MARKET INSIGHT: Price Signal Summary - S&P E-Minis Correction Extends
- In the equity space, the trend condition in S&P E-Minis remains bullish, however, a corrective cycle suggests scope for a pullback near-term. This will allow an overbought reading in momentum studies to unwind - attention is on the 20-day EMA at 4164.93. A breach of this EMA would signal scope for a deeper pullback, potentially exposing the 50-day EMA, at 4078.40. EUROSTOXX 50 futures remain in an uptrend, however, the contract has entered a corrective phase. The 20-day EMA, at 3709.50, has been cleared and sights are on the 50-day EMA at 3650.80 - a key area of support.
- In FX, EURUSD outlook remains bearish. The recent move down has confirmed a short-term reversal and means the pair has failed to clear channel resistance. The bear channel is drawn from the Feb 10 high and intersects at 1.0282. Sights are on 0.9952 next, the Jul 14 low. GBPUSD is weaker, having breached support at 1.2004, the Aug 5 low. The break lower signals scope for an extension and has opened 1.1760, the Jul 14 low and bear trigger. USDJPY continues to appreciate and last week traded above resistance at 135.58 last week, the Aug 8 high. The pair has today pierced 137.27, 76.4% of the Jul 14 - Aug 2 downleg. A clear break of this level would open 137.96, the Jul 22 high.
- On the commodity front, Gold is trading lower, extending the pullback from $1807.9, the Aug 10 high. The yellow metal has failed to confirm a clear break of the 5-month downtrend and the break of support at $1754.4 Aug 3 low, signals scope for a deeper pullback towards $1711.7 next. In the Oil space, WTI futures remain vulnerable. Last week’s move down has resulted in a print below support at $87.01, the Aug 5 low. This reinforces bearish conditions and a clear break of $87.01 would confirm a resumption of the downtrend. Attention is on $85.37, the Mar 15 low. Key short-term resistance has been defined at $95.05, the Aug 11 high.
- In the FI space, Bund futures remain in a bear cycle and the contract is trading at its recent lows. The focus is on the 150.00 handle next. Gilts remain vulnerable. The next objective is 112.24, 76.4% retracement of the Jun 16 - Aug 2 upleg.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
USDCAD TECHS: Takes Out 20-, 50-Day EMAs
- RES 4: 1.3300 High Nov 4 2020
- RES 3: 1.3272 2.0% 10-dma envelope
- RES 2: 1.3224 High Jul 14
- RES 1: 1.3166 3.0% Upper Bollinger Band
- PRICE: 1.2853 @ 16:25 BST Jul 22
- SUP 1: 1.2823 Low Jul 22
- SUP 2: 1.2819 Low Jun 28 and key support
- SUP 3: 1.2763 Low Jun 13
- SUP 4: 1.2701 2.0% 10-dma envelope
USDCAD dipped further Friday, narrowing the gap with intraday support at 1.2819 - the late June low. The pair has now traded below both the 20- and 50-day EMA, denting the outlook and turning the near-term outlook negative. A deeper pullback opens 1.2763 and the 2.0% 10-dma envelope of 1.2701.
US TSYS: Weak Global PMIs
Tsys finish the week with a risk-off tone after weak PMI services read, Tsy broadly higher, curves initially steeper as hawkish forward rate hike guidance for the latter half of the year cooled -- a 75bps hike is still expected next week Wednesday while a 50bps move at the Sep policy meeting looks more likely.
- Tsys surged in early London trade after France and Germany mfg PMIs both missed expectations overnight, contractionary sub-50 reads at 49.6 and 49.2 respectively (UK mfg PMI bucked trend, coming out at 52.2 vs. 52.0 est).
- Volumes spiked as Tsy futures furthered the rally (30YY 2.9477% low) after preliminary July reading of the SP Global mfg PMI of 52.3 vs. 52.0 exp (52.7 in June), service sector miss at 47.0 vs. 52.7 est (steady to June read).
- Heavy volumes by the close w/ TYU2>1.6M. Yield curves turned mixed amid some profit taking in the short end: 2s10s -0.212 at -21.661 vs. -17.316 high, 5s30s however, +7.060 at 12.689.
- Fed terminal rate now seen at 3.33%, from what had been seen at 3.69% after last week's US CPI beat.
- Cross assets: Spot gold firmer but well off highs +4.78 at 1723.59, crude sold off late: WTI -1.54 to 94.81.
AUDUSD TECHS: Pierces 50-Day EMA
- RES 4: 0.7141 76.4% retracement of the Jun 3 - Jul 14 downleg
- RES 3: 0.7069 High Jun 16
- RES 2: 0.6977 High Jul 22
- RES 1: 0.6957 50-day EMA
- PRICE: 0.6955 @ 16:19 BST Jul 22
- SUP 1: 0.6786/6682 Low Jul 18 / 14 and the bear trigger
- SUP 2: 0.6647 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing
- SUP 3: 0.6588 Low May 28 2020
- SUP 4: 0.6538 Low May 26 2020
AUDUSD traded well into the Friday close, piercing the 50-day EMA on an intraday basis. This improves the near-term outlook and opens next resistance at the Jun 16 high crossing at 0.7069. A solid break and close above here would cement the next upleg, which targets 0.7141, the 76.4% retracement of the Jun 3 - Jul 14 downleg. Any reversal lower would refocus attention on the 0.6682 bear trigger where a break would confirm a resumption of the downtrend.
