MNI DAILY TECHNICAL ANALYSIS - Sterling Bouncing

Tech Focus: Sterling bouncing

• EURGBP, is through 0.8800 once again. The break lower resumes the current downtrend with the focus on 0.8711, the May 11, 2020 low.
• GBPCHF tests above 1.2300. The next resistance is at 1.2337, the Mar 5, 2020 high.
• GBPUSD bounced off the Thursday low of 1.3567. Key resistance is still far off at 1.3759, Jan 27 high.

Price Signal Summary - EURUSD Cracks 1.2000

• In equities, E-mini S&P futures are at all time highs, confirming a resumption of the uptrend.
• In the FX space, USDJPY continues to push higher. The focus is on 105.68 next, Nov 11 high.
• EURUSD cracked 1.2000. This exposes 1.1945 next, 23.6% of the March - Jan rally.
• On the commodity front, Gold has cleared support at $1831.5 as well as $1804.7, Jan 18 low. This opens $1775.90 as first support. Silver remains vulnerable following the sharp sell-off earlier in the week. Further weakness would open $25.483, 76.4% retracement of the Jan 18 - Feb 1 rally. Oil contracts remain firm. Brent (J1) targets $59.71, 1.382 projection of the Apr - Aug - Nov 2020 price swing. WTI (H1) bulls are eyeing $56.52, 1.236 projection of the Apr - Aug rally from the Nov 2 low and $57.00, a round number resistance
• In the FI space, Bunds (H1) are trading closer to recent lows. The next support lies at 176.09, 1.00 projection of Jan 4 - 12 sell-off from the Jan 27 high. Gilts are well through support at 133.22, 1.382 projection of the Dec 11 - 24 sell-off from the Jan 4 high. This opens 132.43.

FOREIGN EXCHANGE

EURUSD TECHS: Extends Weakness Below 1.2000

• RES 4: 1.2190 High Jan 22 and a key resistance
• RES 3: 1.2156 High Jan 29
• RES 2: 1.2095 50-day EMA
• RES 1: 1.2054 Low Jan 18
• PRICE: 1.1959 @ 05:52 GMT Feb 5
• SUP 1: 1.1952 Intraday low
• SUP 2: 1.1945 23.6% retracement March - Jan rally
• SUP 3: 1.1924 Low Nov 30
• SUP 4: 1.1852 2.0% 10-dma envelope

EURUSD remains bearish following yesterday's strong sell-off. The pair has now cleanly fallen through the key 1.20 support confirming again a resumption of the current corrective pullback. The focus is on 1.1945 next, the 23.6% retracement of the rally between Mar - Jan. A break of this level would open 1.1924, Nov 30, 2020 low. On the upside, initial resistance is seen at 1.2054, Jan 18 low.

GBPUSD TECHS: Finds Support

• RES 4: 1.3804 High Apr 30, 2018
• RES 3: 1.3773 High May 1, 2018
• RES 2: 1.3759 High Jan 27 and the bull trigger
• RES 1: 1.3710 High Feb 2
• PRICE: 1.3679 @ 06:15 GMT Feb 5
• SUP 1: 1.3567 Low Feb 4
• SUP 2: 1.3537/20 Low 50-day EMA / Low Jan 18 and key support
• SUP 3: 1.3505 Low Jan 12
• SUP 4: 1.3452 Low Jan 11

GBPUSD bounced off yesterday's low. A bullish theme remains in place and recent weakness appears to have been a correction. Attention remains on 1.3759, Jan 27 high where a break would confirm a resumption of the uptrend and resume the bullish price sequence of higher highs and higher lows. This would open 1.3773, May 1 2018 high. On the downside, initial support lies at yesterday's 1.3567 low.

EURGBP TECHS: Downtrend Accelerates

• RES 4: 0.9085 High Jan 6
• RES 3: 0.8937/96 50-day EMA / High Jan 12
• RES 2: 0.8872/0.8925 20-day EMA / High Jan 18 and key resistance
• RES 1: 0.8840 High Feb 4
• PRICE: 0.8744 @ 06:25 GMT Feb 5
• SUP 1: 0.8711 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: 0.8661 2.0% 10-dma envelope

The EURGBP bearish case strengthened Thursday as the downtrend accelerated. The cross has breached the 1.0% 10-dma envelope base of 0.8750 and 0.8748, 61.8% of the Feb - Mar 2020 rally. Moving average studies are still pointing south reinforcing current trend conditions. The focus is on 0.8711 next, the May 11, 2020 low. On the upside, initial resistance is at yesterday's high of 0.8840.

USDJPY TECHS: Remains Firm

• RES 4: 106.11 High Oct 7, 2020
• RES 3: 106.05 1.50 proj of the Jan 6 - 11 rally from the Jan 21 low
• RES 2: 105.84 Upper 3.0% Bollinger Band
• RES 1: 105.68 High Nov 11 and a key resistance
• PRICE: 105.53 @ 06:32 GMT Feb 5
• SUP 1: 104.98/40 Low Feb 4 / High Jan 11 and recent breakout level
• SUP 2: 103.71 Former channel top drawn off the Mar 2020 high
• SUP 3: 103.33 Low Jan 21
• SUP 4: 103.28/02 61.8% and 76.4 % of the Jan 6 - 11 rally

USDJPY is firm and bullish conditions remain intact following recent key price developments and this week's extension higher. On Jan 27, USDJPY cleared a bear channel resistance drawn off the Mar 2020 high. Resistance at 104.40 gave way on Jan 28, confirming a resumption of the uptrend that started Jan 6. The focus is on 105.68 next, Nov 11 high. A break would open the 105.82/106.05 zone. Initial support is at 104.98, yesterday's low.

EURJPY TECHS: Consolidating

• 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: 127.34 High Jan 29
• PRICE: 126.26 @ 06:36 GMT Feb 5
• SUP 1: 125.94 50-day EMA
• SUP 2: 125.60 Low Jan 27
• SUP 3: 125.09 Low Jan 18 and the key support
• SUP 4: 124.92 100-DMA

EURJPY is unchanged. The bullish tone remains intact despite the recent pullback. Gains between Jan 18 - 29 reinforce the current positive theme 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 125.94, the 50-day EMA.

AUDUSD TECHS: 50-day EMA Still Under Pressure

• 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: 0.7704 High Jan 29
• PRICE: 0.7603 @ 06:41 GMT Feb 5
• SUP 1: 0.7564 Low Feb 2 and the intraday bear trigger
• SUP 2: 0.7557 Low Dec 28
• SUP 3: 0.7517 Low Dec 22
• SUP 4: 0.7462 Low Dec 21

AUDUSD is unchanged. The pair maintains a bearish tone and is trading closer to recent lows. Scope is seen for a deeper pullback as part of a corrective cycle with momentum studies also trending down and unwinding a recent overbought reading. Attention is on the 50-day EMA. This has this week been probed and a clear break would strengthen a bearish case and open 0.7517, Dec 22 low. On the upside, 0.7704 marks initial resistance.

USDCAD TECHS: Bullish Pennant

• RES 4: 1.3037 2.0% 10-dma envelope
• RES 3: 1.2957 High Dec 21 and key resistance
• RES 2: 1.2915 High Dec 23
• RES 1: 1.2881 High Jan 28
• PRICE: 1.2816 @ 06:47 GMT Feb 5
• SUP 1: 1.2738 Low Jan 29
• SUP 2: 1.2686 Low Jan 27 and key near-term support
• SUP 3: 1.2635 Low Jan 22
• SUP 4: 1.2590 Low Jan 21 and major support

USDCAD continues to consolidate. In terms of price patterns, the recent consolidation appears to be a pennant - a continuation pattern. This reinforces the current bullish outlook with the pair likely to extend the current corrective recovery following the recent rebound off cycle lows at 1.2590. The focus is on 1.2957, Dec 21 high. On the downside, firm near-term support is seen at 1.2686, Jan 27 low.

FIXED INCOME

BUND TECHS: (H1) Key Support Breached

• RES 4: 178.12 High Jan 27 and the bull trigger
• RES 3: 177.66 High Jan 29
• RES 2: 177.30 20-day EMA
• RES 1: 176.70 High Feb 3
• PRICE: 176.39 @ 05:00 GMT Feb 5
• SUP 1: 176.09 1.00 proj of Jan 4 - 12 sell-off from Jan 27 high
• SUP 2: 175.84 Low Nov 11 and a key support
• SUP 3: 175.61 1.236 proj of Jan 4 - 12 sell-off from Jan 27 high
• SUP 4: 175.31 1.382 proj of Jan 4 - 12 sell-off from Jan 27 high

Bund futures remain weak. The contract Tuesday traded through support at 176.89, Jan 29 low and a short-term trendline support at 176.88, drawn off the Jan 12 low. Yesterday saw price trade below the key support at 176.34, Jan 12 low. The break lower strengthens a bearish case and further weakness is likely. The focus is on 175.84 next, Nov 11 low. Initial resistance is seen at 176.70.

BOBL TECHS: (H1) Bearish Price Structure

• RES 4: 135.480 High Jan 27
• RES 3: 135.370 High Jan 29
• RES 2: 135.227 50-day EMA
• RES 1: 135.170 20-day EMA
• PRICE: 134.980 @ 05:06 GMT Feb 5
• SUP 1: 134.950 Intraday low
• SUP 2: 134.930 Low Jan 13
• SUP 3: 134.840 Low Jan 12 and a bear trigger
• SUP 4: 134.620 1.00 proj of Dec 11 - Jan 12 sell-off from Jan 27 high

BOBL futures traded lower again yesterday extending the recent sell-off from 135.480, Jan 27 high. The continued weakness this week has seen price trade below support at 134.970, Jan 22 low. The break of this level strengthens a bearish argument and signals scope for a move towards the key support at 134.840, the Jan 12 low and a bear trigger. Initial resistance is seen at 135.170, the 20-day EMA.

SCHATZ TECHS: (H1) Key Support Exposed

• RES 4: 112.390 High Dec 16
• RES 3: 112.365/68 High Jan 27 / 61.8% of the Dec 11 - 28 downleg
• RES 2: 112.335 High Jan 1
• RES 1: 112.305 High Feb 2
• PRICE: 112.275 @ 04:41 GMT Feb 5
• SUP 1: 112.245 Low Feb 4
• 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 traded higher Jan 27 clearing 112.330 in the process, Jan 4, 5 and 15 highs. The break also confirmed a triple bottom reversal highlighting a shift in sentiment. While this reversal pattern remains valid, this week's sell-off threatens the recent bullish price action. The move lower has exposed key support at 112.235, Dec 23 low and 112.240, Jan 2, 21 and 22 low. Initial resistance is at 112.305. Key resistance is 112.365, Jan 27 high.

GILT TECHS: (H1) Downtrend Accelerates

• RES 4: 134.43 50-day EMA
• RES 3: 134.10 High Feb 2
• RES 2: 133.65 High Jan 4
• RES 1: 133.55 Low Dec 1 and a recent breakout level
• PRICE: 132.81 @ Close Feb 4
• SUP 1: 132.43 Low Feb 4
• SUP 2: 132.00 2.00 proj of Dec 11 - 24 sell-off from Jan 4 high
• SUP 3: 131.53 2.236 proj of Dec 11 - 24 sell-off from Jan 4 high
• SUP 4: 131.24 2.382 projection of Dec 11 - 24 sell-off from Jan 4 high

Gilt futures sold off sharply yesterday. This week has seen former support at 133.55, Dec 1 low cleared and importantly this has confirmed a resumption of the underlying downtrend that started early August last year. A retest of yesterday's low of 132.43 is likely. Further Out, scope is seen for weakness towards 132.00, a Fibonacci projection. Initial resistance is seen at 133.55, the recent breakout level.

BTP TECHS: (H1) Eyeing Key Resistance

• RES 4: 153.87 1.00 proj of the Oct - Jan rally from Jan 22 low
• RES 3: 153.00 Round number resistance
• RES 2: 152.67 High Jan 8 and key resistance
• RES 1: 152.42 High Feb 4
• PRICE: 152.23 @ Close Feb 4
• SUP 1: 151.43 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. Tuesday saw the contract gap higher. Importantly, the contract also traded above a trendline resistance drawn off the Jan 8 high. The break higher alters the recent picture that had appeared bearish and instead, this week's gains signal scope for a stronger short-term recovery. Attention is on key resistance at 152.67, Jan 8 high. Firm support is at 150.70, Feb 2 low. A break of this level would reinstate a bearish threat.

EQUITIES

EUROSTOXX 50 Techs: Approaching Key Resistance

• RES 4: 3700.00 Round number resistance
• RES 3: 3668.70 High Feb 25
• RES 2: 3657.83 High Jan 8 and the bull trigger
• RES 1: 3644.64 High Feb 4
• PRICE: 3642.12 @ Close Feb 4
• SUP 1: 3545.09 Low Feb 2
• SUP 2: 3473.76 Low Jan 28 and the bear trigger
• SUP 3: 3455.94 Low Dec 22
• SUP 4: 3401.14 Low Dec 21 and a key support

EUROSTOXX 50 has rebounded this week and defined a key short-term support at 3473.76, Jan 28 low. The extension of this week's recovery has opened the key resistance and the bull trigger at 3657.83, Jan 8 high. A break of this level would confirm a resumption of the underlying uptrend and open the 3700.00 handle. For bears, the index needs to clear support at 3473.76 to reinstate a bearish theme. This would open 3401.14.

COMMODITIES

BRENT TECHS: (J1) Holding Onto Gains

• RES 4: $61.61 - 1.500 proj of the Apr - Aug - Nov 2020 price swing
• RES 3: $60.00 - High Feb 20, 2020 (cont)
• RES 2: $59.71 - 1.382 proj of the Apr - Aug - Nov 2020 price swing
• RES 1: $59.41 - Intraday high
• PRICE: $59.13 @ 06:46 GMT Feb 5
• SUP 1: $57.31 - High Jan 13 and former breakout level
• SUP 2: $55.74 - 20-day EMA
• SUP 3: $54.40 - Low Jan 22
• SUP 4: $52.90 - Low Jan 6

Brent futures started the week on a firm note and have maintained this theme all week. Futures have cleared the year's former high of $57.31, Jan 13 high and this confirmed a resumption of the broader uptrend paving the way for strength towards $60.00 next, the Feb 20, 2020 high (cont) and a psychological round number. Key support has been defined at $54.40, Jan 22 low. A breach is required to signal a top. Initial support lies at $57.31.

WTI TECHS: (H1) Bullish Focus

• RES 4: $60.00 - Psychological round number
• RES 3: $59.06 - 1.382 proj of Apr - Aug rally from the Nov 2 low
• RES 2: $58.00 - Round number resistance
• RES 1: $56.84 - Intraday high
• PRICE: $56.54 @ 06:55 GMT Feb 5
• SUP 1: $53.94 - High Jan 13 and recent breakout level
• SUP 2: $52.83 - 20-day EMA
• SUP 3: $51.44 - Low Jan 22
• SUP 4: $50.86 - Low Jan 8

WTI futures started the week on a firm note and a bullish tone remains intact. Importantly, futures have this week traded above former resistance at $53.94, Jan 13 high and a bull trigger. The breach of this level confirms a resumption of the underlying uptrend and paves the way for strength towards $58.00 and $59.06 next. The latter is a Fibonacci projection. Key support remains $51.44, Jan 22 low where a break is required to signal a top.

GOLD TECHS: Clears Support

• RES 4:$1900.00 - Round number resistance
• RES 3: $1875.7 - High Jan 29 and key resistance
• RES 2: $1848.5 - 20-day EMA
• RES 1: $1834.9 - High Feb 4
• PRICE: $1799.0 @ 07:16 GMT Feb 5
• SUP 1: $1785.0 - Low Feb 4
• SUP 2: $1775.9 - Low Dec 1
• SUP 3: $1764.8 - Low Nov 30
• SUP 4: $1747.6 - Low Jun 26, 2020

Gold traded sharply lower yesterday. Importantly, the yellow metal has cleared support at $1804.7, the Jan 18 low. This reinforces current bearish conditions and resumes the downtrend that started on Jan 6. The move lower signals scope for weakness towards $1775.9, Dec 1 low and $1764.8, the Nov 30 low and a key support. On the upside, initial resistance is seen at yesterday's high of $1834.9.

SILVER TECHS: Remains Vulnerable

• RES 4: $30.100 - High Feb 1
• RES 3: $29.053 - High Feb 2
• RES 2: $28.000 - Round number resistance
• RES 1: $27.195 - High Feb 3
• PRICE: $26.471 @ 07:19 GMT Feb 5
• SUP 1: $25.676 - 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 Monday clearing resistance at $27.931, Jan 6 high. The climb resulted in a test of $30.00 and more importantly registered a fresh trend high print of the upleg that started mid-March last year. Tuesday's price action though highlights a reversal of Monday's direction and Silver remains vulnerable. Further weakness would open 25.483, a Fibonacci retracement. Key resistance is at $30.100.