NZD has been falling back ahead of today’s RBNZ decision. Although the central bank is not expected to change interest rates, traders may be taking money off the table in fear of Governor Wheeler trying to talk down the Kiwi Dollar after the gains of recent weeks. Comments about inflation and the housing market in the statement may also attract attention.
Meanwhile, major indices continue to struggle, sending mixed signals at best and in several cases, signs of topping, particualry for the Australia 200, Japan 225 and Hong Kong 50.
Asia Pacific Indices
Australia 200 is accelerating downward, with RSI falling away from 50. The index is testing 5,670 the neckline of a head and shoulders top. Next potential support appears at the 200-day average near 5,620 then 5,607 a 38% retracement of the previous uptrend.
Japan 225 is starting to drop back, falling toward 20,125 after an attempt to break out over 20,240 ran into resistance near 20,310. The new high was not confirmed byt the RSI. A growing negative divergence indicates upward momentum may have peaked. Initial correction support possible near 20,000 then 19,930.
Hong Kong 50 continues to roll over, with resistance falling toward 25,875 from 26,000. The index is falling toward 25,500 and the RSI is falling toward 50 where breakdowns would signal a downturn. Next potential support after that at the 50-day average near 25,110.
North American and European Indices
US 30 was unable to hold above 21,500 having encountered resistance near 21,545. The index may need to pause or correct in the near term to work off an overbought RSI. Initial support possible near 21,400 then 21,355 with next resistance possible near 21,720.
US SPX 500 is starting to drop back having met resistance near 2,454 and failing to hold above 2,450. The index has slipped under 2,440 toward 2,432 with next potential support near 2,428 where a 23% Fibonacci retracement and uptrend support converge. RSI indicates a deepening correction.
US NDAQ 100 has bounced up from 5,690 toward 5,770 and more encouraging, the RSI has regained the 50 level to signal momentum turning upward. IT still needs to retake 5,800 and a broken former trend support line to signal an upturn. Additional support in place at the 50-day average near 5,660.
UK 100 continues to trend sideways between 7,400 and 7,600 with RSI bouncing around 50 confirming neutral momentum. A head and shoulders pattern suggests a top may be forming which would be confirmed by a break of the 7,405 neckline. Resistance drops form 7,525 toward 7,475 indicating emerging distribution.
Germany 30 is sending mixed signals. It remains in an uptrend trading above 12,700 with an ascending triangle forming below 12,900 and RSI holding 50. On the other hand, the index looks close to breaking an uptrend support line while the RSI looks close to breaking 50. Either of these would signal a downturn with next potential support near 12,625 a recent low, or the 50-day average near 12,560.
Commodities
Gold has stabilized between $1,240 near its 200-day average and $1,246 while RSI levelling off near 40 suggests recent selling pressure may be subsiding. The price would need to retake $1,254 to signal an upturn and a breakout from an emerging sideways range.
WTI crude oil is breaking down again today. The pair has turned sharply downward form a lower high near $43.90 plunging below $43.50 into the $41.90 to $42.20 area with next potential support near $41.00 then $40.00. An oversold RSI indicates potential for a pause or bounce at some point.
FX
US Dollar Index is testing the top of a 96.30 to 97.50 trading range. RSI back above 50 and higher lows forming an ascending triangle indicate renewed accumulation. Next resistance on a breakout possible near 98.10 then a measured 98.70.
EURUSD appears to have peaked and come under distribution with the pair falling away from a lower high near $1.1200 toward $1.1145. RSI slipping under 50 signals momentum turning downward. A break of $1.1118 a 23% retracement would signal a new downleg starting with next potential support near $1.1010 a 38% Fibonacci retracement.
GBPUSD dipped under $1.2600 then rallied, in what could be a bear trap turnaround. The pair has climbed back up toward $1.2665 with next potential resistance near $1.2745 then $1.2815. A double bottom in the RSI suggests downward pressure may have peaked and could be starting to fade.
NZDUSD continues to fall back from $0.7300 in what looks like a normal trading correction to work off an overbought RSI. Even with upward momentum slowing, the pair remains in an uptrend above $0.7200 with additional support in place near $0.7160 then $0.7100 a 50% retracement and the 200-day average. Next upside resistance possible near $0.7375.
AUDUSD has gone into consolidation mode, trading between $0.7535 and $0.7625 both Fibonacci levels with the lower bound close to the 200-day average. Additional support in place near $0.7500 with additional resistance possible near $0.7680.
USDSGD has dropped back from its 50-day average near $1.3910 toward $1.3890 but with RSI holding 50 to indicate continued underlying upward momentum, this appears to be more of a trading setback than a downturn. Next potential support near $1.4850 with next upside resistance possible near $1.3950 a Fibonacci level then the $1.4000 round number.
USDJPY is consolidating recent gains between 111.00 and 111.60, holding above its 50 and 200-day averages and 50 on the RSI to indicate renewed accumulation. Next potential resistance near 111.80 then 112.15.
GBPJPY held 140.00 support and is bouncing around between there and 141.90 a Fibonacci level. RSI stuck below 50 and a symmetrical triangle suggest that this could be a pause within a bigger downtrend rather than a base.
EURJPY us climbing within a 122.50 to 125.80 trading range with support moving up toward 123.55 and the pair advancing on 124.15 with next potential resistance near 125.00. RSI breaking out of a downtrend confirms momentum turning back upward.
USDCAD is breaking out of a rounded bottom that formed between $1.3200 and $1.3300. RSI climbing up from 30 indicates downward pressure easing. On a breakout, initial resistance may appear near $1.3340 the 200-day average then a measured $1.3400.
Disclaimer: CMC Markets is an order execution-only service. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
