MNI DAILY TECHNICAL ANALYSIS - EURUSD Inverted Hammer Could Signal Potential Top

Price Signal Summary – EURUSD Inverted Hammer Could Signal Potential Top

• The trend condition in S&P E-Minis is resolutely bullish, with the upside trigger at 5066.50 giving way to new highs at 5107.75. This erases the pullback off last week’s highs, confirming S/T weakness as corrective. Support to watch lies at 4967.25, the 20-day EMA. The bull cycle in Eurostoxx 50 futures extended sharply early Thursday, with psychological resistance at 4800 cleared in style, and first modest resistance at 4548.00 cracking in the process. The intraday high of 4864.00 looks extended having pierced the 2.0% Upper Bollinger Band.
• EURUSD’s rally faltered at the daily highs of 1.0888 Thursday, as the sell-on-rallies theme resumed and the pair failed to break the 50-dma to challenge any reversal trigger. Weakness off highs reaffirms the overarching bearish theme, with a negative close yesterday forming a potential hammer, which could mark a near-term top. The sell-on-rallies theme was evident in EURGBP across both the Tuesday and Thursday sessions, retaining the view that S/T strength is corrective in the cross. A bearish trend condition remains intact and the cross traded to fresh cycle lows last week. EURJPY maintains a firmer tone and has made further progress through the mid-Jan highs of 161.86. With key resistance pierced, the uptrend off Dec lows has resumed, showing above 163.43, the 1.0% 10-dma envelope.
• Gold traded lower into mid-month, and the progress off lows faltered Thursday after the failed break of the 50-dma of $2031.71. Clearance here and above the Feb 1 high of $2065.50 would reinstate a bullish theme. Gains off the Feb 5 low still appear corrective at these levels. Key short-term resistance in WTI futures has been defined at $78.52, the Feb 16 high - a level untroubled by the recovery off this week’s low. Clearance of this level would be a bullish development.
• Bund futures remain in a bear mode condition, although downward momentum faltered through the European close on Thursday. Solid French PMI data added extra weight Thursday, putting prices through both the mid-February lows as well as the late November lows to affirm the negative background bias. A bear threat in Gilt futures remains present and last Tuesday’s move lower confirmed a resumption of the current bear cycle. Key support at 97.57, the Jan 25 low, has been cleared.

FOREIGN EXCHANGE

EURUSD TECHS: Potential Hammer

• RES 4: 1.1046 High Jan 2
• RES 3: 1.0998 High Jan 5
• RES 2: 1.0932 High Jan 24 and a reversal trigger
• RES 1: 1.0888/98 High Feb 22 / 02
• PRICE: 1.0826 @ 08:53 GMT Feb 23
• SUP 1: 1.0695 Low Feb 14
• SUP 2: 1.0656 Low Nov 10
• SUP 3: 1.0611 76.4% retracement of the Oct - Dec bull leg
• SUP 4: 1.0568 Low Nov 2

EURUSD’s rally faltered at the daily highs of 1.0888 Thursday, as the sell-on-rallies theme resumed and the pair failed to break the 50-dma to challenge any reversal trigger. Weakness off highs reaffirms the overarching bearish theme, with a negative close yesterday forming a potential hammer, which could mark a near-term top. Last week’s bearish extension remains an influence on prices, however the short-term corrective recovery could extend on any strength through the reversal trigger at 1.0932. Consolidation at current or lower levels will re-target fresh trend lows and support at 1.0656, the Nov 10 low.

GBPUSD TECHS: Bear Threat Remains Present

• RES 4: 1.2881 76.4% retracement of the Jul 14 - Oct 4 bear leg
• RES 3: 1.2827 High Dec 28 and the bull trigger
• RES 2: 1.2775 High Jan 24
• RES 1: 1.2709 High Feb 22
• PRICE: 1.2667 @ 08:54 GMT Feb 23
• SUP 1: 1.2519 Low Feb 5 and the bear trigger
• SUP 2: 1.2500 Low Dec 13
• SUP 3: 1.2432 50.0% retracement of the Oct 4 - Dec 28 bull phase
• SUP 4: 1.2374 Low Nov 17

A bear threat in GBPUSD remains present, with the weakness off the Thursday high putting the pair back into negative territory. Initial resistance is at 1.2684, the Feb 13 high, has given way - but strength looks corrective below 1.2827, the Dec 28 high and bull trigger. Any continuation lower would open 1.2519, the Feb 5 low where a break would confirm a resumption of the current bear cycle. Recently, the pair breached 1.2597, the Jan 17 low, to confirm a range breakout, paving the way for a move towards 1.2500, the Dec 13 low.

EURGBP TECHS: Key Short-Term Resistance Remains Intact

• RES 4: 0.8676 High Jan 3
• RES 3: 0.8620 High Jan 20
• RES 2: 0.8581 50-day EMA and key near-term resistance
• RES 1: 0.8578 High Feb 20
• PRICE: 0.8546 @ 08:55 GMT Feb 23
• SUP 1: 0.8493 Low Aug 23 2023 and a key medium-term support
• SUP 2: 0.8454 61.8% of the Mar 7 - Sep 26 ‘23 bull phase
• SUP 3: 0.8388 Low Aug 17 2023
• SUP 4: 0.8340 Low Aug 2 2022

The sell-on-rallies theme was evident in EURGBP across both the Tuesday and Thursday sessions, retaining the view that S/T strength is corrective in the cross. A bearish trend condition remains intact and the cross traded to fresh cycle lows last week, breaching support at 0.8513, the Jan 29 low. The break confirms a resumption of the bear cycle with the next objective at 0.8493, the Aug 23 ‘23 low and a key support. Key near-term resistance to watch is 0.8578, the 50-day EMA. A clear break of the average would be a bullish development.

USDJPY TECHS: Shallow Correction

• RES 4: 152.43 0.764 proj of the Dec 28 - Jan 19 - Feb 1 price swing
• RES 3: 151.91/95 High Nov 13 / High Oct 1 ‘22 and major resistance
• RES 2: 151.43 High Nov 16
• RES 1: 150.89 High Feb 13
• PRICE: 150.66 @ 08:56 GMT Feb 22
• SUP 1: 148.85/147.57 20- and 50-day EMA values
• SUP 2: 145.90 Low Feb 1 and key support
• SUP 3: 145.59 Low Jan 16
• SUP 4: 144.36 Low Jan 12

The USDJPY trend outlook remains bullish and the latest shallow pullback appears to be a correction. Recent fresh cycle highs confirm, once again, a resumption of the uptrend and note that last Tuesday’s gains resulted in a break of 149.75, the Nov 22 high. This signals scope for a climb towards 151.91/95, the Nov 13 ‘23 high and the Oct 1 ‘22 high and major resistance. Initial firm support lies at 148.85, the 20-day EMA.

EURJPY TECHS: Further Through Mid-Jan Highs

• RES 4: 164.30 High Nov 16 and a key medium-term resistance
• RES 3: 163.72 High Nov 27
• RES 2: 163.47 High Feb 22
• RES 1: 163.43 1.0% 10-dma envelope
• PRICE: 163.06 @ 08:57 GMT Feb 23
• SUP 1: 160.37 20-day EMA
• SUP 2: 158.92/08 Low Feb 7 / 1 and key support
• SUP 3: 157.21 Low Jan 9
• SUP 4: 156.08 Low Jan 4

EURJPY maintains a firmer tone and has made further progress through the mid-Jan highs of 161.86. With key resistance pierced, the uptrend off Dec lows has resumed, showing above 163.43, the 1.0% 10-dma envelope. Key short-term support is unchanged at 158.08, Feb 1 low. A clear break of this level would highlight a reversal. Initial support lies at 160.37, the 20-day EMA.

AUDUSD TECHS: Firmer Close Despite Bearish Trend Signals

• RES 4: 0.6900 High Jun 16 and a key resistance
• RES 3: 0.6871 High Dec 28 and the bull trigger
• RES 2: 0.6729/71 High Jan 12 / 3
• RES 1: 0.6625 High Jan 30 and key resistance
• PRICE: 0.6562 @ 08:58 GMT Feb 23
• SUP 1: 0.6443 Low Feb 13
• SUP 2: 0.6412 76.4% Fibonacci retracement for Oct - Dec upleg
• SUP 3: 0.6360 Low Nov 14
• SUP 4: 0.6339 Low Nov 10

AUD/USD rallies were sold into the Thursday close, with prices returning negative despite printing a new multi-week high at 0.6595. Further losses would see the bearish trend resume, confirming the latest bounce as corrective. Last Tuesday’s initial break lower reinforced the bearish theme. To the downside, sights rest on 0.6412, a Fibonacci retracement. Moving average studies are in a bear-mode set-up, highlighting a clear, albeit weaker, downtrend. Key resistance to watch is 0.6625, the Jan 30 high. Initial resistance is at 0.6546, the 20-day EMA and a level pierced this week.

USDCAD TECHS: Support Remains Intact

• RES 4: 1.3661 High Nov 27
• RES 3: 1.3623 61.8% retracement of the Nov 1 - Dec 27 bear leg
• RES 2: 1.3608 High Dec 13
• RES 1: 1.3586 High Feb 13
• PRICE: 1.3493 @ 08:59 GMT Feb 23
• SUP 1: 1.3413/3359 Low Feb 09 / Jan 31 and key S/T support
• SUP 2: 1.3343 Low Jan 12
• SUP 3: 1.3288 Low Jan 5
• SUP 4: 1.3229 Low Feb 1

The USDCAD trend structure remains bullish despite the sell-off late last week as well as through the Thursday open - a correction. Tuesday’s softer-than-expected CPI works in favour of further gains. The pair traded higher Tuesday resulting in a break of resistance at 1.3544, the Feb 5 / 6 high and bull trigger. This confirms a resumption of the bull cycle that started Dec 27 and opens 1.3623, 61.8% of the Nov 1 - Dec 27 bear leg. On the downside, key support to watch lies at 1.3359, the Jan 31 low. Initial firm support has been defined at 1.3413, the Feb 9 low.

FIXED INCOME

BUND TECHS: (H4) Bearish Threat Resumes

• RES 4: 136.29 High Feb 1 and the bull trigger
• RES 3: 135.88 High Feb 2
• RES 2: 134.60 High Feb 7
• RES 1: 134.21 20-day EMA
• PRICE: 132.37 @ 08:07 GMT Feb 23
• SUP 1: 131.73 1.0% 10-dma envelope
• SUP 2: 131.49 61.8% retracement of the Oct 4 - Dec 27 bull phase
• SUP 3: 131.45 Low Nov 28
• SUP 4: 130.47 Low Nov 24

Bund futures remain in a bear mode condition, although downward momentum faltered through the European close on Thursday. Solid French PMI data added extra weight Thursday, putting prices through both the mid-February lows as well as the late November lows to affirm the negative background bias. The focus is on 131.49 next, the 61.8% retracement of the Oct 4 - Dec 27 bull phase. Clearance here sees further losses through the Nov’23 rally. For bulls, clearance of 136.29, the Feb 1 high, is required to signal a reversal.

BOBL TECHS: (H4) Bearish Trend Structure

• RES 4: 118.660 High Feb 1 and the reversal trigger
• RES 3: 118.370 High Feb 2
• RES 2: 117.880 High Feb 5
• RES 1: 117.480 20-day EMA
• PRICE: 116.100 @ 08:09 GMT Feb 23
• SUP 1: 115.960 Low Feb 22
• SUP 2: 115.883 Lower 2.0% Bollinger Band
• SUP 3: 115.820 Low Nov 24
• SUP 4: 115.514 1.0% 10-dma envelope

A bearish cycle in Bobl futures resumed Thursday, with prices firmly taking out support at 116.11 on the way to new pullback lows of 115.960. This clear break confirms a resumption of the bear cycle that started Dec 27 and sights are on 115.820, the Nov 24 low. On the upside, key short-term resistance has been defined at 118.660, the Feb 1 high. A break would be a bullish development, but that’s looking unlikely given current momentum.

SCHATZ TECHS: (H4) Southbound

• RES 4: 106.070 High Feb 2
• RES 3: 105.890 High Feb 5
• RES 2: 105.772 20-day EMA
• RES 1: 105.665 High Feb 9
• PRICE: 105.125 @ 08:11 GMT Feb 23
• SUP 1: 105.115/110 Low Oct 19/Feb 23
• SUP 2: 105.003 Lower Bollinger Band
• SUP 3: 105.075 2.236 projection of the Jan 12 - 25 - 31 price swing
• SUP 4: 104.356 1.0% 10-dma envelope

The downtrend in Schatz futures accelerated early Thursday, with another lower low following ahead of the open on Friday. Solid European PMI numbers were the initial driver, driving prices through support layered between 105.295 and 105.195. Extended pullback lows at 105.110 are the lowest print since mid-October. This affirms the current bear cycle. This maintains the bearish price sequence of lower lows and lower highs and note too that moving average studies are in a bear mode position. Short-term gains are considered corrective below the 20-day EMA.

GILT TECHS: (H4) Bears Remain In The Driver’s Seat

• RES 4: 100.81 High Jan 5
• RES 3: 100.62 High Feb 1 and key resistance
• RES 2: 100.20 High Feb 2
• RES 1: 98.45 50-day EMA
• PRICE: 97.37 @ 08:14 GMT Feb 23
• SUP 1: 96.81 Low Feb 13 and the bear trigger
• SUP 2: 96.67 Low Dec 5
• SUP 3: 96.10 Low Nov 30
• SUP 4: 95.56 Low Nov 27

A bear threat in Gilt futures remains present and last Tuesday’s move lower confirmed a resumption of the current bear cycle. Key support at 97.57, the Jan 25 low, has been cleared. The break confirms a resumption of the downtrend and opens 96.67, the Dec 5 low. On the upside, initial firm resistance is seen at 98.05, the 20-day EMA. Key resistance and the reversal trigger is at 100.62, the Feb 1 high.

BTP TECHS: (H4) Cracks Support

• RES 4: 121.43 High 27 and a key resistance
• RES 3: 120.40 High Dec 29
• RES 2: 119.77 High Jan 4
• RES 1: 119.27 High Jan 30 and key near-term resistance
• PRICE: 116.83 @ 08:36 GMT Feb 22
• SUP 1: 116.50 Low Feb 22
• SUP 2: 115.70 Low Dec 8
• SUP 3: 114.10 50.0% retracement of the Oct 19 - Dec 27 bull cycle
• SUP 4: 113.31 Low Nov 28

The trend condition in BTP futures is affirmed as bearish and recent weakness reinforces current conditions. Key support at 116.98, the Jan 25 low, has been cracked, and while markets held well into the Thursday close, the break signals a resumption of the bear cycle. The Dec 8 low of 115.70 sits just below. Firm resistance has been defined at 119.27, the Jan 30 high. Clearance of this level could signal scope for a stronger recovery instead.

EQUITIES

EUROSTOXX50 TECHS: (H4) Another Leg Higher

• RES 4: 4939.30 2.382 projection of the Nov 8 - 24 - 28 price swing
• RES 3: 4919.80 3.0% Upper Bollinger Band
• RES 2: 4904.40 2.236 projection of the Nov 8 - 24 - 28 price swing
• RES 1: 4884.00 High Feb 22
• PRICE: 4866.00 @ 08:19 GMT Feb 23
• SUP 1: 4701.60 20-day EMA
• SUP 2: 4602.20 50-day EMA
• SUP 3: 4402.00 Low Jan 17 and key short-term support
• SUP 4: 4370.00 Low Nov 28

The bull cycle in Eurostoxx 50 futures extended sharply early Thursday, with psychological resistance at 4800 cleared in style, and first modest resistance at 4548.00 cracking in the process. The intraday high of 4864.00 looks extended having pierced the 2.0% Upper Bollinger Band, however the outlook is resolutely bullish the longer these levels hold. The upleg reinforces current conditions. Moving average studies are in a bull-mode position, highlighting positive market sentiment.

E-MINI S&P TECHS: (H4) Bullish to Bullish

• RES 4: 5170.86 2.236 proj of Nov 10 - Dec 1 - 7 price swing
• RES 3: 5133.07 2.0% 10-dma envelope
• RES 2: 5110.50 2.00 proj of Nov 10 - Dec 1 - 7 price swing
• RES 1: 5107.75 High Feb 23 and the bull trigger
• PRICE: 5097.50 @ 08:31 GMT Feb 23
• SUP 1: 4967.25 20-day EMA
• SUP 2: 4866.000/4862.18 Low Jan 31 / 50-day EMA
• SUP 3: 4702.00 Low Jan 5
• SUP 4: 4594.00 Low Nov 30

The trend condition in S&P E-Minis is resolutely bullish, with the upside trigger at 5066.50 giving way to new highs at 5107.75. This erases the pullback off last week’s highs, confirming S/T weakness as corrective. Support to watch lies at 4967.25, the 20-day EMA. A clear break of this average would suggest potential for a deeper retracement, possibly towards the 4866.00 key support, the Jan 31 low. The trigger for a resumption of gains is 5107.75, the Feb 22 high.

COMMODITIES

BRENT TECHS: (J4) Bounce Stops Short of Key Resistance

• RES 4: $87.12 - High Oct 27
• RES 3: $86.03 - 76.4% retracement of the Sep 15 - Dec 13 bear cycle
• RES 2: $84.17 - High Jan 29 and key short-term resistance
• RES 1: $83.96 - High Feb 22
• PRICE: $83.17 @ 08:36 GMT Feb 23
• SUP 1: $79.88/76.62 - 50-day EMA / Low Feb 5 and key S/T support
• SUP 2: $74.82 - Low Jan 03
• SUP 3: $72.96 - Low Dec 13 and the bear trigger
• SUP 4: $70.99 - Low Jun 23 ‘23

Brent futures recovered well off Wednesday lows, but the bounce is yet to trouble next resistance at $84.17. The latest recovery appears to be a correction - for now. However, a continuation higher and progress through the Jan 29 high would cancel the recent bearish threat and highlight a stronger reversal. This would open $86.03, a Fibonacci retracement point. On the downside, the trigger for a resumption of the downtrend is $76.62, Feb 5 low.

WTI TECHS: (J4) Corrective Bounce Off Lows

• RES 4: $85.75 - High Sep 19 and a key resistance
• RES 3: $84.66 - High Oct 20
• RES 2: $82.34 - 76.4% retracement of the Sep 19 - Dec 13 bear cycle
• RES 1: $78.52 - High Feb 16 and key resistance
• PRICE: $77.91 @ 08:43 GMT Feb 23
• SUP 1: $75.25/71.49 - 50-day EMA / Low Feb 5
• SUP 2: $69.79 - Low Jan 3
• SUP 3: $68.57 - Low Dec 13 and the bear trigger
• SUP 4: $65.41 - Low Jun 12

Gains off the Feb 5 low still appear corrective at these levels. Key short-term resistance has been defined at $78.52, the Feb 16 high - a level untroubled by the recovery off this week’s low. Clearance of this level would be a bullish development. On the downside, support to watch lies at $71.49, the Feb 5 low. A break of this level would reinstate the recent bearish theme and pave the way for a move towards $69.79, the Jan 3 low.

GOLD TECHS: Sell-on-Rallies Resumes

• RES 4: $2135.4 - High Dec 4 and all-time high
• RES 3: $2097.1 - 76.4% retracement of the Dec 4 - 13 bear leg
• RES 2: $2088.5 - High Jan 12 / High Dec 28
• RES 1: $2034.9/2065.5 - High Feb 22 / Feb 1
• PRICE: $2018.9 @ 08:46 GMT Feb 23
• SUP 1: $1984.3 - Low Feb 14
• SUP 2: $1973.2 - Low Dec 13 and key support
• SUP 3: $1931.7 - Low Nov 13
• SUP 4: $1908.3 - Low Oct 16

Gold traded lower into mid-month, and the progress off lows faltered Thursday after the failed break of the 50-dma of $2031.71. Clearance here and above the Feb 1 high of $2065.50 would reinstate a bullish theme, with the mid-month weakness proving corrective in nature. Any reversal and continuation lower would open $1973.2, the Dec 13 low and the next key support.

SILVER TECHS: Resumes Weakness

• RES 4: $26.135 - High May 5 and a key resistance
• RES 3: $25.761 - High Dec 4 and key resistance
• RES 2: $24.606/994 - High Dec 22 / 76.4% of Dec 4 - 13 bear leg
• RES 1: $23.534 - High Jan 12
• PRICE: $22.625 @ 08:51 GMT Feb 23
• SUP 1: $21.883 - Low Nov 13 and a key support
• SUP 2: $20.689 - Low Oct 3 and the bear trigger
• SUP 3: $19.904 - Low Mar 10 and a key support
• SUP 4: $19.904 - Low Mar 10 2023

A bearish theme in Silver remains intact and the recovery from Wednesday’s low appears to be a correction. The move lower earlier this week reinforces a bearish theme. The recent breach of support at $22.510, the Dec 13 low, signals scope for $21.883, the Nov 13 low. A break of this level would further strengthen the bearish theme. Initial key resistance to watch is $23.534, Jan 12 high. Clearance of this level would instead highlight a stronger reversal.