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MNI DAILY TECHNICAL ANALYSIS - Medium-Term Bulls Return to EUR/USD


Tech Focus: Price Signal Summary - E-Minis Bull Trend Still Intact

  • The equity space remains bullish. E-mini S&P futures are consolidating, the focus though remains on 4000.00.
  • In the FX space, the USD is softer so far this week.
    • EURUSD is holding onto recent gains. Attention is on 1.2156 next, Jan 29 high. The bullish engulfing candle from Feb 5 is still in play.
    • Last week we highlighted an inverted head and shoulders in the USD Index. The pattern's key support is at 90.05, Jan 21 low - the base of the right shoulder. A break would negate the recent reversal and strengthen a USD bearish argument.
    • USDJPY is off recent highs. The key support zone for today is between 104.49, 20-day EMA and 104.34, a trendline support drawn off the Jan 6 low.
    • EURGBP targets 0.8711, May 11, 2020 low.
  • On the commodity front, Gold maintains a firmer tone and is pressuring the resistance highlighted by the 20-day and 50-day EMAs. The 50-day EMA intersects at $1856.2, a break would open $1875.7, Jan 29 high and a key near-term resistance. Oil contracts remain firm. Brent (J1) targets $62.46, Jan 24, 2020 high (cont). WTI (H1) bulls eye $59.06 next, 1.382 projection of Apr - Aug rally from the Nov 2 low.

In the FI space, Bunds (H1) are firmer today as the corrective recovery from 175.61, Feb 8 low extends. Resistance is at 176.86, the 20-day EMA. Gilts (H1) outlook remains bearish with attention on 131.53, 2.236 projection of the Dec 11 - 24 sell-off from the Jan 4 high. BTPs (H1) are through 153.00. This opens 153.87, 1.00 projection of the Oct - Jan rally from Jan 22 low

MNI MARKETS ANALYSIS: EUR/USD MEDIUM-TERM BULLS RETURN

Full piece here: https://marketnews.com/eurusd-medium-term-bulls-return

The current uptrend in EURUSD started in March 2020. In early June our medium-term trend tracker using a daily point and figure chart, confirmed a bullish trend condition. We will look at this trend condition and importantly assess how this year's price action fits into the broader cycle. The EURUSD chart highlights the uptrend that started March 2020 using a point and figure chart method. It highlights:

A clear bullish price sequence of higher highs and higher lows - this is the definition of an uptrend.

We apply a moving average study that attempts to identify the slope of the average. Two exponential moving averages are used, a primary EMA and a smoothed EMA of the first average. The position between the two determines whether the slope is either positive (an uptrend) or negative (a downtrend). Since June 2020, the slope has been positive and this defines the trend condition as bullish. The slope is unchanged at current price levels.

To strengthen the trend condition, and because the direction is up, we attempt to identify price areas that are likely to represent a strong support and call these 'buy-zones'. This is the price area below the EMAs, when the trend is up. Entering a buy zone suggests that the price has entered an area where strong support exists and where demand interest will likely increase. If a trend recovers from the buy-zone, this development reinforces the underlying bullish conditions.

FOREIGN EXCHANGE

EURUSD TECHS: Holding Onto Recent Gains

  • RES 4: 1.2255 76.4% retracement of the Jan 6 - Feb 5 sell-off
  • RES 3: 1.2223 High Jan 13
  • RES 2: 1.2190 High Jan 22 and a key resistance
  • RES 1: 1.2156 High Jan 29
  • PRICE: 1.2128 @ 05:54 GMT Feb 12
  • SUP 1: 1.2020 Low Feb 8
  • SUP 2: 1.1952 Low Feb 5 and the bear trigger
  • SUP 3: 1.1945 23.6% retracement March - Jan rally
  • SUP 4: 1.1924 Low Nov 30

EURUSD is consolidating and holding onto recent gains. The Feb 5 price pattern, a bullish engulfing reversal continues to highlight a short-term bull theme suggesting scope for a recovery. It also marked a base at last week's 1.1952 low. Strong resistance at 1.2092/98, the 50- and 20-day EMAs gave way this week, opening $1.2156 next. On the downside, sub 1.1952 levels would resume recent bearish pressure.

GBPUSD TECHS: Bullish Structure Intact

  • RES 4: 1.4082 1.00 proj of May - Sep 2020 rally from Sep 23 low
  • RES 3: 1.3998 High Apr 26, 2018
  • RES 2: 1.3935 High Apr 27, 2018
  • RES 1: 1.3866 High Feb 10
  • PRICE: 1.3798 @ 06:04 GMT Feb 12
  • SUP 1: 1.3707 20-day EMA
  • SUP 2: 1.35833/67 50-day EMA / Low Feb 4 and key support
  • SUP 3: 1.3520 Low Jan 18
  • SUP 4: 1.3505 Low Jan 12

GBPUSD maintains a firmer tone and hit a new cycle high again this week. Continued gains confirm a resumption of the underlying uptrend that has been in place since the early March 2020 reversal. 1.3804, Apr 30, 2020 high has been breached, the focus is on 1.3935 next, Apr 27, 2018 high. On the downside, firm support lies at 1.3567, Feb 4 low. A break is required to dent the current bullish theme. Initial support is at 1.3707, the 20-day EMA.

EURGBP TECHS: Outlook Remains Bearish

  • RES 4: 0.8996 High Jan 12
  • RES 3: 0.8925 High Jan 18 and key resistance
  • RES 2: 0.8907 50-day EMA
  • RES 1: 0.8840 High Feb 4
  • PRICE: 0.8789 @ 06:08 GMT Feb 12
  • SUP 1: 0.8739/11 Low Feb 5 and the bear trigger / Low May 11, 2020
  • SUP 2: 0.8691 Low May 5, 2020
  • SUP 3: 0.8671 Low Apr 30, 2020 and a key support
  • SUP 4: 0.8616 2.0% 10-dma envelope

EURGBP is unchanged and bears have paused for breath. The outlook is bearish and the cross is trading closer to recent lows. MA conditions are also in a bear mode and this reinforces the current trend set-up. The focus is on 0.8711 next, May 11 2020 low with scope too for a breach of the 0.8700 handle. On the upside, initial firm resistance is at 0.8840. A breach of this level would signal scope for a stronger corrective bounce.

USDJPY TECHS: Finds Support

  • RES 4: 106.11 High Oct 7, 2020
  • RES 3: 106.05 1.50 projection of Jan 6 / 11 / 21 swing
  • RES 2: 105.77 High Feb 5 and key resistance
  • RES 1: 105.26 High Feb 9
  • PRICE: 104.85 @ 06:24 GMT Feb 12
  • SUP 1: 104.51 20-day EMA
  • SUP 2: 104.41 Low Feb 10 / Trendline drawn off the Jan 6 low
  • SUP 3: 103.53 Former channel top drawn off the Mar 2020 high
  • SUP 4: 103.33 Low Jan 21

USDJPY has found some support off Wednesday's low of 104.41. The recent move lower from 105.77, Feb 5 high is considered a correction. The outlook remains bullish following recent price developments. On Jan 27, the pair cleared a bear channel resistance drawn off the Mar 2020 high and resistance at 104.40 gave way on Jan 28. The support zone to watch is 104.51/41, the 20-day EMA and a trendline drawn off the Jan 6 low.

EURJPY TECHS: Eyeing Key Resistance

  • RES 4: 128.39 High Dec 20. 2018
  • RES 3: 127.88 0.618 projection of May - Jun rally from Oct 30 low
  • RES 2: 127.49/50 High Jan 7 / High Mar 1, 2019
  • RES 1: 127.16/24 High Feb 11 / High Jan 29
  • PRICE: 127.13 @ 06:33 GMT Feb 12
  • SUP 1: 126.07 50-day EMA
  • SUP 2: 125.60 Low Jan 27
  • SUP 3: 125.09 Low Jan 18 and the key support
  • SUP 4: 125.06 100-DMA

The EURJPY outlook is unchanged and remains bullish with attention on key resistance at 127.49, Jan 7 high. A break of this hurdle would confirm a resumption of the broader uptrend that has been in place since early May 2020. This would open 127.88 initially, a Fibonacci projection. On the downside, initial support is at 126.11, the 50-day EMA. A clear break of this average is required to risk a deeper short-term pullback.

AUDUSD TECHS: Focus Is On The Bull Trigger

  • RES 4: 0.7917 High Mar 14, 2018 and a key resistance
  • RES 3: 0.7885 High Mar 15. 2018
  • RES 2: 0.7782/7820 High Jan 21 / High Jan 6 and the bull trigger
  • RES 1: 0.7772 High Feb 11
  • PRICE: 0.7747 @ 06:35 GMT Feb 12
  • SUP 1: 0.7651 Low Feb 8
  • SUP 2: 0.7564 Low Feb 2 and the short-term bear trigger
  • SUP 3: 0.7557 Low Dec 28
  • SUP 4: 0.7517 Low Dec 22

AUDUSD edged higher yesterday and maintains a firmer posture. Price action on Feb 5 highlights a reversal signal following the recent inability to clear the 50-day EMA. The pair has breached resistance at 0.7704, Jan 29 high and this signals scope for a climb towards 0.7782/7820, the Jan 21 high and Jan 6 high respectively. The latter is also a bull trigger. On the downside, a break of 0.7564, Feb 2 low would resume recent bearish pressure.

USDCAD TECHS: Off Recent Lows

  • RES 4: 1.2957 High Dec 21 and key resistance
  • RES 3: 1.2915 High Dec 23
  • RES 2: 1.2881 High Jan 28
  • RES 1: 1.2800 50-day EMA
  • PRICE: 1.2725 @ 06:45 GMT Feb 12
  • SUP 1: 1.2661 Low Feb 11
  • SUP 2: 1.2635 Low Jan 22
  • SUP 3: 1.2590 Low Jan 21 and major support
  • SUP 4: 1.2562 Bear channel base drawn off the Jun 26, 2020 high

USDCAD remains weaker despite finding some support. The recent pullback appears to be a deeper corrective move, price has this week traded through support at 1.2686, Jan 27 low and a key S/T level. This is a bearish outcome and exposes the Jan 21 trend low of 1.2590 that also marks the bear trigger. Clearance of this level would resume the underlying downtrend. On the upside, a 1.2881 break, Jan 28 high is required to reinstate bullish activity.

FIXED INCOME

BUND TECHS: (H1) Gains Considered Corrective

  • RES 4: 178.12 High Jan 27 and the bull trigger
  • RES 3: 177.66 High Jan 29
  • RES 2: 176.86 20-day EMA
  • RES 1: 176.64 High Feb 11
  • PRICE: 176.33 @ 05:08 GMT Feb 12
  • SUP 1: 175.92 Low Feb 9
  • SUP 2: 176.61 Low Feb 8 and 1.236 proj of Jan 4 - 12 - 27 swing
  • SUP 3: 175.31 1.382 proj of Jan 4 - 12 sell-off from Jan 27 high
  • SUP 4: 175.07 1.50 proj of Jan 4 - 12 sell-off from Jan 27 high

This week's climb in Bund futures is considered a correction. A bearish theme remains intact with the focus on 175.61, Feb 8 low. Recent weakness has seen price trade through 176.89, Jan 29 low, a S/T trendline drawn off the Jan 12 low and 176.34, the Jan 12 low. Furthermore, the sell-off on Feb 5 resulted in a breach of 175.84, Nov 11 low. A resumption of weakness would open 175.31, a Fibonacci projection. Initial resistance is seen at 176.64.

BOBL TECHS: (H1) Correction Extends

  • RES 4: 135.480 High Jan 27 and key resistance
  • RES 3: 135.370 High Jan 29
  • RES 2: 135.182 50-day EMA
  • RES 1: 135.150 High Feb 11
  • PRICE: 135.050 @ 05:07 GMT Feb 12
  • SUP 1: 134.910 Low Feb 10
  • SUP 2: 134.790 Low Feb 5 and the bear trigger
  • SUP 3: 134.620 1.00 proj of Dec 11 - Jan 12 sell-off from Jan 27 high
  • SUP 4: 134.530 Low Sep 1, 2020 (cont)

BOBL futures gains this week are considered corrective. A weaker outlook remains intact following the recent sell-off from 135.480, Jan 27 high. This downleg saw price trade below support at 134.970, Jan 22 low and 134.840, Jan 12 low and a bear trigger. The break of the latter level strengthens a bearish argument and signals scope for 134.620, a Fibonacci projection. Initial firm resistance is seen at the Feb 5 high of 135.182, the 50-day EMA.

SCHATZ TECHS: (H1) Key Support Still Intact

  • RES 4: 112.365/68 High Jan 27 / 61.8% of the Dec 11 - 28 downleg
  • RES 3: 112.335 High Jan 1
  • RES 2: 112.311 50-day EMA
  • RES 1: 112.290 High Feb 11
  • PRICE: 112.275 @ 05:17 GMT Feb 12
  • SUP 1: 112.245 Low Feb 4, 5, 8 and 9
  • SUP 2: 112.240 Low Jan 12, 21 and 22 low
  • SUP 3: 112.235 Low Dec 23 and the bear trigger
  • SUP 4: 112.201 0.764 proj of Dec 11 -28 sell-off from Jan 27 high

Schatz futures are consolidating and still remain closer to recent lows. The contract traded higher Jan 27 clearing 112.330 in the process, Jan 4, 5 and 15 highs. The break confirmed a triple bottom reversal highlighting a shift in sentiment. While this pattern remains valid, last week's sell-off threatens recent bullish activity. The move lower has exposed key support at 112.235, Dec 23 low and 112.240, Jan 2, 21 and 22 low. Resistance is at 112.290.

GILT TECHS: (H1) Needle Still Points South

  • RES 4: 134.10 High Feb 2
  • RES 3: 133.65 High Jan 4
  • RES 2: 133.55 Low Dec 1 and a recent breakout level
  • RES 1: 132.75 High Feb 5
  • PRICE: 132.48 @ Close Feb 11
  • SUP 1: 131.73 Low Feb 8 and the bear trigger
  • SUP 2: 131.53 2.236 proj of Dec 11 - 24 sell-off from Jan 4 high
  • SUP 3: 131.24 2.382 projection of Dec 11 - 24 sell-off from Jan 4 high
  • SUP 4: 131.01 2.50 projection of Dec 11 - 24 sell-off from Jan 4 high

Gilt futures gains this week are considered corrective. The outlook remains bearish following the recent sharp sell-off and further weakness is likely near-term. Furthermore, the recent break of the Nov 2020 low confirmed a resumption of the underlying downtrend that started early August last year. The focus is on 131.53 next, a Fibonacci projection. On the upside, initial resistance is at the Jan 5 high of 132.75.

BTP TECHS: (H1) Clears The 153.00 Handle

  • RES 4: 156.20 1.236 proj of Oct - Jan rally from Jan 22 low (cont)
  • RES 3: 154.00 Round number resistance
  • RES 2: 153.87 1.00 proj of Oct - Jan rally from Jan 22 low (cont)
  • RES 1: 153.67 High Feb 11
  • PRICE: 153.36 @ Close Feb 11
  • SUP 1: 151.92/43 20-day EMA / Low Jan 4
  • SUP 2: 150.70/43 Low Feb 2 / Low Jan 26
  • SUP 3: 149.57 Low Jan 22 and bear trigger
  • SUP 4: 149.09 Low Nov 11 (cont)

BTP futures remain bullish. The contract gapped higher Feb 3 and also traded above a trendline resistance drawn off the Jan 8 high. Bulls have since not looked back and yesterday's gains mark an acceleration of the bull trend. Futures on Feb 5 breached the former trend high of 152.67, confirming a resumption of the uptrend that opens 153.87 next. The latter is a Fibonacci projection. 151.92 is initial support.

EQUITIES

EUROSTOXX 50 Techs: Bulls Still In The Driving Seat

  • RES 4: 3867.28 High Feb 20, 2020
  • RES 3: 3798.19 0.764 proj of Mar - Jul - Oct 2020 swing
  • RES 2: 3700.00 Round number resistance
  • RES 1: 3681.82 High Feb 8
  • PRICE: 3671.68 @ Close Feb 11
  • SUP 1: 3611.88 20-day EMA
  • SUP 2: 3545.09 Low Feb 2
  • SUP 3: 3473.76 Low Jan 28 and the bear trigger
  • SUP 4: 3455.94 Low Dec 22

EUROSTOXX 50 remains bullish. Price action has defined a key short-term support at 3473.76, Jan 28 low. Gains From this low resulted in breach of the recent trend high at 3657.83, Jan 8 high. The Feb 8 initial climb reinforces the break and confirms a resumption of the underlying uptrend that has opened the 3700.00 handle next. For bears, the index needs to clear support at 3473.76 to reinstate a bearish theme. This would open 3401.14, Dec 21 low.

COMMODITIES

BRENT TECHS: (J1) Firm Above $60.00

  • RES 4: $65.00 - Round number resistance
  • RES 3: $64.58 - High Jan 22, 2020 (cont)
  • RES 2: $62.46 - High Jan 24, 2020 (cont)
  • RES 1: $61.69 - High Feb 10
  • PRICE: $60.69 @ 06:41 GMT Feb 12
  • SUP 1: $59.08 - Low Feb 5
  • SUP 2: $57.74 - 20-day EMA
  • SUP 3: $57.31 - High Jan 13 and former breakout level
  • SUP 4: $54.40 - Low Jan 22

Brent futures are holding onto gains, and maintain a bullish tone following recent strength and the confirmed resumption of the underlying uptrend, marked by the breach of $57.31, Jan 13 high. The contract has this week cleared $60.00 and the break signals potential for a climb towards $62.46 next, the Jan 24 2020 high (cont). On the downside, initial firm support is seen at $57.31 with key trend support at $54.40, Jan 22 low.

WTI TECHS: (H1) Bulls Still In Charge

  • RES 4: $63.17 - 1.618 proj of Apr - Aug rally from the Nov 2 low
  • RES 3: $61.11 - 1.500 proj of Apr - Aug rally from the Nov 2 low
  • RES 2: $60.00 - Psychological round number
  • RES 1: $59.06 - 1.382 proj of Apr - Aug rally from the Nov 2 low
  • PRICE: $57.75 @ 06:48 GMT Feb 12
  • SUP 1: $56.43 - Low Feb 5
  • SUP 2: $55.30 - Low Feb 4
  • SUP 3: $54.90 - 20-day EMA
  • SUP 4: $53.94 - High Jan 13 and recent breakout level

WTI futures maintain a bullish tone. On Feb 2, futures traded above former resistance at $53.94, Jan 13 high and a bull trigger. The break of this level confirmed a resumption of the underlying uptrend and paves the way for strength towards $59.06 next, a Fibonacci projection. Further out, sights are set on $60.00. Key trend support remains $51.44, Jan 22 low where a break is required to signal a top. Initial support is at $56.43, Feb 5 low.

GOLD TECHS: Stalls At $1855.5

  • RES 4: $1918.2 - 76.4% retracement of the Jan 6 - Feb 4 sell-off
  • RES 3: $1892.8 - 61.8% retracement of the Jan 6 - Feb 4 sell-off
  • RES 2: $1875.7 - High Jan 29 and key near-term resistance
  • RES 1: $1855.0/55.5 - 50-day EMA / High Feb 10
  • PRICE: $181901 @ 07:06 GMT Feb 12
  • SUP 1: $1807.9 - Low Feb 8
  • SUP 2: $1785.0 - Low Feb 4
  • SUP 3: $1775.9 - Low Dec 1
  • SUP 4: $1764.8 - Low Nov 30

Gold has failed to hold onto recent gains and resistance this week has been defined at $1855.5, Wednesday's high. Continued intraday weakness would expose the key short-term support at $1785.0, Feb 4 low and a bear trigger. A break of this level would confirm a resumption of the downtrend that has been in place since Jan 6. On the upside, clearance of $1855.5 is required to reinstate a bullish focus.

SILVER TECHS: Consolidating But Remains Vulnerable

  • 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-of
  • RES 1: $27.812 - High Feb 9
  • PRICE: $27.038 @ 07:08 GMT Feb 12
  • SUP 1: $25.933 - 50-day EMA
  • SUP 2: $25.483 - 76.4% retracement of the Jan 18 - Feb 1 rally
  • SUP 3: $24.700 - Low Jan 27
  • SUP 4: $24.057 - Low Jan 18 and a key support

Silver traded sharply higher Feb 1 clearing resistance at $27.931, Jan 6 high. The climb resulted in a test of $30.00 and registered a fresh trend high print of the upleg that started mid-March 2020. On Feb 2 though, price reversed the previous day's direction and Silver still remains vulnerable, despite the recent move higher from $25.905, Feb 4 low. Further weakness would open $25.483, a Fibonacci retracement. Key resistance is at $30.100.

MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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