MNI DAILY TECHNICAL ANALYSIS - Risk of Equity Correction Building

Price Signal Summary – Risk of Equity Correction Building

In the equity space, S&P E-minis have extended recent weakness to open a sizeable gap with 4238.25. Two key supports at 4135.30 and 4110.50 have given way, raising the risk of a further corrective pullback.
In FX, EURUSD maintains a firmer tone following Friday's gains and the break of 1.2150, Apr 29 high. The focus is on 1.2184, Feb 26 high and 1.2243, Feb 25 high. GBPUSD is firm following the rally Monday and attention turns to 1.4237, Feb 24 high and this year's high. USDJPY short-term support has been defined at Friday's low of 108.34. A bullish theme remains intact while this level holds and attention is on 109.70, May 3 high. A break of support would highlight a trendline break, drawn off the Jan 6 low and risk a deeper pullback.
On the commodity front, the Gold is holding onto gains and the outlook is bullish despite near-term volatility. Last week's climb has opened $1851.5, 61.8% retracement of the Jan 6 - Mar 8 sell-off. Oil is off recent highs but the uptrend remains intact. The Brent (N1) focus is on the psychological $70.00 level and $71.75, Jan 8 2020 high (cont). Watch key support at $62.91, May 3 low. WTI bulls are eyeing the key resistance at $67.29, Mar 8 high. Support at $66.10, May 3 low is key. In the FI space, Bunds (M1) are sharply lower and through initial support at 169.47, May 3 low. This exposes the major support at 169.24, Feb 25 low and the bear trigger. Near-term risk in Gilts is still skewed to the downside. The next support and intraday bear trigger is at 127.32, Apr 1 low.

FOREIGN EXCHANGE

EURUSD TECHS: Consolidating

• RES 4: 1.2285 High Jan 8
• RES 3: 1.2243 High Feb 25 and a key resistance
• RES 2: 1.2207 1.0% 10-dma envelope
• RES 1: 1.2182/84 High May 11 / High Feb 26
• PRICE: 1.2123 @ 06:03 BST May 12
• SUP 1: 1.2084 Former trendline resistance drawn off the Jan 6 high
• SUP 2: 1.2052 20-day EMA
• SUP 3: 1.1986 Low May 5 and key short-term support
• SUP 4: 1.1943 Low Apr 19

EURUSD is consolidating and remains below yesterday's 1.2182 high. The outlook is bullish. Last week's break to fresh highs negated recent bearish threats and confirmed a resumption of the uptrend that started Mar 31. The move higher has also resulted in a break of trendline resistance drawn off the Jan 6 high. MA conditions support a bullish theme too. The focus is on 1.2184, Feb 26 high and 1.2243, Feb 25 high. Initial support is at 1.2084.

GBPUSD TECHS: Key Resistance Exposed

• RES 4: 1.4315 High Apr 18, 218
• RES 3: 1.4237 High Feb 24 and a key resistance
• RES 2: 1.4233 2.0% 10-dma envelope
• RES 1: 1.4166 High May 11
• PRICE: 1.4122 @ 06:08 BST May 12
• SUP 1: 1.3972 Low May 10
• SUP 2: 1.3858 Low May 6
• SUP 3: 1.3801 Low May 3 and a key support
• SUP 4: 1.3752 Bull channel base drawn off the May 2020 low

GBPUSD is holding onto recent gains and the outlook remains bullish. The pair has cleared a number of resistance levels reinforcing a positive theme with sights set on the key resistance at 1.4237, Feb 24 high. A break of 1.4237 would strengthen a bullish case and importantly confirm a resumption of the broader uptrend that started in March 2020. On the downside, initial support is at Monday's intraday low of 1.3972.

EURGBP TECHS: Support Remains Under Pressure

• RES 4: 0.8791/8835 High Feb 12 / 2.0% 10-dma envelope
• RES 3: 0.8731 High Feb 26
• RES 2: 0.8701/21 High May 7 / High Apr 26 and the bull Trigger
• RES 1: 0.8660 50-day EMA
• PRICE: 0.8589 @ 06:20 BST May 12
• SUP 1: 0.8589/82 Low Apr 19 and a key support / Low May 11
• SUP 2: 0.8567 61.8% retracement of the Apr 5 - 26 rally
• SUP 3: 0.8472 Low Apr 5 and the bear trigger
• SUP 4: 0.8430 Low Feb 27, 2020

EURGBP traded sharply lower Monday and is consolidating at this week's lows. Attention is on support at 0.8589, Apr 19 low where a clear break would see the cross move out of its recent range and confirm a bearish breakout. This would suggest scope for a deeper pullback, potentially towards the key support at 0.8472, Apr 5 low. On the upside, the key resistance and bull trigger is unchanged at 0.8721, Apr 26 high. Initial resistance is at 0.8660.

USDJPY TECHS: Consolidating At Trendline Support

• RES 4: 110.97 High Mar 31 and the bull trigger
• RES 3: 110.55 High Apr 6
• RES 2: 109.70/96 High May 3 / High Apr 9
• RES 1: 109.29 High May 7
• PRICE: 108.84 @ 06:28 BST May 12
• SUP 1: 108.34/08 Low May 7 / Low Apr 27
• SUP 2: 107.48 Low Apr 23 and the bear trigger
• SUP 3: 106.97 Low Mar 4
• SUP 4: 106.78 50.0% retracement of the Jan - Mar rally

USDJPY is consolidating. The pair traded lower last week and did penetrate trendline support at 108.44. The trendline is drawn off the Jan 6 low. Support though was found at 108.34, May 7 low and a clear breach of this level is required to negate the recent bullish theme. This would expose 107.48, Apr 23 low and a bear trigger. For bulls, a break of 109.70, May 3 high, would strengthen a bullish case and signal scope for a climb above 110.00.

EURJPY TECHS: Needle Still Points North

• RES 4: 133.68 Bull channel top drawn off the Oct 30, 2020 low
• RES 3: 133.28 1.50 proj of Jun-Sep-Oct 2020 swing
• RES 2: 133.13 High Sep 21, 2018 and a key resistance
• RES 1: 132.36/53 1.382 of Jun-Sep-Oct 2020 swing / High May 10
• PRICE: 132.01 @ 07:37 BST May 12
• SUP 1: 131.48 Low May 7
• SUP 2: 130.99 Low May 5 and a key support
• SUP 3: 130.57 Low Apr 27
• SUP 4: 130.17 Bull channel base drawn off the Oct 30, 2020 low

EURJPY is consolidating with the outlook remaining bullish. Price traded above 132.36 Monday, a Fibonacci projection. A clear break would reinforce bullish conditions and signal scope for further gains within the bull channel drawn off the Oct 30 2020 low. Moving average studies are still pointing north, reinforcing current conditions. Support is at 130.99, May 5 low. The focus is on 133.28 next, a Fibonacci projection.

AUDUSD TECHS: Corrective Pullback

• RES 4: 0.8044 High Feb 2, 2018
• RES 3: 0.8007 High Feb 25 and the bull trigger
• RES 2: 0.7934 2.0% 10-dma envelope
• RES 1: 0.7895 76.4% retracement of the Feb 25 - Apr 1 sell-off
• PRICE: 0.7796 @ 06:45 BST May 12
• SUP 1: 0.7761 Low May 7
• SUP 2: 0.7675 Low May 4 and key support
• SUP 3: 0.7635 Low Apr 14
• SUP 4: 0.7586 Low Apr 13

AUDUSD traded higher Monday but stalled at the session high and has since pulled back. A bullish outlook remains intact though. The pair has recently cleared the April highs and this opens the 76.4% retracement of the February - April downtick at 0.7895. A break here would strengthen bullish conditions and point the needle toward the year's best levels printed in late February at 0.8007. Initial support is at 0.7761, May 7 low.

USDCAD TECHS: Bearish Focus

• RES 4: 1.2455 50-day EMA
• RES 3: 1.2419 High Apr 27
• RES 2: 1.2351 High May 4 and a key near-term resistance
• RES 1: 1.2194/2288 High May 7 / High May 6
• PRICE: 1.2118 @ 06:49 BST May 12
• SUP 1: 1.2079 Low May 10
• SUP 2: 1.2062 Low Sep 2017 and a major support
• SUP 3: 1.1978 2.0% 10-dma envelope
• SUP 4: 1.1920 Low May 2015

USDCAD moving average studies are in a bear mode and recent weakness confirmed an extension of the bearish price sequence of lower lows and lower highs. The pair is approaching a major pivot support at 1.2062, the Sep 2017 low. This level will potentially either reinforce the current medium-term bear leg if breached or lead to a reversal if the support manages to contain CAD strength. Initial resistance is at 1.2194, May 7 high.

FIXED INCOME

BUND TECHS: (M1) Key Support Exposed

• RES 4: 172.12 High Apr 8
• RES 3: 171.62 High Apr 14
• RES 2: 171.19/27 50-day EMA / High Apr 22
• RES 1: 170.55/98 20-day EMA / High Apr 7
• PRICE: 169.42 @ 05:09 BST May 12
• SUP 1: 169.24 Low Feb 24 and major support
• SUP 2: 168.96 0.618 proj of the Jan 27 - Feb 25 - Mar 25 price swing
• SUP 3: 168.52 Low Mar 20, 2020 (cont)
• SUP 4: 168.09 0.764 proj of the Jan 27 - Feb 25 - Mar 25 price swing

Bund futures failed to hold onto week's highs and the reversal lower confirms a resumption of bearish activity. Yesterday's sell-off resulted in a breach of support at 169.47, May 3 low leaving the key support at 169.24, Feb 24 kow exposed. Clearance of this latter level would confirm a resumption of the broader downtrend and open 169.00 and below. A key short-term resistance has been defined at 170.98, Apr 7 high.

BOBL TECHS: (M1) Bearish Activity Resumed

• RES 4: 135.180 High Apr 14
• RES 3: 135.050 High Apr 22
• RES 2: 135.040 High May 6
• RES 1: 134.881 20-day EMA
• PRICE: 134.550 @ 05:20 BST May 12
• SUP 1: 134.466 76.4% retracement of the Feb 26 - Mar 25 rally
• SUP 2: 134.140 Low Feb 26 and key support
• SUP 3: 134.000 Round number support
• SUP 4: 133.340 Low Mar 19, 2020 (cont)

Bobl futures traded sharply lower yesterday and in the process breached key short-term support at 134.560, May 3 low. This confirms a resumption of the bearish cycle that started Mar 25. The break lower and resumption of weakness signals scope for a move towards 134.466 next, a Fibonacci retracement. Clearance of this level would expose the key support at 134.140, this year's low. Key resistance is at 135.040, May 6 high.

SCHATZ TECHS: (M1) Clears Congestion Support

• RES 4: 112.165 High Mar 25 and the bull trigger
• RES 3: 112.150 High Apr 8
• RES 2: 112.110/120 High May 4, 5, and 6 / High Apr 22
• RES 1: 112.090 20-day EMA
• PRICE: 112.040 @ 05:29 BST May 12
• SUP 1: 112.035 Low May 11
• SUP 2: 112.026 61.8% retracement of the Feb 26 - Mar 25 rally
• SUP 3: 111.993 76.4% retracement of the Feb 26 - Mar 25 rally
• SUP 4: 111.940 Low Feb 26 ad key support

Schatz futures stalled last week at 112.110 and resistance at 112.120, Apr 22 high remains intact. The subsequent pullback has resulted in a break of 112.060, a level that provided support in March and April. The clear break strengthens a bearish case and paves the way for weakness towards 112.026 next, a Fibonacci retracement. On the upside, a breach of 112.110 is required to signal a reversal. Bearish!

GILT TECHS: (M1) Key Support Zone Exposed

• RES 4: 130.38 High Feb 17 / 18
• RES 3: 129.75 High Feb 19
• RES 2: 129.09/27 High Apr 23 and the reversal trigger / High Mar 2
• RES 1: 128.80 High May 7
• PRICE: 127.77 @ Close May 11
• SUP 1: 127.40 Low Apr 29
• SUP 2: 127.32 Low Apr 1
• SUP 3: 126.79 Low Mar 18 and the bear trigger
• SUP 4: 126.55 Low Apr 17, 2019 (cont)

The Gilt futures outlook remains bearish. The pullback from 128.80, last week's high on May 7, refocuses attention on a firm area of support between 127.40 and 127.32, the Apr 29 and Apr 1 lows respectively. Clearance of this zone would strengthen a bearish case and expose the major support at 126.79, Mar 18 low and the bear trigger. A break of 126.79 would confirm a resumption of the broader downtrend. Initial firm resistance is 128.80.

BTP TECHS: (M1) Downtrend Extends

• RES 4: 148.85 High Apr 15
• RES 3: 148.65 High Apr 22
• RES 2: 147.79 High May 4 and key near-term resistance
• RES 1: 147.33 High May 7
• PRICE: 146.26 @ Close May 11
• SUP 1: 146.00 Round number support
• SUP 2: 145.35 1.00 proj of the Feb 12 - 26 - Mar 11 price swing
• SUP 3: 144.96 Low Sep 9, 2020 (cont)
• SUP 4: 144.16 1.236 proj of the Feb 12 - 26 - Mar 11 price swing

BTP futures remain weak and traded lower again yesterday. A bearish theme follows last week's move lower and break of support at 146.84, Feb 26 low. This confirms a resumption of the downtrend that has been in place since Feb 12 and opens 146.00 next ahead of 145.35, a Fibonacci projection. Moving average studies are in a bear mode reinforcing the current bear cycle. On the upside, key short-term resistance is at 147.79, May 4 high.

EQUITIES

EUROSTOXX 50 TECHS: (M1) Approaching Key Support

• RES 4: 4175.00 Low Nov 26, 2007 (cont)
• RES 3: 4140.00 High Jan 18, 2008 (cont)
• RES 2: 4099.00 1.00 proj of of the Mar - Jul - Oct 2020 price swing
• RES 1: 4036.00 High May 10 and the bull trigger
• PRICE: 3899.00 @ 05:54 BST May 12
• SUP 1: 3882.00 Low May 4 and key support
• SUP 2: 3858.41 50-day EMA
• SUP 3: 3821.00 High Mar 18 and recent breakout level
• SUP 4: 3727.00 Low Mar 25

EUROSTOXX 50 futures started the week on a softer note. The contract remains under pressure however, broader trend conditions still highlight a bullish theme and pullbacks are likely corrective. The recent break of 4000 confirmed a resumption of the underlying uptrend opening 4099.00, a Fibonacci projection. Key support to watch is 3882.00, May 4 low. A break would be bearish and signal a top and the start of a deeper correction.

E-MINI S&P (M1): Risk of Corrective Sell-Off Building

• RES 4: 4267.25 2.0% 10-dma envelope
• RES 3: 4239.26 1.764 proj of the Feb 1 - Feb 16 - Mar 4 price swing
• RES 2: 4238.25 High May 10
• RES 1: 4185.50 High May 12
• PRICE: 4144.00 @ 08:57 BST May 12
• SUP 1: 4103.75 Low may 11 and key support
• SUP 2: 4093.86 2.0% 10-dma Envelope
• SUP 3: 4058.02 50-day EMA
• SUP 4: 4021.00 Low Apr 5

S&P E-minis continue to edge off resistance and have traded weaker across the week. Two support levels have given way, with the 4135.30 bull channel base drawn off the Mar 4 low and 4110.50, the Apr 20 low failing to support prices on Monday/Tuesday. This signals the potential for a deeper corrective sell-off. Price needs trade above Tuesday's 4185.50 high to ease the developing bearish threat.

COMMODITIES

BRENT TECHS: (N1) Price Structure Remains Bullish

• RES 4: $71.95 - High Sep 16, 2019 (cont)
• RES 3: $71.75 - High Jan 8 2020 (cont)
• RES 2: $70.00 - Psychological round number
• RES 1: $69.95 - High May 5
• PRICE: $68.59 @ 06:51 BST May 12
• SUP 1: $67.13 - Low May 11
• SUP 2: $66.10 - Low May 3
• SUP 3: $64.75 - 50-day EMA
• SUP 4: $63.93 - Low Apr 26

Brent crude futures price structure remains bullish. Price on May 5, probed key resistance at $69.73, Mar 8 high. A clear break of this level would confirm a resumption of the broader uptrend and extend the bullish price sequence of higher highs and higher lows. This would open $71.75, the Jan 8, 2020 high (cont). On the downside, initial firm support has been defined at $66.10. A break would be bearish.

WTI TECHS: (M1) Needle Still Points North

• RES 4: $70.00 - Psychological round number
• RES 3: $67.95 - High Oct 29, 2018
• RES 2: $67.29 - High Mar 8 and the bull trigger
• RES 1: $66.76 - High May 5
• PRICE: $65.33 @ 06:54 BST May 12
• SUP 1: $63.68 - Low May 11
• SUP 2: $62.91 - Low May 3 and key near-term support
• SUP 3: $60.61 - Low Apr 22 and key short-term support
• SUP 4: $58.77 - Low Apr 12

WTI futures maintain a bullish tone following last week's gains. The contract has probed resistance at $66.15, Mar 15 high where a clear break would pave the way for a test of the key hurdle for bulls at $67.29, Mar 8 high. Clearance of this resistance would confirm a resumption of the broader uptrend. On the downside, firm near-term support has been defined at $62.91, May 3 low. A break would be bearish.

GOLD TECHS: Bullish Price Sequence

• RES 4: $1875.7 - High Jan 29
• RES 3: $1855.5 - High Feb 10
• RES 2: $1851.5 - 61.8% retracement of the Jan 6 - Mar 8 sell-off
• RES 1: $1845.5 - High May 10
• PRICE: $1830.7 @ 07:11 BST May 12
• SUP 1: $1799.1 - High May 4 and a recent breakout level
• SUP 2: $1790.2 - 20-day EMA
• SUP 3: $1764.3 - Low Apr 30
• SUP 4: $1756.2 - Low Apr 29 and key near-term support

Gold is holding onto recent gains. The yellow metal recently cleared resistance at $1797.9, Apr 22 high. This confirmed a resumption of the uptrend that started early March where a reversal pattern in the shape of a double bottom began. This pattern was confirmed on Apr 8. The move higher paves has also confirmed a bullish price sequence of higher highs and higher lows and the focus is on $1851.5 next, a retracement. Support is at $1799.1.

SILVER TECHS: Bulls Still In Charge

• RES 4: $28.609 - 76.4% retracement of the Feb 1 - Mar 31 sell-off
• RES 3: $28.328 - High Feb 23 and a key resistance
• RES 2: $28.205 - High Feb 25
• RES 1: $27.883 - High May 10
• PRICE: $27.393 @ 07:15 BST May 12
• SUP 1: $26.506 - 20-day EMA
• SUP 2: $25.718 - Low Apr 29 and key near-term support
• SUP 3: $25.636 - Low Apr 19
• SUP 4: $25.199 - Low Apr 14

Silver remains bullish. The metal rallied last week, extending the current bull cycle that started Mar 3. The push higher strengthens a bullish case and confirms a resumption of the recovery from Mar 31. With moving average signals in a bull mode too, further gains are likely towards $28.328, Feb 23 high. This level represents the next key resistance handle. On the downside, key short-term support has been defined at $25.718, Apr 29 low.