Stocks Under Pressure, Dollar Trying to Recover (TEST)

GBPUSD – technical overview

Setbacks have been very well supported in 2018, with the market confined to a well defined uptrend. A break above the 2018 high at 1.4346 will confirm the next meaningful higher low at 1.3712, opening a measured move upside extension to the 1.5000 area. However, the major pair may not be ready to extend the run just yet in 2018, with a bearish reversal ahead of the high opening the door for another round of setbacks. Nevertheless, so long as the market holds above rising bull channel support off the 2017 low, dips should continue to be very well supported ahead of 1.3500.

• R2 1.4346– 25Jan/2018 high – Very Strong
• R1 1.4279 – 1Feb high – Strong
• S1 1.4067 – 27Mar low – Medium
• S2 1.3983 – 20Mar low – Strong

GBPUSD – fundamental overview

The market had sold the Pound aggressively in Tuesday trade, with profit taking kicking in ahead of the 2018 high as many participants feared to many positives had been priced into the UK currency’s outlook, with a May hike still not guaranteed, inflation cooling off a bit and the world post Brexit still very much up in the air. We have since seen some demand into dips on the headlines around a possible Irish border deal, though with so many positives already priced and with the Dollar catching a quarter end bid, there could be risk building for a more sizable corrective pullback in the sessions ahead. Looking at today’s calendar. absence of first tier UK data will leave the focus on Brexit updates, global sentiment, a batch of US data featuring GDP and core PCE, the advanced goods trade balance and pending home sales, and some Fed speak.

GBPUSD – Technical charts in detail

USDJPY – technical overview

A multi-month range trade was broken in February after the market sunk below 107.30. This has opened the door for deeper setbacks in the days ahead, possibly down towards a measured move extension target of 100.00 after the market had consolidated for much of 2017 between 107.00 and 114.00. At this point, a daily close back above 107.91 would be required at a minimum to take the immediate pressure off the downside.

• R2 106.65 – 21Mar high – Strong
• R1 105.91 – 27Mar high – Medium
• S1 104.63 – 26Mar/2018 low – Medium
• S2 104.00 – Figure – Strong

USDJPY – fundamental overview

The Yen has managed to come under some pressure in recent sessions, with USDJPY bid back up off the lows on some optimism surrounding geopolitical risk, with North Korea showing a willingness to sit down and talk and the US talking about trade deals with China. Meanwhile, quarter end flow has also been broadly supportive of the Buck, though with global equities remaining under pressure and the Abe scandal still lingering, there continues to be healthy demand for the Yen and USDJPY offers into rallies on the traditional correlation with risk sentiment. Looking ahead, the market will continue to monitor global sentiment, while taking in a batch of US releases including GDP and core PCE, the advanced goods trade balance and pending home sales, and some Fed speak.

USDJPY – Technical charts in detail

EURCHF – technical overview

The market continues to trend higher, recently extending gains to a fresh multi-month high. The bullish price action has the market thinking about a retest of that major barrier at 1.2000 further up. In the interim, look for the current round setbacks to be very well supported, while only back below 1.1652 would delay the overall constructive tone.

• R2 1.1834 – 15Jan/2018 high – Strong
• R1 1.1800 – Figure – Medium
• S1 1.1652 – 22Mar low – Strong
• S2 1.1448 – 8Feb/2018 low – Strong

EURCHF – fundamental overview

The SNB will need to be careful right now, as its strategy to weaken the Franc could face headwinds from the US equity market in 2018. The record run in the US stock market has been a big boost to the SNB’s strategy with elevated sentiment encouraging Franc weakness. Of course, the SNB is no stranger to this risk, given a balance sheet with massive exposure to US equities. But any signs of a more intensified liquidation on that front into Q2 2018, will likely invite a very large wave of demand for the Franc, which will put the SNB in a more challenging position to weaken the Franc.  And so, we speculate the SNB continues to be active buying EURCHF in an attempt to build some cushion ahead of what could be a period of intense Franc demand.

AUDUSD – technical overview

The market has been in the process of rolling over after failing to sustain a break above 0.8100 earlier this year. This has set up a sequence of lower tops and lower lows on the daily chart, with deeper setbacks seen towards the 0.7500 barrier over the coming sessions. A break back above 0.7917 would be required to negate the structure and force a shift in the outlook.

• R2 0.7886 – 15Mar high – Strong
• R1 0.7786 – 22Mar high – Medium
• S1 0.7673 – 21Mar low – Medium
• S2 0.7628 – 14Dec low – Strong

AUDUSD – fundamental overview

Overall, the currency faces resistance from sliding base metals and a deterioration in global sentiment that at the moment, is coming from global trade tension and White House drama. Ultimately, any signs of continued capitulation in risk assets, will be what drives this market, with the Australian Dollar at risk for additional declines. Interestingly, optimism around possible China trade deals with the US and North Korea’s willingness to sit down and talk have had very little positive impact. Looking ahead, the market will continue to monitor global sentiment, while taking in a batch of US releases including GDP and core PCE, the advanced goods trade balance and pending home sales, and some Fed speak.

USDCAD – technical overview

There are signs of basing after months of downside pressure, with the market recently pushing back above critical psychological resistance at 1.3000. Look for any setbacks to now be well supported ahead of 1.2500, with a higher low sought out in favour of the next major upside extension through 1.3125 and towards 1.3500 further up.

• R2 1.3002– 7Mar high – Strong
• R1 1.2949 – 22Mar high – Medium
• S1 1.2816 – 27Mar low – Medium
• S2 1.2804 – 12Mar low – Strong

USDCAD – fundamental overview

The Canadian Dollar came back under pressure following a period of recovery, with US Dollar demand into quarter end reportedly driving a good deal of this flow. Meanwhile, global trade and NAFTA risk remains a major concern for the Loonie, with deteriorating global sentiment only adding to the Loonie’s stress. As far as today’s calendar goes, absence of first tier data out of Canada will leave monitoring global trade and risk sentiment developments, while taking in a batch of US releases including GDP and core PCE, the advanced goods trade balance and pending home sales, and some Fed speak.

NZDUSD – technical overview

The market looks to be in the process of topping out, with the daily chart slowly rolling over in 2018. Rallies are now expected to be very well capped below 0.7400, with only a break back above the figure to negate. Look for deeper setbacks in the sessions ahead, with a break back below 0.7154 to strengthen the outlook and accelerate declines towards 0.7000.

• R2 0.7355 – 13Mar high – Strong
• R1 0.7304 – 27Mar high – Medium
• S1 0.7203 – 23Mar low – Medium
• S2 0.7154 – 21Mar low – Strong

NZDUSD – fundamental overview

Adrian Orr has officially stepped in as RBNZ Governor this week and the central banker will be faced with the updated dual mandate of inflation targeting and maximum sustainable employment. Overall, the Kiwi rate is holding up relatively well right now, though quarter end demand for the US Dollar and a deterioration in global risk sentiment is starting to weigh on the correlated commodity currency. Local data has also not been Kiwi supportive over the past couple of weeks, highlighted by a discouraging GDP print and third consecutive negative reading at the GDT auction. Looking ahead, the market will continue to monitor global sentiment, while taking in a batch of US releases including GDP and core PCE, the advanced goods trade balance and pending home sales, and some Fed speak.

US SPX 500 – technical overview

A severely overbought market is finally showing signs of rolling over off the January record high, allowing for stretched monthly readings to unwind. Any rallies should now be very well capped ahead of 2800 in favour of continued weakness towards the 2015 high at 2138.

• R2 2743 – 21Mar high – Strong
• R1 2680 – 27Mar high – Medium
• S1 2589 – 23Mar low – Medium
• S2 2533 – 6Feb/2018 low – Strong

US SPX 500 – fundamental overview

Investor immunity to downside risk is not looking as strong these days and there’s a clear tension out there as the VIX starts to rise from unnervingly depressed levels. The reversal of monetary policy is the central theme driving this downturn in sentiment, with geopolitical risk and the threat of global trade wars nothing more than the story being used as the excuse for the market to be doing what it is destined to do as policy normalization ramps up in 2018.

GOLD (SPOT) – technical overview

Setbacks have been well supported over the past several months, with the market continuing to put in higher lows and higher highs. Look for some more chop followed by an eventual push above massive resistance in the form of the 2016 high at 1375. This will then open the door for a much larger recovery in the months ahead. In the interim, setbacks are expected to be well supported around 1300.

• R2 1375 – 2016 high – Very Strong
• R1 1366 – 25Jan/2018 high – Medium
• S1 1325 – 22Mar low – Strong
• S2 1303 – 2Mar low  – Strong

GOLD (SPOT) – fundamental overview

Solid demand from medium and longer-term players persists, with these players more concerned about exhausted monetary policy, extended global equities, political uncertainty, systemic risk and geopolitical threats. All of this should continue to keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax. Certainly the US Dollar under pressure has added to the metal’s bid tone as well, but there is a growing sense that even in a scenario where the US Dollar is bid for an extended period, GOLD will hold up on risk off macro implications. The 2016 high at 1375 is a massive level that if broken and closed above, could be something that triggers a widespread panic and rush to accumulate more of the hard asset.

BTCUSD – technical overview

Bitcoin has come under intense pressure since topping out at a record high just shy of 20,000 in December. The market has exceeded a measured move downside objective that had targeted a drop to 7,000, with deeper setbacks now on the cards for a move to retest the September 2017 peak around 5,000. At this point, it will take a daily close back above recent highs at 12,000, which also coincide with the top of the Ichimoku cloud, to take the pressure off the downside.

• R2 12,000 – Ichimoku Top – Strong
• R1 10,000 – Psychological – Medium
• S1 7,000 – Round Number – Medium
• S2 6,000 – 6Feb/2018 low  – Strong

BTCUSD – fundamental overview

The crypto asset has come under pressure in 2018, with ramped up regulatory oversight and potential government crackdowns forcing many holders to exit positions. The market is also coming back to earth after a euphoric 2017 run that had bubble written all over. Bitcoin has struggled on the transaction side as well, with transactions per second a major drawback, along with a mining community that has been less willing to process transactions due to the lower fees. The Lightning network has been a welcome development and is helping to ramp up transaction speed, which has been behind some of the recovery off the 2018 low, though it seems the combination of a massive bubble, more regulatory oversight, a market that is still trying to convince of its proof of concept, and the threat of a reduction in global risk appetite, could all result in even deeper setbacks ahead.

BTCUSD – Technical charts in detail

ETHUSD – technical overview

Ether continues to extend declines since topping out at a record high back in January, with setbacks extending to fresh 2018 lows below 500. Short term resistance comes in at 590 and a break back above this level will be required at a minimum to take the immediate pressure off the downside. Until then, the market will consider another extension, with a daily close below 450 to expose a measured move decline into 300.

• R2 590 – 21Mar high – Strong
• R1 545 – 24Mar high – Medium
• S1 446 – 27Mar/2018 low – Strong
• S2 400 – Psychological  – Strong

ETHUSD – fundamental overview

Setbacks in the price of ETH have been more intense than those of Bitcoin in 2018. Though both markets are going through a period of shakeup following bubble activity in 2017, there has been a bigger exodus from ETH with this cryptocurrency more heavily correlated to risk in global markets. The reduction in global risk appetite has put a strain on the investment in projects on the blockchain and with most of the blockchain projects built on the Ethereum protocol, it makes sense to see this market more negatively impacted than bitcoin, which is considered to be the store of value digital currency.