MNI DAILY TECHNICAL ANALYSIS - GBP Signals Potential for Stronger Recovery

Price Signal Summary – GBP Signals Potential for Stronger Recovery

• On the equity front, S&P E-minis continue to creep higher. The outlook is unchanged and trend conditions remain bullish. The focus is on 4580.21, 1.382 projection of the Jun 21 - Jul 14 - 19 price swing. EUROSTOXX 50 remains firm following this week's rally and break of 4238.50, Aug 13 high. This confirms a resumption of the uptrend and opens 4294.20, 1.236 projection of the May 13 - Jun 17 - Jul 19 price swing.
• In the FX space, EURUSD is back above its 50-day EMA and holding onto recent gains. An extension would set the scene for a climb towards 1.1909, Jul 30 high and a key short-term resistance. Support to watch is 1.1735, Aug 20 low. GBPUSD key near-term resistance has given way, with prices above the 50-day EMA at 1.3824. This signals potential for a stronger recovery. Support lies at 1.3680.
• On the commodity front, Gold is consolidating but the outlook remains bullish with the focus on $1834.1, Jul 15 high and the next bull trigger. WTI bullish conditions remain intact. Recent gains suggest potential for a climb towards $70.74, the 76.4% retracement of the Jul 30 - Aug 23 sell-off. Support is seen at $66.92, Aug 25 low.
• In FI, Bunds traded sharply lower Tuesday and breached 175.66, Aug 27 low. Price action has also moved below the 50-day EMA reinforcing current bearish conditions. Note too that futures have tested key trendline support at 175.18. The trendline is drawn from the May 19 low. A break would strengthen bearish conditions. Bulls will be looking for the trendline to hold. Gilt futures on Tuesday cleared support at 128.33, Aug 12 low and 128.24, Aug 12 low. The break lower strengthens a bearish case and signals scope for 128.03, the Jul 6 low (cont).

See Bund chart: https://emedia.marketnews.com/marketnewsintl/RXU1_Comdty_02.09.jpg

FOREIGN EXCHANGE

EURUSD TECHS: Approaching Key S/T Resistance

• RES 4: 1.1965 50.0% retracement of the May - Aug sell-off
• RES 3: 1.1945 High Jun 28
• RES 2: 1.1909 High Jul 30 and a key resistance
• RES 1: 1.1884 Intraday high
• PRICE: 1.1877 @ 05:55 BST Sep 3
• SUP 1: 1.1788 20-day EMA
• SUP 2: 1.1735/1664 Low Aug 27 / Low Aug 20 and the bear trigger
• SUP 3: 1.1621 1.00 proj of the Jan 6 - Mar 31 - May 25 price swing
• SUP 4: 1.1603 Low Nov 4, 2020

EURUSD maintains a firmer tone following this week's gains. Price is once again above the 50-day EMA and the outlook for bulls has improved. Attention is on 1.1909, the Jul 30 high and the next key short-term resistance. A break of this hurdle would strengthen a bullish case. On the downside, the support to watch is 1.1735, Aug 27 low. A break would suggest the recent rally is over.

GBPUSD TECHS: Recovery Extends

• RES 4: 1.3983/90 High Jul 30 / 61.8% of the Jun 1 - Jul 20 sell-off
• RES 3: 1.3958 High Aug 4
• RES 2: 1.3888 High Aug 11
• RES 1: 1.3850 High Aug 17
• PRICE: 1.3832 @ 06:07 BST Sep 3
• SUP 1: 1.3731 Low Sep 1
• SUP 2: 1.3680/02 Low Aug 27 / Low Aug 20
• SUP 3: 1.3572 Low Jul 20 and the bear trigger
• SUP 4: 1.3520 Low Jan 18

GBPUSD traded higher Thursday, extending the recovery that started Aug 20. The pair has breached its 50-day EMA to tilt the outlook more positive with price above Tuesday's resistance of 1.3808. The break higher opens 1.3888, Aug 11 high and 1.3983, the Jul 30 high. On the downside, initial key support to watch lies at 1.3680, Aug 27 low. A move below this level would signal a resumption of bearish pressure.

EURGBP TECHS: Holding Onto The Bulk Of Recent Gains

• RES 4: 0.8670 High Jul 20 and key resistance
• RES 3: 0.8659 High Jul 21
• RES 2: 0.8618 76.4% retracement of the Jul 20 - Aug 10 sell-off
• RES 1: 0.8603 High Sep 01
• PRICE: 0.8586 @ 06:15 BST Sep 3
• SUP 1: 0.8543 Low Aug 24
• SUP 2: 0.8506 Low Jul 19
• SUP 3: 0.8484 Low Aug 16
• SUP 4: 0.8450 Low Aug 10 and a key support

EURGBP maintains a positive S/T tone and is holding onto the bulk of its recent gains. The cross has pulled away from the 20- and 50-day EMAs breached recently and has also progressed through the 100-dma. A break of the 100-dma strengthens a bullish case and opens 0.8618 next, a Fibonacci retracement. On the downside, key short-term support has been defined at 0.8543, Aug 24 low. A break would signal a reversal.

USDJPY TECHS: In A Range

• RES 4: 111.66 High Jul 2 and the bull trigger
• RES 3: 110.82 High Jul 7
• RES 2: 110.80 High Aug 11 and a key resistance
• RES 1: 110.42/46 High Sep 1 / High Aug 13
• PRICE: 110.04 @ 06:28 BST Sep 3
• SUP 1: 109.41 Low Aug 24
• SUP 2: 109.11/108.72 Low Aug 16 / Low Aug 04 and the bear trigger
• SUP 3: 108.56 Low May 25
• SUP 4: 108.47 76.4% of the Apr 23 - Jul 2 rally

USDJPY continues to trade in a range. The outlook is unchanged and despite recent gains, the pair still appears vulnerable with attention on the key support at 108.72, Aug 4 low. A breach of this level would strengthen a bearish case and open 108.47, a Fibonacci retracement. For bulls, key near-term resistance is unchanged at 110.80, Aug 11 high. A break would instead open key resistance at 111.66, Jul 2 high.

EURJPY TECHS: Heading North

• RES 4: 132.43 High Jul 1
• RES 3: 131.77 61.8% retracement of the Jun - Aug sell-off
• RES 2: 131.09 High Jul 13
• RES 1: 130.80 1.0% 10-dma envelope
• PRICE: 130.69 @ 06:35 BST Sep 3
• SUP 1: 129.56 20-day EMA
• SUP 2: 129.16 Low Aug 27
• SUP 3: 128.60 Low Aug 24
• SUP 4: 127.94 Low Aug 19 and the bear trigger

EURJPY continues to climb and has this week topped the 50-day EMA at 129.96. Furthermore, the cross has also breached former resistance at 130.56, Jul 29 high. The break of these resistance points strengthens the current bull theme and opens 130.80 next, 1.0% 10-dma envelope. Key support and the bear trigger has been defined at 127.94, Aug 19 low. Initial support lies at 129.56, the 20-day EMA.

AUDUSD TECHS: Approaching The Next Resistance

• RES 4: 0.7534 High Jul 7
• RES 3: 0.7499 50.0% retracement of the May - Aug sell-off
• RES 2: 0.7487 High Jul 15
• RES 1: 0.7427 High Aug 4 and a key resistance
• PRICE: 0.7418 @ 04:44 BST Sep 3
• SUP 1: 0.7312 20-day EMA
• SUP 2: 0.7285 Low Aug 30
• SUP 3: 0.7222/7106 Low Aug 27 / Low Aug 20 and the bear trigger
• SUP 4: 0.7053 38.2% retracement of the Mar '20 - Feb uptrend

AUDUSD continues to climb and now sits solidly above the 50-day EMA. A clear break of this average signals scope for a stronger bullish retracement with attention on 0.7427, the Aug 24 high and a key near-term resistance. Clearance of this hurdle would strengthen bullish conditions. On the downside, key support to watch is at 0.7222, Aug 27 low. A break would signal a reversal. Initial support is at 0.7312, the 20-day EMA.

USDCAD TECHS: Approaching The 50-Day EMA

• RES 4: 1.2976 1.00 proj of the Jun 23 - Jul 19 - 30 price swing
• RES 3: 1.2957 High Dec 21, 2020
• RES 2: 1.2834/ 2949 High Aug 23 / High Aug 20 and the bull trigger
• RES 1: 1.2654/2708 High Aug31 / High Aug 27
• PRICE: 1.2544 @ 06:52 BST Sep 3
• SUP 1: 1.2536 50-day EMA
• SUP 2: 1.2422 Jul 30 low and a key support
• SUP 3: 1.2303 Low Jul 6
• SUP 4: 1.2253 Low Jun 23

USDCAD ebbed lower yesterday touching the lowest level since mid-August. This keeps the near-term outlook bearish and reinforces recent bearish signals - a shooting star candle formation on Aug 20 and a strong sell-off and weak close on Aug 23. Attention is on 1.2536, the 50-day EMA. A clear break of the EMA would strengthen the current bearish theme. Key resistance is at 1.2949, Aug 20 high. Initial firm resistance is at 1.2708.

FIXED INCOME

BUND TECHS: (U1) Trendline Support Remains Exposed

• RES 4: 177.61 High Aug 05 and the bull trigger
• RES 3: 177.24 High Aug 17 and 19
• RES 2: 176.87 High Aug 25
• RES 1: 175.66/76.48 Low Aug 27 / High Aug 31
• PRICE: 175.38 @ 05:15 BST Sep 3
• SUP 1: 175.25/174.98 Trendline drawn from May 19 low / Low Sep 1
• SUP 2: 174.64 50.0% retracement of the Jul 22 - Aug 5 rally
• SUP 3: 173.94 61.8% retracement of the Jul 22 - Aug 5 rally
• SUP 4: 173.70 Low Jul 13 and 14

Bund futures are trading closer to recent lows. Price action has this week moved below the 50-day EMA reinforcing bearish conditions and is testing trendline support at 175.25. The trendline is drawn from the May 19 low. A clear break would signal scope for a deeper sell-off and highlight a more significant reversal. This would open 174.64, a Fibonacci retracement. Key short-term resistance has been defined at 176.48, Tuesday's high.

BOBL TECHS: (U1) Bearish Tone

• RES 4: 135.640 High Aug 05 and the bull trigger
• RES 4: 135.430 High Aug 20 a key near-term resistance
• RES 3: 135.340 Aug 25 high
• RES 2: 135.270 High Aug 31
• PRICE: 135.030 @ 05:04 BST Sep 3
• SUP 1: 134.890 Low Sep 1
• SUP 2: 134.750 50.0% retracement of the Jun 22 - Aug 5 rally
• SUP 3: 134.689 Trendline support drawn from the May 20 low
• SUP 4: 134.540 61.8% retracement of the Jun 22 - Aug 5 rally

Bobl futures maintain a weaker tone following this week's resumption of the downtrend that started Aug 5. The contract has cleared recent support at 135.040, Aug 27 low and the 50-day EMA. This signals scope for a move towards 134.750 next, a Fibonacci retracement. Further out, trendline support intersects at 134.689. The trendline is drawn from the May 20 low. Key short-term resistance is at 135.270, the Aug 31 high.

SCHATZ TECHS: (U1) Needle Points South

• RES 4: 112.415 High Aug 05 and the bull trigger
• RES 3: 112.390 High Aug 6
• RES 2: 112.330/350 High Aug 25 / High Aug 20 and key resistance
• RES 1: 112.325 High Aug 31
• PRICE: 112.280 @ 05:27 BST Sep 3
• SUP 1: 112.262 50.0% retracement of the Jun 22 - Aug 5 rally
• SUP 2: 112.245 Low Jul 21
• SUP 3: 112.227 50.0% retracement of the Jun 22 - Aug 5 rally
• SUP 4: 112.210 Low Jul 20

Schatz futures remain weak. The contract traded lower Aug 31 resuming the downtrend that started Aug 5. Price has cleared recent support at 112.295, Aug 13, 16, 26 and 30 low and has also breached its 50-day EMA. With bearish conditions reinforced, scope is seen for a move towards 112.262 next, a Fibonacci retracement. The Aug 31 high of 112.325 is seen as a key short-term resistance.

GILT TECHS: (Z1) Bearish Threat Still Present

• RES 4: 130.72 High Aug 4 and the bull trigger (cont)
• RES 3: 130.53 High Aug 5 (cont)
• RES 2: 129.35 High Aug 20 and a key near-term resistance
• RES 1: 129.05 High Aug 31
• PRICE: 128.61 @ Close Sep 2
• SUP 1: 128.03 Low Jul 6 (cont)
• SUP 2: 127.65 61.8% retracement of the Jun 3 - Aug rally (cont)
• SUP 3: 127.50 Low Jun 28 (cont)
• SUP 4: 127.25 Low Jun 23 (cont)

Gilt futures this week confirmed a break of support at 128.33, Aug 12 low and traded below 128.24, the Aug 12 low. Despite a recovery, the break lower strengthens a bearish case and signals scope for an extension. Note too that the contract has cleared the 50-day EMA on the continuation chart. The focus is on weakness towards 128.03, Jul 6 low (cont). Key near-term resistance has been defined at 129.05, Aug 31 high.

BTP TECHS: (U1) Bearish Conditions Intact

• RES 4: 157.71 High Aug 5 and the bull trigger
• RES 3: 155.43 High Aug 13
• RES 2: 155.11 High Aug 25
• RES 1: 154.55 High Aug 30
• PRICE: 153.79 @ Close Sep 2
• SUP 1: 153.02 Low Sep 1
• SUP 2: 152.84 50.0% retracement of the May 25 - Aug 5 rally
• SUP 3: 152.66 Low Jul 15
• SUP 4: 152.16 50.0% retracement of the May 25 - Aug 5 rally

BTP futures trend conditions remain bearish. On Aug 25, the contract cleared a key support at 154.54 marking the base of a bull channel drawn off the May 19 low. The bearish breakout signals scope for a deeper corrective pullback and Tuesday's sell-off confirmed a resumption of this downleg with the contract clearing 153.53, Aug 26 low. This opens 152.84, a Fibonacci retracement. Key S/T resistance has been defined at 154.55, Aug 30 high.

EQUITIES

EUROSTOXX 50 TECHS: (U1) Bulls In Control

• RES 4: 4341.40 1.382 proj of the May 13 - Jun 17 - Jul 19 price swing
• RES 3: 4294.20 1.236 proj of the May 13 - Jun 17 - Jul 19 price swing
• RES 2: 4269.92 2.0% 10-dma envelope
• RES 1: 4249.50 High Sep 1
• PRICE: 4229.00 @ 05:48 BST Sep 3
• SUP 1: 4138.50 Low Aug 26
• SUP 2: 4078.00 Low Aug 19 and the bear trigger
• SUP 3: 4026.20 76.4% retracement of the Jul 19 - Aug 13 rally
• SUP 4: 3944.00 Low Jul 21

EUROSTOXX 50 futures trend conditions remain bullish. The contract traded higher Wednesday and breached 4238.50, Aug 13 high. This confirms a resumption of the uptrend and opens 4294.20, 1.236 projection of the May 13 - Jun 17 - Jul 19 price swing. Key support has been defined at 4078.00, Aug 19 low. A break is required to signal a reversal. Initial firm support is at 4138.50, Aug 26 low.

E-MINI S&P (U1): Fresh All-Time High

• RES 4: 4610.63 1.50 proj of Jun 21 - Jul 14 - 19 price swing
• RES 3: 4600.00 Round number resistance
• RES 2: 4580.21 1.382 proj of Jun 21 - Jul 14 - 19 price swing
• RES 1: 4545.75 Intraday high
• PRICE: 4544.25 @ 06:57 BST Sep 3
• SUP 1: 4469.24 20-day EMA
• SUP 2: 4395.06 50-day EMA
• SUP 3: 4347.75 Low Aug 19 and the bear trigger
• SUP 4: 4224.00 Low Jul 19 and key support

S&P E-minis are firmer today and have once again registered a fresh all-time high. The outlook remains bullish and recent gains confirm a resumption of the underlying uptrend. The contract's recovery from 4347.75, Aug 19 low means the 50-day EMA remains intact and this reinforces bullish conditions. The average intersects at 4395.06 and still represents a key trend support. A clear break of the EMA is required to signal a short-term reversal.

COMMODITIES

BRENT TECHS: (X1) Testing Bear Channel Resistance

• RES 4: $75.20 - High Jul 6 and the bull trigger
• RES 3: $75.13 - High Jul 14
• RES 2: $74.84 - High Jul 30
• RES 1: $73.47/41 - high Sep 3 / Bear channel top drawn off Jul 6 high
• PRICE: $73.17 @ 07:02 BST Sep 3
• SUP 1: $70.42 - Low Sep 1
• SUP 2: $69.77/$68.13 - Low Aug 26 / Low Aug 24
• SUP 3: $64.20 - Low Aug 23
• SUP 4: $63.54 - Low May 21 and a key support

Brent futures remain bullish and the contract is holding onto recent gains. Key short-term support has been defined at $64.20, Aug 23 low where a break is required to reinstate a bearish theme. Attention is on $73.41, a bear channel top drawn off the Jul 6 high. The channel top was tested yesterday and a break would strengthen bullish conditions. Initial firm support is at $69.77, the Aug 26 low.

WTI TECHS: (V1) Rally Extends

• RES 4: $73.52 - High Jul 30
• RES 3: $71.78 - Bear channel top drawn from the Jul 6 high
• RES 2: $71.29 - High Aug 3
• RES 1: $70.74 - 764.% retracement of the Jul 30 - Aug 23 sell-off
• PRICE: $69.96 @ 07:07 BST Sep 3
• SUP 1: $67.12/65.41 - Low Aug 25 / Low Aug 24
• SUP 2: $61.74 - Low Aug 23 and key support
• SUP 3: $60.81 - 1.236 proj of the Jul 6 - 20 - 30 price swing
• SUP 4: $60.68 - Low May 21

WTI futures remain bullish and the contract is holding onto recent gains and rallied yesterday. The recovery from the Aug 23 low defined a key short-term support at $61.74, Aug 23 low where a break is required to reinstate a bearish theme. Short-term, further gains are likely and the focus is on $70.74 next, a Fibonacci retracement. On the downside, initial firm support lies at $67.12, Sep 1 low. A break would be seen as an initial bearish threat.

GOLD TECHS: Consolidation Mode

• RES 4: $1863.3 - High Jun 16
• RES 3: $1853.3 - 61.8% retracement of the Jun 1 - 29 decline
• RES 2: $1834.1 - High Jul 15 and the bull trigger
• RES 1: $1823.3 - High Aug 30
• PRICE: $1812.8 @ 07:20 BST Sep 3
• SUP 1: $1774.5 - Low Aug 19
• SUP 2: $1751.7 - Low Aug 13
• SUP 3: $1717.8 - Low Aug 10
• SUP 4: $1690.6 - Low Aug 08 and the bear trigger

Gold is consolidating but maintains a bullish tone. The yellow metal recently cleared its 50-day EMA. The move above this average confirms a resumption of the upleg from Aug 9. This signals scope for a climb towards resistance at $1834.1, Jul 15 high and a bull trigger. On the downside, initial support is unchanged at $1774.5, Aug 19 low. Clearance of this support would be bearish and signal a short-term reversal.

SILVER TECHS: Trading Near Recent Highs

• RES 4: $26.467 - High Jul 14
• RES 3: $26.002 - High Aug 04 and a key resistance
• RES 2: $24.769 - 50-day EMA
• RES 1: $24.375 - High Aug 9
• PRICE: $23.954 @ 07:26 BST Sep 3
• SUP 1: $22.878/626 - Low Aug 20 / Low Aug 09 and the bear trigger
• SUP 2: $21.899 - Low Nov 30, 2020
• SUP 3: $20.871 - 50% retracement of the Mar '20 - Jan '21 rally
• SUP 4: $20.000 - Psychological round number

Silver is unchanged and trading closer to recent highs. A bearish risk remains present despite short-term gains. Moving average conditions continue to highlight a bearish theme and note that price action since Aug 9 still appears to be a flag - a bearish formation. A break and close below the Aug 9 low of $22.626 would confirm a resumption of bearish pressure and open 20.871, 50% of the Mar '20 - Feb '21 range. $24.375 marks the next resistance.