MNI DAILY TECHNICAL ANALYSIS - USD/CAD Nears Multi-Year Support

TECH FOCUS: USD/CAD Nears Key Support

-Bears remain in control for USD/CAD, which has again hit new cycle lows this week.
-This narrows the gap with key multi-year trend support on the monthly chart:

Figure 1: USD/CAD Monthly Chart - Prices nearing multi-year support

Source: MNI/Bloomberg

• SUP 1: 1.2451 Low Feb 16, 2018 Low
• SUP 1: 1.2480 Downtrendline
• SUP 3: 1.2393 2.0% 10-dma envelope
• SUP 4: 1.2251 2018 Low

Price Signal Summary – A Number of Markets Circle Key Levels

The pullback in equity markets continues to appear corrective, with DMAs continuing to provide some support and leaving markets open to near-term recovery. Key support remains the 3803.30 50-dma, with a medium-term target remaining at the 4000.00 handle.
An initial objective is at 3988.40, 2.236 projection of the Sep 24 - Oct 12 - Oct 30 price swing last year.
In the FX space, EURUSD had a volatile Thursday, but erased intraday gains on Thursday and is settling lower at the time of writing. Markets have so far steered clear of any test on nearby supports. Earlier this week, markets cleanly topped both 1.2169 and 1.2190, to extend the recovery off the Feb 5 low and to retain targets north of this week's 1.2243. GBPUSD remains firm following Wednesday's break to new multi-year highs, but overbought conditions appear to have slowed progress. 1.4377 remains critical resistance.
On the commodity front, Gold has suffered further in overnight trade, edging toward 1750. Markets need to build a base above the 1,800 level to steady the outlook, but for now, the most likely course of direction is lower. For oil, the bull run is still firmly in control as Brent crude futures topped out at - again - new cycle highs of $67.70 on Thursday. Markets are defying overbought signals, with the RSI once again climbing toward February's multi-decade peak. The focus is on $70.30 next, a clearance of which raises the risk of a test on the 2020 highs at $71.75.
In the FI space, Bund futures broke lower Thursday, hitting new 2021 lows of 172.55 as they joined the global bond market sell-off. Markets edged through all nearby support, clearing the way for a broader slide toward the lower levels of 2020, starting with the Sep 1 2020 low at 172.35, which acts as first support. For Gilts, further weakness is likely with a bearish cycle continuing to dominate. The focus is on a clean break of the 130.00 psychological level, opening the Mar 19 2020 low of 127.99..

FOREIGN EXCHANGE

EURUSD TECHS: Extends February Recovery

• RES 4: 1.2349 High Jan 6
• RES 3: 1.2255 76.4% Jan - Feb Sell Off
• RES 2: 1.2252 1.0% 10-dma Envelope
• RES 1: 1.2243 High Feb 25
• PRICE: 1.2231 @ 16:56 GMT Feb 25
• SUP 1: 1.2082 Low Feb 19
• SUP 2: 1.2023 Low Feb 17
• SUP 3: 1.1952 Low Feb 5 and the bear trigger
• SUP 4: 1.1945 23.6% retracement March - Jan rally

The pair hit new multi-week highs Thursday, rallying to touch 1.2243 on broad greenback weakness. This extends the recovery from the February lows and narrows the gap with key Fib resistance at 1.2255. A break above here opens the 2021 highs of 1.2349 - which marks a major level for the pair. The key short-term support is at 1.2023. A break would be bearish and expose 1.1952, Feb 5 low.

GBPUSD TECHS: Bulls Press Pause

• RES 4: 1.4377 2018 High and Major Resistance
• RES 3: 1.4344 High April 18 2018
• RES 2: 1.4246 2.0% 10-dma envelope
• RES 1: 1.4237 High Feb 24
• PRICE: 1.4104 @ 17:08 GMT Feb 25
• SUP 1: 1.4079 23.6% Fib of February Rally
• SUP 2: 1.3952 High Feb 16
• SUP 3: 1.3776 Low Feb 12 and Key near-term support
• SUP 4: 1.3737 Low Feb 9

Price edged off the multi-year high printed earlier this week, as bullish momentum appeared to run out of steam slightly. This does little to change the picture, however, with moving average studies solidly in bull mode. Next upside levels rest at 1.4246 vol band resistance and the 1.4344 high last posted in 2018. Key support is seen into the 23.6% Fib of the February rally at 1.4079.

EURGBP TECHS: Bouncing Well

• RES 4: 0.8840 High Feb 4
• RES 3: 0.8797 High Feb 9
• RES 2: 0.8739 Low Feb 5
• RES 1: 0.8700 Feb 18 high
• PRICE: 0.8675 @ 17:11 GMT Feb 25
• SUP 1: 0.8541 Low Feb 24
• SUP 2: 0.8517 3.0% Lower Bollinger Band
• SUP 3: 0.8508 2.0% 10-dma Envelope
• SUP 4: 0.8469 38.2% 2015 - 2016 Rally

Following Wednesday's notable down-move in EURGBP, the pair has bounced smartly Thursday, putting a rise back above the 0.87 mark on the cards. Bears need to reinforce the move through 0.86 support to cement any further weakness, which would initially expose 0.8517 vol band support. Initial resistance remains at 0.8700, Feb 18 high.

USDJPY TECHS: Still Pointing Higher

• RES 4: 106.95 High Aug 28, 2020
• RES 3: 106.63 1.0% 10-dma envelope
• RES 2: 106.55 High Sep 3, 2020
• RES 1: 106.29 High Feb 25
• PRICE: 106.20 @ 17:23 GMT Feb 25
• SUP 1: 104.92 Low Feb 23
• SUP 2: 104.74 Trendline drawn off the Jan 6 low / Low Feb 10
• SUP 3: 104.41 Low Feb 10
• SUP 4: 104.07 Low Jan 28

USDJPY maintains a bullish tone and the recent pullback has been confirmed as a correction. The Feb 16 climb resulted in a break of resistance at 105.77, Feb 5 high. This confirms a resumption of the uptrend that started Jan 6 and reinforces the significance of the recent key technical break - the breach on Jan 27 of the bear channel resistance drawn off the Mar 2020 high. The focus is on 106.55 next, the Sep Support is seen at 104.74.

EURJPY TECHS: Accelerates Off Bull Trigger

• RES 4: 129.47 1.00 proj of the Jun - Aug - Oct 2020 price swing
• RES 3: 129.26 High Dec 13, 2018
• RES 2: 130.63 1.0% 10-dma Envelope
• RES 1: 129.97 High Feb 25
• PRICE: 129.91 @ 17:25 GMT Feb 25
• SUP 1: 127.31 Low Feb 17
• SUP 2: 127.04 Low Dec 15
• SUP 3: 126.40 50-day EMA
• SUP 4: 126.10 Low Feb 4

The cross continues to post gains, gaining traction after topping the bull trigger of 128.46 earlier in the week and touching the best levels since late 2018 in the process. This opens the cross for further gains toward the Dec 13, 2018 high at 129.26, although technically overbought conditions are now present, which may slow progress from here.

AUDUSD TECHS: Tops 0.80 as Reflationary Theme Rolls On

• RES 4: 0.8296 50% 2011 – 2020 Pullback
• RES 3: 0.8164 High May 15, 2015
• RES 2: 0.8136 2017/2018 Double Top and Major Resistance
• RES 1: 0.8007 High Feb 25
• PRICE: 0.7929 @ 17:36 GMT Feb 25
• SUP 1: 0.7718 20-day EMA
• SUP 2: 0.7651 Low Feb 8
• SUP 3: 0.7583/64 Low Feb 5 / Low Feb 2 and the bear trigger
• SUP 4: 0.7557 Low Dec 28

The reflationary theme persists across currencies this week, with AUD/USD the latest pair to top a notable historical level and hit a new multi-year high. This secures AUD/USD's bullish posture, although a now overbought RSI measure suggests progress could slow from here. Thursday's move higher raises the risk of a major test on key double top resistance from 2017/2018 at 0.8136.

USDCAD TECHS: Bears Still in Control

• RES 4: 1.2915 High Dec 23
• RES 3: 1.2845/81 High Feb 4 / High Jan 28
• RES 2: 1.2763/78 High Jan 12 / 50-day EMA
• RES 1: 1.2746 High Feb 17
• PRICE: 1.2540 @ 17:37 GMT Feb 25
• SUP 1: 1.2451 Low Feb 16, 2018 Low
• SUP 1: 1.2480 Downtrendline Drawn of
• SUP 3: 1.2393 2.0% 10-dma envelope
• SUP 4: 1.2251 2018 Low

USDCAD found support last week at 1.2610, Feb 16 low, but this gave way into the Friday close. The recent move lower is seen as a deeper corrective pullback however price has cleared the Jan 21 low of 1.2590 that also marks a bear trigger. This prompts the pair to resume the underlying downtrend. A 1.2881 break, Jan 28 high is required to reinstate bullish activity. 1.2763 is a firm resistance.

FIXED INCOME

BUND TECHS: (H1) Resumes Slide

• RES 4: 176.64 High Feb 11
• RES 3: 176.15 50-day EMA
• RES 2: 175.70 High Feb 15
• RES 1: 175.45 High Feb 16
• PRICE: 172.57 @ 05:02 GMT Feb 26
• SUP 1: 172.55 Low Feb 25
• SUP 2: 172.35 Low Sep 1, 2020 (cont)
• SUP 3: 171.65 Lower 3.0% Bollinger band
• SUP 4: 171.82 61.8% March - December 2020 Rally

Bund futures broke lower Thursday, hitting new 2021 lows of 172.55 as they joined the global bond market sell-off. Markets edged through all nearby support, clearing the way for a broader slide toward the lower levels of 2020, starting with the Sep 1 2020 low at 172.35, which act as first support. To stabilise the outlook, markets need to re-take the 174.00 to build a base for any gains toward the February highs.

BOBL TECHS: (H1) June 2020 Lows in View

• RES 4: 135.150 High Feb 11 and key resistance
• RES 3: 134.850 High Feb 15
• RES 2: 134.790 Low Feb 5 and Feb 18 high
• RES 1: 134.673 20-day EMA
• PRICE: 134.460 @ 17:53 GMT Feb 25
• SUP 1: 133.990 Low Feb 25
• SUP 2: 133.790 Low Jun 5, 2020 (cont)
• SUP 3: 133.775 50.0% retracement of the 2018 - 2020 rally
• SUP 4: 133.340 Low March 19 2020

The bearish cycle in Bobl futures continued Thursday, with markets edging through all nearby support to open a move toward the 2020 lows. A break through here (133.790) would be resolutely negative and cement the current downtrend toward levels not seen since H1 2019. Initial resistance is seen at 134.790. The Feb 11 high of 135.150 marks the key trend resistance.

SCHATZ TECHS: (H1) Needle Still Points South

• RES 4: 112.365 High Jan 27
• RES 3: 112.273/112.290 50-day EMA/High Feb 11 and key resistance
• RES 2: 112.245 High Feb 18
• RES 1: 112.227 20-day EMA
• PRICE: 112.120 @ 05:08 GMT Feb 26
• SUP 1: 112.110 Low Feb 25
• SUP 2: 112.000 76.4% 2019 - 2020 Rally
• SUP 3: 111.990 Low Aug 26 2020
• SUP 4: 111.910 Low June 5 2020

The bearish stance in Schatz futures was cemented Thursday, with prices spiralling lower and narrowing the gap with 2020 lows. Attention is on further bearish pressure towards 111.990 and 111.910, a break through which would be a very negative signal. Trend resistance has been defined at 112.290, Feb 11 high.

GILT TECHS: (H1) Bears In Control

• RES 4: 133.55 Low Dec 1 and a recent breakout level
• RES 3: 132.67 High Feb 11
• RES 2: 131.73 Low Feb 8/12 and gap high on the daily chart
• RES 1: 131.49 High Feb 16 and gap low on the daily chart
• PRICE: 129.12 @ Close Feb 25
• SUP 1: 128.63 Low Feb 25
• SUP 2: 127.99 Low Mar 19, 2020 (cont)
• SUP 3: 127.26 2.0% 10-dma envelope
• SUP 4: 126.61 3.0% Lower Bollinger Band

Bears remain solidly in control Thursday, with the technical outlook deteriorating further. A combination of contract rolls and bullish GBP prices sent prices to new 2021 lows of 128.63. Further weakness is likely with a bearish cycle continuing to dominate. The focus is on a clean break of the 130.00 psychological level, opening the Mar 19 2020 low of 127.99.

BTP TECHS: (H1) Cracks Support at Last Week's Low

• RES 4: 154.00 Round number resistance
• RES 3: 153.82 High Feb 12 and the bull trigger
• RES 2: 152.89 High Dec 15
• RES 1: 152.06 High Feb 17
• PRICE: 149.39 @ Close Feb 25
• SUP 1: 148.81 Low Feb 25
• SUP 2: 148.37 Low Oct 22 and key support
• SUP 3: 147.91 200-dma
• SUP 4: 146.79 23.6% March - February Rally

BTP futures joined the global bond market in seeing aggressive selling pressure Thursday, hitting new 2021 lows of 148.81. This cements the fragile outlook, which began on the break of 151.19, 61.8% of the Jan 22 - Feb 12 rally. The focus shifts to 148.37 key support, the Oct 22 low. Initial resistance is at 152.06, Feb 17 high.

EQUITIES

EUROSTOXX 50 Techs: Inside Session

• RES 4: 3867.28 High Feb 20, 2020
• RES 3: 3858.79 1.50 proj of Dec 21 - Jan 8 rally from Jan 28 low
• RES 2: 3798.19 0.764 proj of Mar - Jul - Oct 2020 swing
• RES 1: 3742.53 High Feb 15
• PRICE: 3685.28 @ Close Feb 25
• SUP 1: 3659.35 20-day EMA
• SUP 2: 3643.33 Low Feb 23
• SUP 3: 3628.47 Low Feb 10
• SUP 4: 3594.18 50-day EMA

Despite bouncing at the open, the EUROSTOXX 50 retreated for much of the Thursday session. Markets remain bullish however, to keep the focus on 3798.19 further out, a Fibonacci projection. Moving average studies remain in a bull mode reinforcing underlying conditions. On the downside, the index needs to close below the 20-day EMA to reinstate a bearish theme. The bull trigger is the Feb 15 high of 3742.53.

COMMODITIES

BRENT TECHS: (J1) Rally Hits Pause

• RES 4: $71.75 - High Jan 8, 2020 (cont)
• RES 3: $70.30 - 23.6% Projection of February Rally
• RES 2: $67.74 - 2.0% Upper Bollinger Band
• RES 1: $67.70 - High Feb 25
• PRICE: $66.67 @ 18:17 Feb 25
• SUP 1: $62.09 - Low Feb 19
• SUP 2: $60.35 - Low Dec 12
• SUP 3: $60.02 - 20-day EMA
• SUP 4: $58.43 - Bull channel base drawn off the Nov 2, 2020 low

The bull run remains in control as Brent crude futures topped out at - again - new cycle highs of $67.70 Thursday. The rally hit pause after striking that mark, however, providing few new technical signals. Markets are defying overbought signals, with the RSI once again climbing toward February's multi-decade peak. The focus is on $70.30 next, a clearance of which raises the risk of a test on the 2020 highs at $71.75.

WTI TECHS: (J1) Uptrend Firm

• RES 4: $65.66 - 1.764 proj of Apr - Aug rally from the Nov 2 low
• RES 3: $64.00 - Round number resistance
• RES 2: $63.85 - 5.0% 10-dma Envelope
• RES 1: $63.81 - High Feb 24
• PRICE: $63.12 @ 18:19 Feb 25
• SUP 1: $58.59 - Low Feb 19
• SUP 2: $57.31 - Low Feb 12
• SUP 3: $56.63 - 20-day EMA
• SUP 4: $54.94 - Bull channel base drawn off the Nov 2, 2020 low

The uptrend regathered momentum Thursday, helping WTI hit new cycle highs of $63.81 in the process, but paused thereafter. Nonetheless, WTI futures have resumed their rally to maintain the bullish price sequence of higher highs and higher lows. The focus is on $64.00 next, psychological resistance. On the downside, the near-term firm support lies at $57.31, the Feb 12 low. Initial support is at $58.59, Friday's low.

GOLD TECHS: Bouncing Off Key Support

• RES 4: $1855.5 - High Feb 10 and a key resistance
• RES 3: $1830.8 - High Dec 12
• RES 2: $1823.3 - 20-day EMA
• RES 1: $1816.0 - High Feb 23
• PRICE: $1778.1 @ 18:23 GMT Feb 25
• SUP 1: $1760.7 - Low Feb 19
• SUP 2: $1757.8 - Low Jul 2, 2020
• SUP 3: $1747.6 - Low Jun 26, 2020
• SUP 4: $1742.5 - Low Jun 22, 2020

Gold lagged Thursday, reinforcing the bearish outlook after prices edged through $1785.00, Feb 4 low last week. This reinforces the current bearish theme with the reversal from $1855.5, Feb 10 high clearly weighing on the yellow metal. MA studies are also in a bear mode highlighting the current path of least resistance. At the tail-end of last week, $1764.8, Nov 30 low had been probed and has now given way, opening $1757.8, Jul 2, 2020 low.

SILVER TECHS: Volatile, Outlook Remains Bearish

• RES 4: $30.100 - High Feb 1
• RES 3: $29.053 - High Feb 2
• RES 2: $28.498 - 61.8% retracement of the Feb 1 - 4 sell-off
• RES 1: $28.003 - 50.0% retracement of the Feb 1 - 4 sell-off
• PRICE: $27.568 @ 18:27 GMT Feb 25
• SUP 1: $26.139 - Low Feb 19
• SUP 2: $25.905 - Low Feb 4
• SUP 3: $25.483 - 76.4% retracement of the Jan 18 - Feb 1 rally
• SUP 4: $24.700 - Low Jan 27

Silver had a volatile finish last week, having trading sharply lower early Friday before staging a decent recovery. The metal remains vulnerable following the sell-off on Feb 2. Recent gains are considered a correction and a resumption of weakness is seen likely near-term. A move lower once again would refocus attention on $25.905, Feb 4 low. Clearance of this support would set the scene for a deeper pullback. Resistance is seen at $28.003 and $28.498, Fibonacci retracement levels.