• SUP 3: 145.72 2.236 proj of the Dec 6 - 18 - 14 price swing
• SUP 4: 145.29 Low Nov 1 and key support

BTP futures remain heavy following the sell-off since Dec 20 and yesterday’s extension lower. The contract recently breached support at 148.25, Dec 1 low as well as the 147.36 key support, Nov 24 low. 146.55, the 76.4% retracement of the Nov 1 - 22 rally has been tested. A clear break of this level would signal scope for an extension lower towards key support at 145.29, the Nov 1 low. Initial firm resistance is seen at 148.02, the Dec 29 high.

EQUITIES

EUROSTOXX 50 TECHS: (H2) Approaching The Nov High

• RES 4: 4400.00 Round number resistance
• RES 3: 4392.50 High Nov 18
• RES 2: 4355.56 3.0% 10-dma envelope
• RES 1: 4347.00 Intraday high
• PRICE: 4338.50 @ 08:53 GMT Jan 4
• SUP 1: 4253.50 Low Dec 29
• SUP 2: 4203.80 50-day EMA
• SUP 2: 4149.00 Low Dec 22
• SUP 4: 4108.50 Low Dec 21

EUROSTOXX 50 futures remain in an uptrend and continues to push higher. The recent break of resistance at 4270.00, the Dec 8 high strengthened bullish conditions and attention is on the key resistance at 4392.50, the Nov 18 high. Clearance of this hurdle would reinforce bullish conditions. On the downside, initial support to watch is at 4253.50, the Dec 29 low. The 50-day EMA at 4203.80 also represents a key support parameter.

E-MINI S&P (H2): 4800.00 Remains Exposed

• 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: 4799.75 High Dec 30 and ATH
• PRICE: 4794.25 @ 09:07 GMT Jan 3
• 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 printed a fresh all-time high Dec 30 of 4799.75. Trend conditions remain bullish and the 4800.00 is still exposed. A break higher would confirm a resumption of the uptrend and pave the way for a climb towards 4854.19, a Fibonacci projection. On the downside, initial support is seen at 4745.50, the Jan 3 low The 50-day EMA at 4634.63 remains a key pivot support parameter. A break of this EMA is required to threaten the trend.

COMMODITIES

BRENT TECHS: (H2) Holding Above Support

• RES 4: $83.69 - High Oct 10 and a major resistance
• RES 3: $83.11 - High Nov 10
• RES 2: $81.17 - High Nov 24
• RES 1: $80.03 - High Dec 29 and the bull trigger
• PRICE: $79.16 @ 08:19 GMT Jan 4
• SUP 1: $77.04 - Low Jan 3
• SUP 2: $76.38 - 50-day EMA
• SUP 3: $75.38 - Low Dec 27
• SUP 4: $73.55 - Low Dec 22

Brent futures remain in an uptrend and recent weakness is considered corrective. Yesterday’s low of $77.04 represents a key short-term support. Attention is on resistance at $80.03, the Dec 29 high where a break would confirm a resumption of the current bull cycle and open $81.17, the Nov 24 high. On the downside, a break of $77.04 would instead suggest scope for a deeper corrective pullback.

WTI TECHS: (G2) Trend Needle Points North

• RES 4: $81.73 - High Nov 10
• RES 3: $79.40 - High Nov 16
• RES 2: $78.59 - High N0v 24
• RES 1: $77.44 - 76.4% retracement of the Oct - Dec downleg
• PRICE: $76.37 @ 09:30 GMT Jan 04
• SUP 1: $74.27 - Low Jan 3 and key short-term support
• SUP 2: $73.72 - 50-day EMA
• SUP 3: $72.57 - Low Dec 27
• SUP 4: $70.80 - Low Dec 22

WTI futures are holding the sizeable Dec27 rally and remain in an uptrend. Recent weakness is considered corrective. Yesterday’s low of $74.27 represents a key short-term support. Attention is on resistance at $77.44, the Dec 29 high and a Fibonacci retracement. A break would confirm a resumption of the uptrend and open $78.59, Nov 24 high. On the downside, a break of $74.27 would instead suggest scope for a deeper pullback.

GOLD TECHS: Short-Term Directional Triggers Defined

• RES 4: $1877.2 - High Nov 16 and key resistance
• RES 3: $1871.0 - High Nov 18
• RES 2: $1849.1 - High Nov 22
• RES 1: $1831.9 - High Jan 3 and key near-term resistance
• PRICE: $1805.7 @ 08:15 GMT Jan 4
• SUP 1: $1798.5 - Low Jan 3
• SUP 2: $1779.8 - Channel base from Aug 9 low
• SUP 3: $1753.7 - Low Dec 15 and a key support
• SUP 4: $1746.0 - Low Oct 6

Gold traded sharply lower yesterday. In terms of price patterns, the sell-off appears to be a bearish engulfing candle but it remains to be seen whether this pattern is an early sign of a stronger bearish reversal that would result in a break of support at $1753.7, the Dec 15 low. For now, yesterday’s high of $1831.9 and 1779.8, the channel base drawn from the Aug 9 low, mark the key short-term directional triggers.

SILVER TECHS: Maintains A Bullish Tone But Watch Support

• 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: $23.359/383 - 100- / 50-DMA
• PRICE: $22.857 @ 09:25 GMT Jan 4
• SUP 1: $22.593 - Low Dec 29
• SUP 2: $22.182/21.918 - Low Dec 21 / Low Dec 16
• SUP 3: $21.427/423 - Low Dec 15 / Low Sep 29 and key support
• SUP 4: $20.871 - 50.0% retracement of the Mar ‘20 - Feb ‘21 rally

Silver maintains a bullish tone having rebounded from $21.427 on Dec 15. In pattern terms, price action on Dec 15 was a bullish hammer formation and subsequent gains have reinforced this reversal signal. Attention is on the 100- and 50-dmas at $23.359/383. A clear break would strengthen the bullish condition and signal scope for an extension higher. Watch initial support at $22.593, Dec 29 low. A break would concern bulls.