MNI DAILY TECHNICAL ANALYSIS - Stocks Remain Vulnerable Following Recent Reversal

Price Signal Summary – Stocks Remain Vulnerable Following This Week’s Reversal

• In the equity space, S&P E-minis remain vulnerable near-term following a reversal lower this week from levels just above 4800.00. Price has traded below the 20-day EMA and attention is on the 50-day EMA that intersects at 4647.00 today. EUROSTOXX 50 futures reversed course Thursday as a risk-off mood weighed on price. The pullback at this stage is considered corrective with bullish conditions intact following a strong recovery between Dec 20 and Wednesday’s high.
• In FX, EURUSD remains in a consolidation mode. Broader trend conditions remain bearish and the MA set-up reinforces this outlook. The current consolidation means resistance at 1.1383/86, Nov 30 and Dec 31 high, is intact. EURGBP remains vulnerable and continues to trade near its recent lows. The cross printed a fresh multi-year low of 0.8335 Wednesday. With further weakness likely, attention is on the major support and bear triggers at 0.8282/77, the Feb’20 and Dec’19 lows.
• On the commodity front, Gold traded lower yesterday. The move reinforces the potential importance of Monday’s sell-off. In pattern terms, Monday is an engulfing candle and a bearish reversal signal. WTI futures remain in an uptrend and price continues to climb. The recovery from Monday’s low has resulted in a break of resistance at $77.44, the Dec 29 high and a Fibonacci retracement, 76.4% of the Oct - Dec downleg.
• In the FI space, Bund futures remain in a downtrend and the contract traded lower again yesterday. Price has traded through the 170.19 objective, Nov 2 low paving the way for further downside towards the major support at 169.34, the Oct 29 low. Gilt futures remain in a downtrend and the contract traded sharply lower yesterday, having gapped lower at the open. The move below support has strengthened bearish conditions signalling scope for further downside.

FOREIGN EXCHANGE

EURUSD TECHS: Trading Sideways

• RES 4: 1.1608 High Nov 9
• RES 3: 1.1514 Low Nov 5
• RES 2: 1.1452 Bear channel top drawn from the Jun 1 high
• RES 1: 1.1383/86 High Nov 30 / High Dec 31
• PRICE: 1.1302 @ 05:59 GMT Jan 7
• SUP 1: 1.1272/22 Low Jan 04 / Low Dec 15
• SUP 2: 1.1186/85 Low Nov 24 / Low Jul 1, 2020 and the bear trigger
• SUP 3: 1.1128 1.764 proj of the Jan 6 - Mar 31 - May 25 price swing
• SUP 4: 1.1040 76.4% retracement of the Mar ‘20 - Jan ‘21 uptrend

EURUSD remains in a consolidation mode. Broader trend conditions remain bearish and the MA set-up reinforces this outlook. The current consolidation means resistance at 1.1383/86, Nov 30 and Dec 31 high, is intact and that the pair remains inside December’s range. A resumption of weakness would expose 1.1222, Dec 15 low and the bear at 1.1186/85. For bulls, clearance of the 1.13783/86 would suggest scope for a stronger short-term recovery.

GBPUSD TECHS: Heading North

• RES 4: 1.3758 2.0% 10-dma envelope
• RES 3: 1.3676 61.8% retracement of the Oct - Dec sell-off
• RES 2: 1.3607 High Nov 9
• RES 1: 1.3599 High Jan 6
• PRICE: 1.3547 @ 06:08 GMT Jan 7
• SUP 1: 1.3431 Low Jan 3
• SUP 2: 1.3429 20-day EMA
• SUP 3: 1.3343 Low Dec 23
• SUP 4: 1.3240 Low Dec 22

GBPUSD is trading closer to its recent highs and the outlook remains bullish. The pair has this week probed the 100-dma. A clear break of this average would firm the bullish outlook and maintain the current positive momentum structure with the trajectory of the 50-dma beginning to level out. Scope is seen for a climb to 1.3676 next, a Fibonacci retracement. Support to watch is 1.3429, the 20-day EMA. A move below this average would alter the picture.

EURGBP TECHS: Eyeing The Range Base

• RES 4: 0.8498 High Dec 23
• RES 3: 0.8463 50-day EMA
• RES 2: 0.8426 20-day EMA
• RES 1: 0.8381/8419 Nov 22 low / High Jan 3
• PRICE: 0.8343 @ 06:17 GMT Jan 7
• SUP 1: 0.8335 Low Jan 5
• SUP 3: 0.8308 1.0% 10-dma envelope
• SUP 4: 0.8282/77 Low Feb’20 / Dec’19 and key bear trigger
• SUP 4: 0.8242 50% Fib Retracement 2015-2020 Upleg

EURGBP remains vulnerable and continues to trade near its recent lows. The cross printed a fresh multi-year low of 0.8335 Wednesday. With further weakness likely, attention is on the major support and bear triggers at 0.8282/77, the Feb’20 and Dec’19 lows. Note that the cross is also approaching the base of a broad multi-year range at 0.8300. This level represents a key pivot chart point. Initial firm resistance is at 0.8419.

USDJPY TECHS: Trend Outlook Remains Bullish

• RES 4: 118.66 High Dec 15, 2016
• RES 3: 118.07 2.236 proj of Apr 23 - Jul 2 - Aug 4 price swing
• RES 2: 117.08 2.00 proj of Apr 23 - Jul 2 - Aug 4 price swing
• RES 1: 116.35 High Jan 4
• PRICE: 115.92 @ 06:22 GMT Jan 7
• SUP 1: 115.29 Low Jan 4
• SUP 2: 114.82 20-day EMA
• SUP 3: 114.06 50-day EMA
• SUP 4: 113.33 Low Dec 20

USDJPY is consolidating below Tuesday's high of 116.35. Trend conditions remain bullish. The break this week of 115.52, Nov 24 high, confirmed a resumption of both the short and medium-term uptrend, paving the way for a climb towards 117.08 next, a Fibonacci projection. Moving average conditions remain in a bull mode and this condition reinforces the current positive sentiment. Initial firm support is seen at 114.82, the 20-day EMA.

EURJPY TECHS: Holding Onto Recent Gains

• RES 4: 132.82 3% Upper Bollinger Band
• RES 3: 132.56 High Nov 4
• RES 2: 132.04 76.4% retracement of the Oct 20 - Dec 3 downleg
• RES 1: 131.60 High Jan 5
• PRICE: 131.03 @ 06:36 GMT Jan 7
• SUP 1: 130.24 Low Jan 4
• SUP 2: 129.92/72 20- and 50-day EMA levels
• SUP 3: 129.20 Low Dec 27
• SUP 4: 128.57 Low Dec 22

EURJPY Dips are considered corrective. A bullish theme continues to dominate and this week’s gains have solidified this tone. The cross has cleared resistance at 131.15, 61.8% of the Oct - Dec bear leg and 131.20, a vol-based resistance, signalling potential for an extension higher. This opens 132.04, a Fibonacci retracement. A firm support zone is seen at 129.92/72, the 20- and 50-day EMA levels.

AUDUSD TECHS: Bearish Threat Still Present

• RES 4: 0.7371 High Nov 15
• RES 3: 0.7341 61.8% retracement of the Oct 28 - Dec 3 downleg
• RES 2: 0.7335 Former channel base drawn from the Aug 20 low
• RES 1: 0.7223/7278 High Jan 6 / High Dec 31
• PRICE: 0.7154 @ 06:39 GMT Jan 7
• SUP 1: 0.7121 Low Dec 22
• SUP 2: 0.7082 Low Dec 20 and a key support
• SUP 3: 0.7060 76.4% retracement of the Dec 3 - 31 upleg
• SUP 4: 0.6993 Low Dec 3 and key support

AUDUSD remains vulnerable following this week’s move lower. The pair has failed to hold onto recent gains and levels above the 50-day EMA. This highlights a bearish threat and the potential for a deeper pullback, exposing support at 0.7082, the Dec 20 low. Clearance of this support would strengthen a bearish case. Key short-term resistance is at 0.7278, the Dec 31 high.

USDCAD TECHS: Bullish Engulfing Candle Still In Play

• RES 4: 1.2964 High Dec 20 and the bull trigger
• RES 3: 1.2924 High Dec 22
• RES 2: 1.2848 High Dec 27 and a key near-term resistance
• RES 1: 1.2814 High Jan 6
• PRICE: 1.2713 @ 06:46 GMT Jan 7
• SUP 1: 1.2667/2621 Low Jan 4 / Low Dec 31 and the bear trigger
• SUP 2: 1.2608 Low Dec 8 and key support
• SUP 3: 1.2585 Low Nov 19
• SUP 4: 1.2546 Low 61.8% retracement of the Oct - Dec rally

Despite pulling back from Thursday’s high, the USDCAD short-term outlook remains bullish and price remains above last week’s low of 1.2621 on Dec 31 - a key short-term support. Monday’s rally is a bullish engulfing candle. The pattern highlights a base at 1.2621 and scope for a climb towards 1.2848, Dec 27 high and a key near-term resistance. On the downside, sub 1.2621 levels would cancel the reversal pattern and instead open 1.2608, Dec 8 low.

FIXED INCOME

BUND TECHS: (H2) Downtrend Intact

• RES 4: 173.19 High Dec 23
• RES 3: 172.26 20-day EMA
• RES 2: 171.77 Low Nov 24 and recent breakout level
• RES 1: 171.17 High Jan 4
• PRICE: 170.43 @ 05:11 GMT Jan 7
• SUP 1: 169.95 Low Nov 6
• SUP 2: 169.48 Low Nov 1
• SUP 3: 169.34 Low Oct 29 and major support
• SUP 4: 169.08 3.618 projection of the Dec 8 - 20 price swing

Bund futures remain in a downtrend and the contract traded lower again yesterday. Price has traded through the 170.19 objective, Nov 2 low paving the way for further downside towards the major support at 169.34, the Oct 29 low. A break of this support level would strengthen bearish conditions. On the upside, initial firm resistance is seen at 171.77 where a break is required to ease bearish pressure. First resistance is at 171.17.

BOBL TECHS: (H2) Bearish Extension

• RES 4: 133.710 Low Dec 8 and recent breakout level
• RES 3: 133.559 20-day EMA
• RES 2: 133.530 High Dec 29
• RES 1: 133.260 High Jan 3 and 4
• PRICE: 133.010 @ 05:14 GMT Jan 7
• SUP 1: 132.870 Low Jan 6
• SUP 2: 132.760 2.00 proj of the Nov 30 - Dec 8 - 20 price swing
• SUP 3: 132.566 2.236 proj of the Nov 30 - Dec 8 - 20 price swing
• SUP 4: 132.447 2.382 proj of the Nov 30 - Dec 8 - 20 price swing

Bobl futures remain bearish, with a fresh low print yesterday reinforcing current conditions. The break on Dec 23 of support at 133.710, Dec 8 low confirmed a resumption of bearish activity and bears haven’t looked back. Scope is seen for an extension lower with the focus on 132.760 next, a Fibonacci projection level. On the upside, initial firm resistance is seen at 133.530, the Dec 29 high. A break would ease bearish pressure.

SCHATZ TECHS: (H2) Trend Needle Still Points South

• RES 4: 112.155 High Dec 23
• RES 3: 112.120 High Dec 27
• RES 2: 112.098 20-day EMA
• RES 1: 112.080 High Dec 29
• PRICE: 112.030 @ 05:27 GMT Jan 7
• SUP 1: 111.985 Low Jan 3 and the bear trigger
• SUP 2: 112.956 1.764 proj of the Nov 26 - Dec 16 - 20 price swing
• SUP 3: 111.927 3.0% Lower Bollinger Band
• SUP 4: 111.920 1.382 proj of the Nov 26 - Dec 16 - 20 price swing

Schatz futures traded lower yesterday. The short-term outlook remains bearish following last week’s extension lower - the downleg started Dec 20. Support at 112.055, Dec 16 low has recently been cleared, reinforcing a bearish theme and this has opened 111.956 next, a Fibonacci projection. On the upside, initial firm resistance is seen at the 20-day EMA that intersects at 112.098. A break of this level would ease bearish pressure.

GILT TECHS: (H2) Remains Vulnerable

• RES 4: 125.93 High Dec 22
• RES 3: 125.18 High Dec 31
• RES 2: 125.14 20-day EMA
• RES 1: 124.17 Low Nov 24 and recent breakout level
• PRICE: 123.27 @ Close Jan 6
• SUP 1: 123.15 Low Jan 6
• SUP 2: 123.00 Round number support
• SUP 3: 122.81 3.50 proj of the Dec 8 - 16 - 20 price swing
• SUP 4: 122.32 3.0% Lower Bollinger Band

Gilt futures remain in a downtrend and the contract traded sharply lower yesterday, having gapped lower at the open. This week’s sell-off has resulted in a break of support at 124.35, Dec 29 low and 124.17, Nov 24 low. The move below the latter support has strengthened bearish conditions signalling scope for further downside. The focus is on the 123.00 handle next. Initial resistance is seen at 124.17.

BTP TECHS: (H2) Bear Cycle Extends

• RES 4: 149.22 High Dec 22
• RES 3: 148.02 High Dec 29
• RES 2: 147.90 20-day EMA
• RES 1: 146.04/147.00 High Jan 6 / High Jan 4
• PRICE: 145.77 @ Close Jan 6
• SUP 1: 145.36 Low Jan 6
• SUP 2: 145.29 Low Nov 1 and key support
• SUP 3: 144.90 2.618 proj of the Dec 6 - 18 - 14 price swing
• SUP 4: 144.59 2.764 proj of the Dec 6 - 18 - 14 price swing

BTP futures traded sharply lower yesterday and remains weak as the current bear cycle extends. The contract recently cleared support at 148.25, Dec 1 low as well as the 147.36 key support, Nov 24 low. 146.55, 76.4% of the Nov 1 - 22 rally has also been breached. The break lower signals scope for an extension towards a key support at 145.29, the Nov 1 low. Initial firm resistance is seen at 148.02, Dec 29 high.

EQUITIES

EUROSTOXX 50 TECHS: (H2) Holding Above The 20-Day EMA

• RES 4: 4426.80 1.382 proj of the Nov 30 - Dec 8 - 20 price swing
• RES 3: 4400.00 Round number resistance
• RES 2: 4392.50 High Nov 18 and key resistance
• RES 1: 4381.50 High Jan 5
• PRICE: 4314.00 @ 05:49 GMT Jan 7
• SUP 1: 4255.20 20-day EMA
• SUP 2: 4219.70 50-day EMA
• SUP 2: 4149.00 Low Dec 22
• SUP 4: 4108.50 Low Dec 21

EUROSTOXX 50 futures reversed course Thursday as a risk-off mood weighed on price. The pullback at this stage is considered corrective with bullish conditions intact following a strong recovery between Dec 20 and Wednesday’s high. Initial support is seen at 4255.20, the 20-day EMA. A more important area of support though lies at 4219.70, the 50-day EMA. For bulls, a return higher would refocus attention on key resistance at 4392.50.

E-MINI S&P (H2): 50-Day EMA Marks Support

• RES 4: 4968.50 1.00 proj of the Oct 1 - Nov 22 - Dec 3 price swing
• RES 3: 4900.00 Round number resistance
• RES 2: 4854.19 0.764 proj of the Oct 1 - Nov 22 - Dec 3 price swing
• RES 1: 4808.25 High Jan 4 and the bull trigger
• PRICE: 4695.75 @ 06:59 GMT Jan 7
• SUP 1: 4647.00 50-day EMA
• SUP 2: 4565.75 Low Dec 21
• SUP 3: 4520.25 Low Dec 20 and a key support
• SUP 4: 4485.75 Low Dec 3

S&P E-minis remain vulnerable near-term following a reversal lower this week from levels just above 4800.00. Price has traded below the 20-day EMA and attention is on the 50-day EMA that intersects at 4647.00 today. This average is regarded as a key pivot chart point and a clear break of it would signal scope for a deeper pullback. For now, a move lower is considered corrective. The bull trigger is unchanged at 4808.25.

COMMODITIES

BRENT TECHS: (H2) Bullish Extension

• RES 4: $84.50 - 1.382 proj of the Dec 2 - 9 - 20 price swing
• RES 3: $84.00 - Round number resistance
• RES 2: $83.69 - High Oct 10 and a major resistance
• RES 1: $83.11 - High Nov 10
• PRICE: $82.86 @ 06:43 GMT Jan 7
• SUP 1: $79.51 - Low jan 5
• SUP 2: $77.04 - Low Jan 3
• SUP 3: $76.69 - 50-day EMA
• SUP 4: $75.38 - Low Dec 27

Brent futures remain in an uptrend and this week’s gains have reinforced the current bullish theme. The break of resistance at $80.03, Dec 29 high, confirmed a resumption of the current bull cycle and has opened $83.11 next, the Nov 10 high ahead of the key resistance at $83.69, Oct 10 high. On the downside, Monday’s low of $77.04 represents the key short-term support. A break would threaten the trend.

WTI TECHS: (G2) Approaching Key Resistance

• RES 4: $85.29 - 1.764 proj of the Dec 2 - 9 - 20 price swing
• RES 3: $83.71 - 1.618 proj of the Dec 2 - 9 - 20 price swing
• RES 2: $82.13 - High Oct 25 and a major resistance
• RES 1: $81.73 - High Nov 10
• PRICE: $80.18 @ 07:05 GMT Jan 7
• SUP 1: $76.73 - Low Jan 6
• SUP 2: $74.27 - Low Jan 3 and key short-term support
• SUP 3: $74.00 - 50-day EMA
• SUP 4: $72.57 - Low Dec 27

WTI futures remain in an uptrend and price continues to climb. The recovery from Monday’s low has resulted in a break of resistance at $77.44, the Dec 29 high and a Fibonacci retracement, 76.4% of the Oct - Dec downleg. The break confirms a resumption of the uptrend and opens $81.72 next, the Nov 10 high ahead of the key resistance at $82.13, Oct 25 high. On the downside, Monday’s low of $74.27 represents a key short-term support.

GOLD TECHS: Approaching The Bull Channel Base

• RES 4: $1877.2 - High Nov 16 and key resistance
• RES 3: $1871.0 - High Nov 18
• RES 2: $1849.1 - High Nov 22
• RES 1: $1811.6/31.9 - High Jan 6 / High Jan 3 and key resistance
• PRICE: $1790.7 @ 07:08 GMT Jan 7
• SUP 1: $1786.5 - Low Jan 6
• SUP 2: $1782.3 - Channel base drawn from the Aug 9 low
• SUP 3: $1753.7 - Low Dec 15 and a key support
• SUP 4: $1746.0 - Low Oct 6

Gold traded lower yesterday. The move reinforces the potential importance of Monday’s sell-off. In pattern terms, Monday is an engulfing candle and a bearish reversal signal. Attention is on the base of a bull channel drawn from the Aug 9 low that intersects at $1782.3. A break would strengthen a bearish case and open $1753.7, the Dec 15 low. Monday’s high of $1831.9 is key resistance.

SILVER TECHS: Bearish Threat

• RES 4: $23.886 - 61.8% retracement of the Nov 16 - Dec 15 sell-off
• RES 3: $23.772 - High Nov 24
• RES 2: $23.436 - High Dec 28
• RES 1: $22.829 - High Jan 6
• PRICE: $22.464 @ 08:12 GMT Jan 6
• SUP 1: $21.918 - Low Dec 16
• SUP 2: $21.427/423 - Low Dec 15 / Low Sep 29 and key support
• SUP 3: $20.871 - 50.0% retracement of the Mar ‘20 - Feb ‘21 rally
• SUP 4: $20.000 - Psychological round number

Silver traded lower yesterday and cleared $22.593, Dec 29 low. This week’s move lower highlights the fact that the metal has failed to remain above the 50-day EMA and bearish price action suggests scope for a deeper S/T sell-off. The focus is on $21.918, Dec 16 low. A break would expose $21.427/423, the Dec 15 and Sep 29 lows. Key resistance is at $23.436.