MNI China Daily Summary: Thursday, December 12

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Price Signal Summary - Gilts In Freefall

OUTLOOK
  • In the equity space, S&P E-Minis remain soft. Continued weakness confirms a resumption of the bear cycle that started mid-August. The break paves the way for a move towards 3741.75, the Jul 14 low. The key support at 3657.00, Jun 17 low, has also been exposed. This is an important bear trigger. EUROSTOXX 50 remains soft following the reversal last week from 3678.00, the Jun 13 high and this week’s follow through. Key short-term support at 3423.00, the Sep 5 low has been cleared, the break strengthens bearish conditions and opens 3360.00 next, the Jul 14 low.
  • In FX, the EURUSD remains vulnerable and has resumed its downtrend today. The break lower this week confirmed a resumption of the primary downtrend - support at 0.9864, Sep 6 low, was cleared. The focus is on 0.9694, 1.00 projection of the Aug 10 - Sep 6 - 12 price swing. The GBPUSD downtrend remains intact and the pair continues to weaken. The move lower maintains the bearish price sequence of lower lows and lower highs, signalling scope for a continuation. The focus is on 1.1073, 0.764 projection of the Aug 10 - Sep 7 - 13 price swing and 1.1001, 2.00 projection of the Jun 16 - Jul 14 - Aug 1 price swing. USDJPY traded in a volatile manner Thursday. The pullback resulted in a print below 141.75, the 20-day EMA. The trend structure remains bullish and it is too early to tell whether yesterday’s price action is a key reversal day. A daily close below the 20-day EMA and below 140.00 would strengthen a bearish threat. A resumption of gains would refocus attention on 145.00 and beyond. Support is at yesterday’s low of 140.36.
  • On the commodity front, Gold is consolidating and the recent pause in the downtrend appears to be a bear flag formation. This pattern reinforces a bearish theme. The recent break of support at $1681.0, the Jul 21 low, confirmed a resumption of the downtrend that started early March. Attention is on $1640.9 next, the Aug 8 2020 low. In the Oil space, a bearish threat in WTI futures remains present. The recent break of support at $84.25, the Jul 14 low, confirmed a resumption of the downtrend that started Jun 8 and marks the end of a broad sideways move that has been in place since mid-July. A continuation lower would open $79.31 next, the Feb 18 low. Key short-term resistance is unchanged at $89.35, the 50-day EMA.
  • In the FI space, Bund futures remain in a clear downtrend and the extension lower this week has again confirmed a resumption of the bear leg that started early August. The major support at 140.67, the Jun 16 low (cont), has been cleared. The break strengthens the broader bearish outlook. With 140.00 pierced, attention turns to 138.68, Jan 2014 low (cont). Gilts have resumed bearish activity today as the downtrend accelerates. The break lower maintains the bearish price sequence of lower lows and lower highs. The psychological 100.00 handle has been pierced, attention turns to 97.44 Low Sep 1994 (cont).
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