MNI DAILY TECHNICAL ANALYSIS - Scope for Near-Term Correction in EUR/USD

Price Signal Summary – Scope for Near-Term Correction in EUR/USD

• In the equity space, S&P E-minis continue to trade higher. Gains though are still considered corrective. Price action in January resulted in a reversal of the moving average condition to bearish. EUROSTOXX 50 futures are trading higher and price has breached the 50-day EMA at 4211.80. This average marks a key resistance area and a clear break of it would suggest scope for stronger recovery.
• In FX, EURUSD started the week on a firmer note and traded higher again Tuesday. Monday’s daily close highlights a 3-day Japanese candle reversal known as a morning star. This suggests scope for a stronger short-term corrective bounce. GBPUSD has recovered from its recent low of 1.3358 on Jan 27 and has probed resistance at 1.3525, Jan 26 high. A continuation higher would suggest scope for a climb towards 1.3662 next, the Jan 20 high. USDJPY has pulled back from its recent high but the outlook remains bullish despite this modest pullback. Last week’s gains resulted in a breach of former resistance at 115.06, the Jan 18 high.
• On the commodity front, Gold is unchanged and remains vulnerable. The recent rally stalled last week and the sharp sell-off resulted in a break of the base of its bull channel drawn off the Aug 9 low. The uptrend in WTI futures remains intact - the contract last week cleared 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 resumed their downtrend Monday, trading below former support at 168.95, Jan 19 low. This maintains the bearish sequence of lower lows and lower highs. The downtrend is also reinforced by a bearish set-up in the moving average condition. Gilt futures remain bearish. The contract traded lower Monday and through support 121.93, Jan 19 low. This confirmed a resumption of the downtrend and an extension of the bearish price sequence of lower lows and lower highs.

FOREIGN EXCHANGE

EURUSD TECHS: Morning Star Reversal Highlights A Base

• RES 4: 1.1421 High Jan 18
• RES 3: 1.1361 Bear channel top drawn from the Jun 1 2021 high
• RES 2: 1.1339 50-day EMA
• RES 1: 1.1291 20-day EMA
• PRICE: 1.1273 @ 06:11 GMT Feb 2
• SUP 1: 1.1121 Low Jan 28 and the bear trigger
• SUP 2: 1.1070 Low May 29, 2020
• SUP 3: 1.1021 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 started the week on a firmer note and traded higher again Tuesday. Monday’s daily close highlights a 3-day Japanese candle reversal known as a morning star. This suggests scope for a stronger short-term corrective bounce ahead of the next firm resistance at 1.1291, the 20-day EMA. Gains are considered corrective. The trend direction remains down following the recent break of support 1.1186, Nov 24 low. The bear trigger is at 1.1121.

GBPUSD TECHS: Recovers From Its Recent Low

• RES 4: 1.3835 High Oct 20 and key resistance
• RES 3: 1.3717/49 200-dma / High Jan 13
• RES 2: 1.3662 High Jan 20
• RES 1: 1.3566 High Jan 24
• PRICE: 1.3525 @ 06:19 GMT Feb 2
• SUP 1: 1.3358/43 Low Jan 27 / Low Dec 23
• SUP 2: 1.3301 76.4% retracement of the Dec 8 - Jan 13 bull phase
• SUP 3: 1.3227 2.0% 10-dma envelope
• SUP 4: 1.3163 Low Dec 8 and a key support

GBPUSD has recovered from its recent low of 1.3358 on Jan 27 and has probed resistance at 1.3525, Jan 26 high. A continuation higher would suggest scope for a climb towards 1.3662 next, the Jan 20 high. On the downside, 1.3358 has been defined as a key short-term support where a break would confirm a resumption of recent bearish pressure and open 1.3343, Dec 23 low and 1.3301, a Fibonacci retracement.

EURGBP TECHS: Candle Pattern Suggest Scope For A Correction

• RES 4: 0.8498 High Dec 23
• RES 3: 0.8465 High Dec 24
• RES 2: 0.8404/23 50-day EMA / High Jan 24 and a key resistance
• RES 1: 0.8372 High Jan 26
• PRICE: 0.8336 @ 06:21 GMT Feb 2
• SUP 1: 0.8305 Low Jan 20/28/31, 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 however from a short-term perspective, there is potential for a correction - Monday’s candle pattern is a bullish engulfing reversal that signals a near-term base. An extension would open 0.8404, the 50-day EMA. The broader trend remains down however and a resumption of weakness would open 0.8282/77, the Feb’20 and Dec’19 lows and the multi-year range base at 0.8300.

USDJPY TECHS: Corrective Pullback

• 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: 116.35 High Jan 4 and the bull trigger
• RES 1: 115.67/68 76.4% of the Jan 4 - 24 downleg / High Jan 28
• PRICE: 114.73 @ 06:28 GMT Feb 2
• 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: 112.53/112.22 Low Nov 30 / 2.0% 10-dma envelope

USDJPY has pulled back from its recent high but the outlook remains bullish despite this modest pullback. Last week’s gains resulted in a breach of former resistance at 115.06, the Jan 18 high. This has strengthened the recent reversal and signals scope for a climb towards 116.35, high Jan 4 and a key resistance. Key short-term support has been defined at 113.47, Jan 24 low. A break would be bearish.

EURJPY TECHS: Holding Onto Recent Highs

• 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: 129.48/66 20- and 50-day EMA values
• PRICE: 129.30 @ 06:36 GMT Feb 2
• SUP 1: 128.38/25 76.4% of the Dec 3 - Jan 5 upleg / 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 holding onto recent gains. The recovery since Jan 25 is considered corrective and the cross remains vulnerable following recent weakness. Price has recently probed 128.38, a Fibonacci retracement. A clear break of this level would expose 127.39, the Dec 6 low and a key support. Initial resistance is at 129.48/66, the 20- and 50-day EMAs. Clearance of this zone would suggest scope for a stronger corrective bounce.

AUDUSD TECHS: Strong Corrective Bounce

• RES 4: 0.7314 High Jan 13 and a key resistance
• RES 3: 0.7277 High Jan 20
• RES 2: 0.7191 50-day EMA
• RES 1: 0.7148 20-day EMA
• PRICE: 0.7136 @ 06:47 GMT Feb 2
• SUP 1: 0.7034/6963 Low Feb 1 / 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 has rebounded from the Jan 28 low of 0.6968. The trend condition remains bearish though and the recent breach of key support at 0.6993/91, the Dec 3 2021 and Nov 2 2020 lows reinforces this theme - the move lower confirmed a resumption of the downtrend and opens 0.6963/21, the Jul 16 and Jul 14 2020 lows. The next firm resistance is seen at 0.7148/91, the 20- day and 50-day EMA values.

USDCAD TECHS: Bullish Theme Intact

• 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: 1.2684 @ 06:53 GMT Feb 2
• SUP 1: 1.2650 Low Jan 27
• 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

The USDCAD outlook remains bullish despite this week’s pullback. Last week’s climb confirmed an extension of the recovery from 1.2451, the 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 has opened 1.2843, a retracement value. On the downside, initial firm support lies at 1.2560, the Jan 26 low. First support is at 1.2650, the Jan 27 low.

FIXED INCOME

BUND TECHS: (H2) Downtrend Intact

• RES 4: 171.77 Low Nov 24 and recent breakout level
• RES 3: 171.24 50-day EMA
• RES 2: 171.07 High Jan 24 and key short-term resistance
• RES 1: 170.27 20-day EMA
• PRICE: 168.90 @ 05:06 GMT Feb 2
• SUP 1: 168.65 Low Jan 31
• SUP 2: 168.46 4.00 proj of the Dec 8 - Dec 20 price swing
• SUP 3: 168.00 Round number support
• SUP 4: 167.69 Low Nov 1, 2021 (cont)

Bund futures resumed their downtrend Monday, trading below former support at 168.95, Jan 19 low. This maintains the bearish sequence of lower lows and lower highs. The downtrend is also reinforced by a bearish set-up in the moving average condition. The focus is on 168.46, a Fibonacci projection. On the upside, key short-term resistance has been defined at 171.07, Jan 24 high. Initial resistance is seen at 170.27, the 20-day EMA.

BOBL TECHS: (H2) Bearish Trend Sequence

• RES 4: 133.530 High Dec 29
• RES 3: 133.278 50-day EMA
• RES 2: 133.250 High Jan 24 and key short-term resistance
• RES 1: 132.837 20-day EMA
• PRICE: 132.160 @ 05:10 GMT Feb 2
• SUP 1: 132.000 Round number support
• SUP 2: 131.940 3.00 proj of the Nov 30 - Dec 8 - 20 price swing
• SUP 3: 131.746 3.236 proj of the Nov 30 - Dec 8 - 20 price swing
• SUP 4: 131.627 3.382 proj of the Nov 30 - Dec 8 - 20 price swing

A sharp sell-off Monday in Bobl futures resulted in a break of support at 132.40, the Jan 19 low and a bear trigger. The breach confirms a resumption of the underlying downtrend and resumes the bearish price sequence of lower lows and lower highs. Moving averages also point south. Attention is on the 132.00 handle and 131.940, a Fibonacci projection. Key resistance has been defined at 133.250, the Jan 24 high.

SCHATZ TECHS: (H2) Trend Needle Still Points South

• RES 4: 112.265 High Dec 20
• RES 3: 112.185 High Dec 22
• RES 2: 112.070/145 High Jan 27 / High Jan 24 and key resistance
• RES 1: 111.925/112.020 High Feb 1 / High Jan 31
• PRICE: 111.875 @ 05:15 GMT Feb 2
• SUP 1: 111.824 1.764 proj of the Nov 26 - Dec 16 - 20 price swing
• SUP 2: 111.800 Round number support
• SUP 3: 111.770 Low Dec 13, 2018 (cont)
• SUP 4: 111.706 2.236 proj of the Nov 26 - Dec 16 - 20 price swing

Schatz futures traded lower again yesterday. Monday’s sell-off resulted in a break of support at 111.890, the Jan 19 low and bear trigger. This brings to an end the recent corrective cycle and confirms a resumption of the underlying downtrend. The move lower opens 111.824, a Fibonacci projection and the 111.800 handle. On the upside, initial resistance is seen at Monday’s high of 112.020 and key resistance is at 112.145, the Jan 24 high.

GILT TECHS: (H2) Trend Structure Remains Bearish

• RES 4: 124.17 Low Nov 24
• RES 3: 124.12 50-day EMA
• RES 2: 123.79 High Jan 13 and a key near-term resistance
• RES 1: 123.14 20-day EMA
• PRICE: 121.94 @ Close Feb 1
• SUP 1: 121.82 Low Feb 1
• SUP 2: 121.61 Low Nov 13 2018 (cont)
• SUP 3: 121.42 3.0% Lower Bollinger Band
• SUP 4: 121.12 Low Nov 8 2018 (cont)

Gilt futures remain bearish. The contract traded lower Monday and through support 121.93, Jan 19 low. This confirmed a resumption of the downtrend and an extension of the bearish price sequence of lower lows and lower highs. Note too that MA studies are in a bear mode, reinforcing the current trend direction. The move lower opens 121.61 next, Nov 13 2018 low. On the upside, key short-term resistance has been defined at 123.71, Jan 24 high.

BTP TECHS: (H2) Bearish Focus

• RES 4: 148.45 High Dec 23
• RES 3: 148.02 High Dec 29
• RES 2: 147.19 50-day EMA
• RES 1: 147.06 High Jan 31
• PRICE: 145.11 @ Close Feb 1
• 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 has traded in a volatile manner recently. Futures traded down to 144.54 last Thursday, before rebounding. Monday also saw a strong reversal off the intraday high of 147.06. The primary direction is down following the recent breach of 145.12, Jan 10 low. The trigger for a resumption of this trend is 144.54, the Jan 27 low. Key resistance is seen at 147.19, the 50-day EMA.

EQUITIES

E-MINI S&P (H2): Approaching The 50-Day EMA

• RES 4: 4808.25 All-time high on Jan 4
• RES 3: 4739.50 High Jan 12
• RES 2: 4671.75 High Jan 18
• RES 1: 4576.53 50-day EMA
• PRICE: 4560.75 @ 06:59 GMT Feb 2
• SUP 1: 4395.50 Low Jan 31
• SUP 2: 4212.75 Low Jan 24 and the bear trigger
• 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 continue to trade higher. Gains though are still considered corrective. Price action in January resulted in a reversal of the moving average condition to bearish. This suggests that short-term gains are corrective. Two important resistance levels to watch are; 4522.38 (breached), the 20-day EMA and the more important 4576.53 level, the 50-day EMA. A decisive break of this resistance zone would suggest scope for a stronger reversal. A resumption of weakness would refocus attention on 4121.75.

EUROSTOXX50 TECHS: (H2) Back Above The 50-Day EMA

• RES 4: 4400.00 Round number resistance
• RES 3: 4392.50 High Nov 18 and key resistance
• RES 2: 4381.50 High Jan 5 and the bull trigger
• RES 1: 4244.00 High Jan 21
• PRICE: 4236.50 @ 05:40 GMT Feb 2
• SUP 1: 4123.00/3990.50 Low Jan 31 / Low Jan 24 and key support
• SUP 2: 3980.00 Low Nov 30 2021
• SUP 3: 3935.00 Low Oct 6 2021
• SUP 4: 3895.00 Low Jul 19 2021 (cont)

EUROSTOXX 50 futures are trading higher and price has breached the 50-day EMA at 4211.80. This average marks a key resistance area and a clear break of it would suggest scope for stronger recovery. This would open 4324.50, the Jan 13 high. Gains are, for now at least, still considered corrective. A reversal lower would refocus attention on 3990.50, the Jan 24 low and the trigger for a resumption of the recent bearish theme.

COMMODITIES

BRENT TECHS: (J2) Northbound

• RES 4: $95.00 Round number resistance
• RES 3: $93.24 - 2.382 proj of the Dec 2 - 9 - 20 price swing
• RES 2: $90.69 - 2.00 proj of the Dec 2 - 9 - 20 price swing
• RES 1: $90.27 - High Jan 28
• PRICE: $89.26 @ 07:02 GMT Feb 2
• SUP 1: $87.79 - Low Jan 27
• SUP 2: $85.52/84.22 - 20-day EMA / Low Jan 24 and key support
• SUP 3: $81.59 - 50-day EMA
• SUP 4: $79.95 - Low Jan 10

Brent futures are unchanged and remain bullish. The contract resumed its uptrend last week following the break of $88.69, 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. The $90.00 handle has been probed and the focus is on $90.69, a Fibonacci projection. On the downside, key S/T support has been defined at $84.22, the Jan 24 low.

WTI TECHS: (H2) Consolidating Near Recent Highs

• 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: $88.87 - High Jan 28
• PRICE: $88.46 @ 07:10 GMT Feb 2
• SUP 1: $85.01 - Low Jan 26
• SUP 2: $82.95/81.90 - 20-day EMA / Low Jan 24
• SUP 3: $78.77/77.34 - 50-day EMA / Low Jan 10
• SUP 4: $74.01 - Low Jan 3

The uptrend in WTI futures remains intact - the contract last week cleared 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: Remains Vulnerable

• 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: $1798.2 @ 07:16 GMT Feb 2
• SUP 1: $1780.4 - Low Jan 28 and the bear trigger
• 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

Gold is unchanged and remains vulnerable. The recent rally stalled last week and the sharp sell-off resulted in a break of the base of its bull channel 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: Looking For Further Weakness

• RES 4: $24.886 - High Nov 22
• RES 3: $24.700 - High Jan 20
• RES 2: $23.994 - High Jan 25
• RES 1: $23.150/599 - 50-day EMA / High Jan 27
• PRICE: $22.679 @ 07:25 GMT Feb 2
• 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 remains vulnerable. The metal has reversed the recent bullish theme following last week’s sharp, accelerated sell-off. Price 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 a key support area. On the upside, initial resistance is seen at $23.150, the 50-day EMA.