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Price Signal Summary - Recovery In The Equity Space Considered Corrective

  • In the equity space, S&P E-minis gains are still considered corrective. Price action in January has resulted in a reversal of the moving average conditions to bearish. This suggests that short-term gains are corrective. Two important resistance levels to watch are; 4521.05, the 20-day EMA and 4578.22, the 50-day EMA. A decisive break of this resistance zone is required to suggest a stronger price reversal. A resumption of weakness would refocus attention on 4121.75, the Jan 24 low. EUROSTOXX 50 futures are trading higher and price has probed the 50-day EMA at 4212.10. This average marks a key resistance area and a clear break of it is required to suggest scope for stronger recovery. Gains are considered corrective. A reversal lower would refocus attention on 3990.50, the Jan 24 low.
  • In FX, EURUSD has recovered from its recent low. Yesterday’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 1.1293, the 20-day EMA. The broader trend direction remains down though and gains are considered corrective. GBPUSD is firmer too as the pair extends the recovery from last week’s 1.3358 low on Jan 27. Resistance to watch is at 1.3525, the Jan 26 high. 1.3358 is the trigger for a resumption of the recent bear leg. Recent USDJPY price action defined a key short-term support last week at 113.47, Jan 24 low. The recent rally from this low suggests potential for stronger short-term gains and sights are set on 116.35, the Jan 4 high and key resistance.
  • On the commodity front, Gold remains vulnerable following the recent break of the bull channel base drawn off the Aug 9 low. The clear breach strengthens the bearish threat and opens $1753.6, the Dec 15 low. Resistance to watch is $1822.2, the Jan 27 high. WTI futures remain in an uptrend. The contract has cleared $87.10, the Jan 20 high and this has opened the psychological $90.00 handle.
  • In the FI space, Bund futures resumed their downtrend yesterday, trading below former support at 168.95, Jan 19 low. This maintains the bearish sequence of lower lows and lower highs. The focus is on 168.46, 4.00 projection of the Dec 8 - Dec 20 price swing. Gilts yesterday traded through support 121.93, Jan 19 low. This confirms a resumption of the downtrend. The move lower opens 121.61 next, the Nov 13 2018 low.

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