MNI DAILY TECHNICAL ANALYSIS - Oversold Equity Conditions Unwind

Price Signal Summary – Oversold Equity Conditions Unwind

• In the equity space, S&P E-minis are firmer and have managed to remain above last Monday’s low of 4212.75. Last week’s price action has allowed the recent oversold reading to unwind. EUROSTOXX 50 futures remain vulnerable and volatile. Last Monday’s sell-off reinforced a bearish threat. Former support at 4216.50, Jan 10 low has been cleared and this resulted in the break of a number of short-term support levels.
• In FX, EURUSD is trading near its recent lows. Last week’s clearance of key support at 1.1186/85, the Nov 24 and Jul 1 2020 lows confirmed a resumption of the broader downtrend that started Jan 6, 2021. A bearish risk remains present in GBPUSD. This follows the strong reversal off 1.3749, Jan 13 high. The pair has recently breached both the 20- and 50-day EMAs and a number of retracement levels, highlighting a bearish threat. AUDUSD remains vulnerable. Weakness extended Friday and resulted in a break of key support at 0.6993/91, the Dec 3 2021 and Nov 2 2020 lows. The break of this support zone reinforces bearish conditions and confirms a resumption of the broader downtrend.
• On the commodity front, the rally in gold stalled last week. The sharp sell-off has resulted in a break of base of its bull channel that intersects at $1795.8 - the channel is drawn off the Aug 9 low. The uptrend in WTI futures resumed last week following the break of resistance at $87.10, Jan 20 high. This maintains the bullish price sequence of higher or higher highs and higher lows and moving average conditions remain in a bull mode.
• In the FI space, Bund futures remain below the Jan 24 high of 171.07. Key short-term resistance at 171.00 was only briefly probed last week, Jan 13 high. A clear break of this hurdle would signal potential for a stronger short-term recovery. Recent price action in Gilt futures has defined 121.93, Jan 19 low, as a key support and bear trigger. Bearish trend conditions remain intact and short-term gains are considered corrective.

FOREIGN EXCHANGE

EURUSD TECHS: Direction Remains Down

• RES 4: 1.1483 High Jan 14 and key resistance
• RES 3: 1.1371/1421 Bear channel top / High Jan 18
• RES 2: 1.1299 20-day EMA
• RES 1: 1.1243 High Jan 27
• PRICE: 1.1165 @ 06:06 GMT Jan 31
• SUP 1: 1.1121 Low Jan 28
• SUP 2: 1.1070 Low May 29, 2020
• SUP 3: 1.1031 Bear channel base drawn from the Jun 1 2021 high
• SUP 4: 1.0976 2.00 proj of the Jan - Mar - May 2021 price swing

EURUSD is trading near its recent lows. Last week’s clearance of key support at 1.1186/85, the Nov 24 and Jul 1 2020 lows confirmed a resumption of the broader downtrend that started Jan 6, 2021. This has cleared the way for weakness towards 1.1070 next, the May 29, 2020 lows. Note that EURUSD remains in a bear channel, drawn from the Jun 1, 2021 high. The base lies at 1.1031 and marks an important support.

GBPUSD TECHS: Bearish Threat Still Present

• RES 4: 1.3913 High Sep 14, 2021
• RES 3: 1.3835 High Oct 20 and key resistance
• RES 2: 1.3721/49 200-dma / High Jan 13
• RES 1: 1.3525/3662 High Jan 26 / High Jan 20
• PRICE: 1.3420 @ 06:15 GMT Jan 31
• SUP 1: 1.3358 Low Jan 27
• SUP 2: 1.3343 Low Dec 23
• SUP 3: 1.3301 76.4% retracement of the Dec 8 - Jan 13 bull phase
• SUP 4: 1.3254 2.0% 10-dma envelope

A bearish risk remains present in GBPUSD. This follows the strong reversal off 1.3749, Jan 13 high. The pair has recently breached both the 20- and 50-day EMAs and a number of retracement levels, highlighting a bearish threat. The focus is on 1.3343, Dec 23 low and 1.3301, a Fibonacci retracement. Initial firm resistance is seen at 1.3525, Jan 26 high. A break would ease bearish pressure.

EURGBP TECHS: Tests The Recent Multi-Year Low

• RES 4: 0.8498 High Dec 23
• RES 3: 0.8465 High Dec 24
• RES 2: 0.8409/23 50-day EMA / High Jan 24
• RES 1: 0.8372 High Jan 26
• PRICE: 0.8320 @ 06:22 GMT Jan 31
• SUP 1: 0.8305 Low Jan 20/28, lowest since 2020
• SUP 2: 0.8300 Base of the multi-year broad range
• SUP 3: 0.8282/77 Low Feb’20 / Dec’19 and key bear trigger
• SUP 4: 0.8242 50% Fibonacci Retracement 2015-2020 Upleg

EURGBP remains bearish. The cross traded lower Friday and tested the recent multiyear low of 0.8305 on Jan 20. Key short-term resistance has been defined at 0.8423, the Jan 24 high and just above the the 50-day EMA, currently at 0.8409. The focus is on the major support and bear triggers at 0.8282/77, the Feb’20 and Dec’19 lows plus the base of a broad multi-year range at 0.8300. A break of the 50-day EMA would signal a S/T base.

USDJPY TECHS: Reinstates Bullish Theme

• RES 4: 118.07 2.236 proj of Apr 23 - Jul 2 - Aug 4 2021 price swing
• RES 3: 117.08 2.00 proj of Apr 23 - Jul 2 - Aug 4 2021 price swing
• RES 2: 115.85/116.35 High Jan 10 / Jan 4 high and the bull trigger
• RES 1: 115.68 High Jan 28
• PRICE: 115.51 @ 06:27 GMT Jan 31
• SUP 1: 114.48/113.47 Low Jan 27 / Low Jan 24 and key support
• SUP 2: 113.43 76.4% of the Nov 30 - Jan 4 rally
• SUP 3: 113.14 Low Dec 17
• SUP 4: 112.53/112.15 Low Nov 30 / 2.0% 10-dma envelope

USDJPY is holding onto last week’s gains and maintains a bullish tone. Last week’s gains resulted in a move through former resistance at 115.06, the Jan 18 high. This strengthens a bullish case and signals scope for a climb towards 116.35, high Jan 4 and the key resistance. Initial resistance is at 115.67 has been tested, a Fibonacci retracement. A key short-term support has been defined at 113.47, Jan 24 low.

EURJPY TECHS: Consolidation Mode

• RES 4: 132.04 76.4% retracement of the Oct 20 - Dec 3 downleg
• RES 3: 131.60 High Jan 5 and the bull trigger
• RES 2: 131.18 High Jan 18
• RES 1: 129.52/69 20- and 50-day EMA values
• PRICE: 128.93 @ 06:40 GMT Jan 31
• SUP 1: 128.25 Low Jan 25
• SUP 2: 128.05 Low Dec 21
• SUP 3: 127.39 Low Dec 6 and a major support
• SUP 4: 127.04 Low Feb 15, 2021

EURJPY is consolidating. The cross remains vulnerable though following the recent move lower and the break of its 50-day EMA. Price has also probed 128.38, a Fibonacci retracement. A clear break of this level would expose 127.39, the Dec 6 low and a key near-term support. Key short-term resistance has been defined at 131.60, Jan 5 high. Initial resistance is at 129.52/69, the 20- and 50-day EMAs.

AUDUSD TECHS: Trend Conditions Remain Bearish

• RES 4: 0.7371 High Nov 15
• RES 3: 0.7277/7314 High Jan 20 / High Jan 13
• RES 2: 0.7199 50-day EMA
• RES 1: 0.7130/7158 Low Jan 7 / 20-day EMA
• PRICE: 0.7036 @ 06:45 GMT Jan 31
• SUP 1: 0.6963 Low Jul 16, 2020
• SUP 2: 0.6921 Low Jul 14, 2020
• SUP 3: 0.6884 0.764 proj of the Oct ‘21 - Dec ‘21 - Jan price swing
• SUP 4: 0.6759 50.0% Fibonacci retrace of the Mar ‘19 - Feb ‘21 rally

AUDUSD remains vulnerable. Weakness extended Friday and resulted in a break of key support at 0.6993/91, the Dec 3 2021 and Nov 2 2020 lows. The break of this support zone reinforces bearish conditions and confirms a resumption of the broader downtrend that started February 2021. The move lower opens 0.6963/21, the Jul 16 and Jul 14 2020 lows. Firm short-term resistance is seen at 0.7130, the Jan 7 low.

USDCAD TECHS: Outlook Remains Bullish

• RES 4: 1.2964 High Dec 20 and a key resistance
• RES 3: 1.2924 High Dec 22
• RES 2: 1.2843 76.4% retracement of the Dec 20 - Jan 19 sell-off
• RES 1: 1.2814 High Jan 6 and a key resistance
• PRICE: 1.2728 @ 06:52 GMT Jan 31
• SUP 1: 1.2649 20-day EMA
• SUP 2: 1.2560 Low Jan 26
• SUP 3: 1.2451/48 Low Jan 19 / 76.4% of the Oct - Dec rally
• SUP 4: 1.2387 Low Nov 10

USDCAD remains bullish. The pair traded higher again Friday, extending the recovery from 1.2451, Jan 19 low. Price has cleared the 50-day EMA and the break has resulted in a move through 1.2768, 61.8% of the Dec 20 - Jan 19 sell-off. This opens 1.2843 next, the 76.4% retracement. On the downside, initial firm support lies at 1.2560, the Jan 26 low. The 20-day EMA, at 1.2649, marks initial support.

FIXED INCOME

BUND TECHS: (H2) Trading Below Recent Highs

• RES 4: 171.99 50.0% retracement of the Aug 12 - Jan 19 downleg
• RES 3: 171.77 Low Nov 24 and recent breakout level
• RES 2: 171.44 50-day EMA
• RES 1: 171.07 High Jan 24
• PRICE: 169.88 @ 05:05 GMT Jan 31
• SUP 1: 169.42 Low Jan 26
• SUP 2: 168.95 Low Jan 19 and the bear trigger
• SUP 3: 168.84 3.764 proj of the Dec 8 - Dec 20 price swing
• SUP 4: 168.46 4.00 proj of the Dec 8 - Dec 20 price swing

Bund futures remain below the Jan 24 high of 171.07. Key short-term resistance at 171.00 was only briefly probed last week, Jan 13 high. A clear break of this hurdle would signal potential for a stronger short-term recovery and expose the 50-day EMA at 171.44. Broader trend conditions remain bearish though. The trigger for a resumption of the downtrend is 168.95, the Jan 19 low.

BOBL TECHS: (H2) Broader Trend Conditions Still Bearish

• RES 4: 133.928 76.4% retracement of the Dec 20 - Jan 19 sell-off
• RES 3: 133.636 61.8% retracement of the Dec 20 - Jan 19 sell-off
• RES 2: 133.370 50-day EMA
• RES 1: 133.250 High Jan 24
• PRICE: 132.620 @ 05:00 GMT Jan 31
• SUP 1: 132.560 Low Jan 27
• SUP 2: 132.400 Low Jan 19 and the bear trigger
• SUP 3: 132.350 2.50 proj of the Nov 30 - Dec 8 - 20 price swing
• SUP 4: 132.253 2.618 proj of the Nov 30 - Dec 8 - 20 price swing

Trend conditions in Bobl futures remain bearish. Last week’s breach of 133.110, the Jan 6 and 13 highs, does however suggest potential for a stronger short-term corrective recovery ahead of resistance at the 50-day EMA at 133.370. The trend remains bearish, the recent break of 132.620, Jan 11 low maintains a bearish price sequence of lower lows and lower highs. The trigger for a resumption of the downtrend is 132.400, Jan 19 low.

SCHATZ TECHS: (H2) Remain Below Last Week’s High

• RES 4: 112.176 112.265 High Dec 20 and a key resistance
• RES 3: 112.250 High Dec 21
• RES 2: 112.176 76.4% retracement of the Dec 20 - Jan 19 downleg
• RES 1: 112.070/145 High Jan 27 / High Jan 24
• PRICE: 111.995 @ 05:14 GMT Jan 31
• SUP 1: 111.980 Low Jan 21
• SUP 2: 111.890 Low Jan 19 and the bear trigger
• SUP 3: 112.861 1.618 proj of the Nov 26 - Dec 16 - 20 price swing
• SUP 4: 111.824 1.764 proj of the Nov 26 - Dec 16 - 20 price swing

Schatz futures have pulled back from recent highs. The recent rally in price resulted in a move through the 20- and 50-day EMAs. This still signals potential for a near-term corrective climb towards 112.176, a Fibonacci retracement. Clearance of this retracement would strengthen bullish conditions and open 112.265 further out, the Dec 20 high. The trend condition is bearish though and the key support and bear trigger is at 111.890.

GILT TECHS: (H2) Eyeing The Bear Trigger

• RES 4: 124.80 50.0% retracement of the Dec 8 - Jan 19 downleg
• RES 3: 124.30 50-day EMA
• RES 2: 124.17 Low Nov 24
• RES 1: 123.79 High Jan 13 and a key near-term resistance
• PRICE: 122.53 @ Close Jan 28
• SUP 1: 121.93 Low Jan 19 and the bear trigger
• SUP 2: 121.61 Low Nov 13 2018 (cont)
• SUP 3: 121.34 3.0% Lower Bollinger Band
• SUP 4: 121.12 Low Nov 8 2018 (cont)

Recent price action in Gilt futures has defined 121.93, Jan 19 low, as a key support and bear trigger. Bearish trend conditions remain intact and short-term gains are considered corrective. Firm resistance has been defined at 123.79, Jan 13 high. A break of this level is required to signal a short-term base and allow for a stronger corrective bounce towards 124.30, the 50-day EMA. A break of 121.93 would resume the downtrend.

BTP TECHS: (H2) Volatile Above Recent Lows

• RES 4: 148.02 High Dec 29
• RES 3: 147.33 50-day EMA
• RES 2: 146.80 High Jan 14 and key short-term resistance
• RES 1: 146.49 High Jan 24
• PRICE: 145.87 @ Close Jan 28
• SUP 1: 144.54 Low Jan 27 and the bear trigger
• SUP 2: 144.08 3.00 proj of the Dec 6 - 18 - 14 price swing
• SUP 3: 143.57 3.236 proj of the Dec 6 - 18 - 14 price swing
• SUP 4: 143.26 3.382 proj of the Dec 6 - 18 - 14 price swing

Trend conditions in BTP futures remain bearish however the contract is trading in a volatile manner. Futures traded down to 144.54 last Thursday - a fresh trend low - before rebounding. The primary direction is down though following the recent breach of 145.12, Jan 10 low. This confirmed a resumption of the trend to maintain a price sequence of lower lows and lower highs, opening 144.08, a Fibonacci projection. Key resistance is at 146.80.

EQUITIES

EUROSTOXX 50 TECHS: (H2) Corrective Recovery

• RES 4: 4392.50 High Nov 18 and key resistance
• RES 3: 4381.50 High Jan 5 and the bull trigger
• RES 2: 4324.50.50 High Jan 13
• RES 1: 4214.90/15.50/4218.50 50-day EMA / High Jan 24
• PRICE: 4177.50 @ 05:43 GMT Jan 31
• SUP 1: 3990.50 Low Jan 24 and a key near-term support
• SUP 2: 3980.00 Low Nov 30 2021
• SUP 2: 3935.00 Low Oct 6 2021
• SUP 4: 3895.00 Low Jul 19 2021 (cont)

EUROSTOXX 50 futures remain vulnerable and volatile. Last Monday’s sell-off reinforced a bearish threat. Former support at 4216.50, Jan 10 low has been cleared and this resulted in the break of a number of short-term support levels. The focus is on 3980.00, Nov 30 low and 3935.00, Oct 6 low. Both are important supports. Initial firm resistance is at 4215.50, the Jan 24 high. Gains are considered corrective.

E-MINI S&P (H2): Last Week’s Low Remains Intact

• RES 4: 4739.50 High Jan 12
• RES 3: 4671.75 High Jan 18
• RES 2: 4581.19 50-day EMA
• RES 1: 4446.25/4485.75 High Jan 26 / Low Dec 3
• PRICE: 4430.50 @ 06:47 GMT Jan 31
• SUP 1: 4212.75 Low Jan 24 and the bear trigger
• SUP 2: 4200.00 Round number support
• SUP 3: 4186.57 23.6% of the Mar ‘20 - Jan ‘22 major rally
• SUP 4: 4126.75 Low Jun 21, 2021 (cont)

S&P E-minis are firmer and have managed to remain above last Monday’s low of 4212.75. Last week’s price action has allowed the recent oversold reading to unwind. Initial resistance to watch is 4446.25, Jan 26 high. The trigger for a resumption of bearish activity is 4212.75 low. Price action is likely to remain choppy near-term. However from a trend perspective, the short-term direction remains down.

COMMODITIES

BRENT TECHS: (H2) Heading North

• RES 4: $95.49 - 2.382 proj of the Dec 2 - 9 - 20 price swing
• RES 3: $95.00 Round number resistance
• RES 2: $93.89 - 2.00 proj of the Dec 2 - 9 - 20 price swing
• RES 1: $91.70 - High Jan 28
• PRICE: $91.25 @ 06:51 GMT Jan 31
• SUP 1: $87.79 - Low Jan 26
• SUP 2: $85.56/04 - 20-day EMA / Low Jan 24 and key support
• SUP 3: $81.65/80.50 - 50-day EMA / Low Jan 10
• SUP 4: $77.04 - Low Jan 3 and key support

Brent futures resumed their uptrend last week following the break of former resistance at $89.50, the Jan 20 high. This maintains the bullish price sequence of higher highs and higher lows and moving average conditions remain in a bull mode. $90.00 has been cleared and the focus is on $93.89, a Fibonacci projection. On the downside, key short-term support has been defined at $85.04, the Jan 24 low.

WTI TECHS: (H2) Bulls Still In Control

• RES 4: $92.85 - 2.50 proj of the Dec 2 - 9 - 20 price swing
• RES 3: $91.58 - 2.382 proj of the Dec 2 - 9 - 20 price swing
• RES 2: $90.00 - Psychological round number
• RES 1: $88.84 - High Jan 28
• PRICE: $87.84@ 07:07 GMT Jan 31
• SUP 1: $85.01 - Low Jan 26
• SUP 2: $82.41/81.90 - 20-day EMA / Low Jan 24
• SUP 3: $78.39/77.34 - 50-day EMA / Low Jan 10
• SUP 4: $74.01 - Low Jan 3

The uptrend in WTI futures resumed last week following the break of resistance at $87.10, Jan 20 high. This maintains the bullish price sequence of higher or higher highs and higher lows and moving average conditions remain in a bull mode. Attention is on the psychological $90.00 handle next as price continues to climb. On the downside, key short-term support has been defined at $81.90, the Jan 24 low.

GOLD TECHS: Bear Channel Support Breached

• RES 4: $1877.2 - High Nov 16 and key resistance
• RES 3: $1871.0 - High Nov 18
• RES 2: $1853.9 - High Jan 25 and the bull trigger
• RES 1: $1822.2 - High Jan 27
• PRICE: $1787.0 @ 07:13 GMT Jan 31
• SUP 1: $1780.4 - Low Jan 28
• SUP 2: $1775.7 - Low Dec 16
• SUP 3: $1753.7 - Low Dec 15 and a key support
• SUP 4: $1746.0 - Low Oct 6

The rally in gold stalled last week. The sharp sell-off has resulted in a break of base of its bull channel that intersects at $1795.8 - the channel is drawn off the Aug 9 low. The break lower highlights a bearish threat and a more significant reversal. This signals potential for weakness towards $1775.7, the Dec 16 low. For bulls, a break of $1853.9, Jan 25 high is required to reinstate the recent bull theme. Initial resistance is at $1822.2.

SILVER TECHS: Needle Points South

• RES 4: $24.886 - High Nov 22
• RES 3: $24.700 - High Jan 20
• RES 2: $23.994 - High Jan 25
• RES 1: $23.199/599 - 50-day EMA / High Jan 27
• PRICE: $22.341 @ 07:26 GMT Jan 31
• SUP 1: $22.151 - Low Jan 28
• SUP 2: $21.949 - Low Jan 7
• 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 has reversed the recent bullish theme following last week’s sharp accelerated sell-off. The metal has breached former support at $22.809, Jan 17 low signalling scope for a deeper retracement. This opens $21.949, the Jan 7 low. A break would reinforce the bearish threat and expose $21.427/423, the Dec 15 and Sep 29 lows and key support. On the upside, initial resistance is seen at $23.199, the 50-day EMA.