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Risk sentiment improves both in the European and the American stock markets since yesterday, thanks to the abating sovereign bond selloff. Yet, the sovereign bond bears are not far with the prospects of less central bank buying, and that means that they will continue threatening the gains in the coming weeks. Therefore, the choppy trading is here to stay as the strategic positioning in the market is changing along with the fundamentally, and perhaps unreversible hawkish shift from the major central banks, unless inflation abates magically.

Yesterday, financials and mining stocks took the lead, small caps outperformed their big cap peers, with Russell 2000 bouncing 1.63%, whereas gains in the major US indices remained between 0.85% and 1.30%.

US crude slipped below the $90 per barrel although the weekly API data suggested a 2-million barrel decline in the US inventories versus the expectation of a 400’000 barrel build. The more official EIA data is due today, and a surprise decline in inventories could invite the oil bulls back to the market at the current dip, as the trend in crude prices remains comfortably positive due to the supportive mix of rising post-pandemic demand and supply constraints.

Caution

Improved sentiment is put on the back of more optimism about reopening, meanwhile the hawkish Fed expectations and the rising yields continue being a serious threat to the actual gains, as the major triggers behind the latest bond selloff are still in play. This means that there is a high risk of a sudden mood swing before Thursday’s US inflation data.

On the index level, the S&P500 is stuck between its 100 and 200-DMA levels and Nasdaq remains below a major Fibonacci resistance near the 14850 level (38.2% retracement level on the latest November – January selloff), which should distinguish between the actual selloff and a medium-term bullish reversal. There is a thick layer of top-sellers within the 14800/15000 range.

Daily Pivots: (S1) 155.89; (P) 156.31; (R1) 156.95; More...

Intraday bias in GBP/JPY is back on the upside as rebound from 152.88 resumes. Further rise should be seen to 157.74/158.19 resistance zone Decisive break there will resume larger up trend. On the downside, break of 155.11 minor support will turn bias back to the downside, to extend the consolidation pattern from 158.19 with another falling leg.

In the bigger picture, price actions from 158.19 are seen as developing into a consolidation pattern to up trend from 123.94 (2020 low). Downside should be contained by 123.94 to 158.19 at 145.10 to bring rebound. Firm break of 158.19 will resume the up trend to long term fibonacci level at 167.93. However, sustained break of 145.10 will raise the chance of trend reversal and target 61.8% retracement at 137.02.

Daily Pivots: (S1) 131.59; (P) 131.81; (R1) 132.15; More....

Intraday bias in EUR/JPY remains neutral first. Some consolidations could be seen below 132.11 temporary top. But downside should be contained well above 128.23 support to bring another rally. As noted before, corrective pattern from 134.11 should have completed three waves down to 127.36. Above 132.11 will bring retest of 133.44/134.11 resistance zone. Decisive break there will resume larger up trend from 114.42.

In the bigger picture, price actions from 134.11 are currently seen as a consolidation pattern only. As long as 38.2% retracement of 114.42 (2020 low) to 134.11 at 126.58 holds, up trend from 114.42 is still in favor to continue. Break of 134.11 will target long term resistance at 137.49 (2018 high). However, sustained break of 126.58 will raise the chance of bearish reversal. In this case, deeper decline would be seen to 61.8% retracement at 121.94, and possibly below.

Daily Pivots: (S1) 0.8408; (P) 0.8433; (R1) 0.8453; More...

Intraday bias in EUR/GBP remains neutral at this point. Some consolidations should be seen before another rally. On the upside, break of 0.8476 will resume the rebound from 0.8282 to 0.8598 resistance. Decisive break there will add to the case of trend reversal and target 38.2% retracement of 0.9499 to 0.8282 at 0.8747 next. However, break of 0.8398 minor support will turn bias back to the downside for retesting 0.8282 low.

In the bigger picture, price actions from 0.9499 (2020 high) are still see a corrective pattern that should be contained by 0.8276 long term support (2019 low). Bullish convergence condition in daily MACD and break of 55 day EMA raises the chance that it might be completed. Sustained trading above 38.2% retracement of 0.9499 to 0.8282 at 0.8747 will affirm this bullish case and target 61.8% retracement at 0.9034 and above.

Daily Pivots: (S1) 1.5944; (P) 1.6007; (R1) 1.6038; More...

Intraday bias in EUR/AUD remains neutral at this point. Further rally will remain in favor as long as 1.5776 support holds. Above 1.6223 will resume whole rise from 1.5354 to 100% projection of 1.5354 to 1.6168 from 1.5559 at 1.6373 next. However, break of 1.5776 will turn bias back to the downside for 1.5559 support instead.

In the bigger picture, rise from 1.5354 is seen as the third leg of the corrective pattern from 1.5250 low. Further rise cannot be ruled out, but even in that case, strong resistance should be seen at 38.2% retracement of 1.9799 to 1.5250 at 1.6988. Larger down trend from 1.9799 is in favor to extend through 1.5250 at a later stage.

Daily Pivots: (S1) 1.0538; (P) 1.0555; (R1) 1.0580; More....

Intraday bias in EUR/CHF remains neutral for consolidation below 1.0602. Further rally is expected as long as 1.0439 support holds. A medium term bottom should be in place at 1.0298 already. Above 1.0602 will target 28.2% retracement of 1.1149 to 1.0298 at 1.0623 first. Sustained trading above there will raise the chance of trend reversal and target 61.8% retracement at 1.0824 next. However, break of 1.0439 will dampen this bullish view and bring retest of 1.0298 instead.

In the bigger picture, current development suggests that a medium term bottom is formed at 1.0298 on bullish convergence condition in daily MACD. Rebound from there is still tentatively viewed part of a corrective pattern. That is, larger down trend from 1.2004 (2018) could still extend through 1.0298 to 61.8% projection of 1.2004 to 1.0505 to 1.1149 at 1.0223. However, sustained trading above 55 week EMA (now at 1.0673) will argue that the down trend is over, and bring stronger rise back to 1.1149 next.

DXY:

On the H4 timeframe, prices are on bearish momentum and consolidating in a triangular pattern. We see the potential for a dip from our 1st resistance at 95.701 in line with 127.2% Fibonacci extension and graphical overlap towards our 1st support at 95.385 in line with 100% Fibonacci extension and 61.8% Fibonacci extension. Our bearish bias is further supported by our ichimoku portraying bearish momentum.

Areas of consideration:

• H4 time frame, 1st resistance at 95.701
• H4 time frame, 1st support at 95.385

XAU/USD (GOLD):

On the H4 chart, prices are at a pivot and strong graphical overlap resistance. We see potential for a pullback from our 1st resistance at 1829.265 in line with 61.8% Fibonacci retracement towards our 1st support at 1815.220 in line with 23.6% Fibonacci retracement and 38.2% Fibonacci retracement. RSI are at levels where dips previously occurred.

Areas of consideration:

• 4h 1st support at 1815.220
• 4h 1st resistance at 1829.265

GBP/USD

In the H4 chart , price is trading in an ascending channel and near 1st support level of 1.35043 which is also 50% Fibonacci retracement and 78.6% Fibonacci projection. Price can potentially continue its bullish momentum to the 1st resistance level of 1.36461 in line with 61.8% Fibonacci projection and 78.6% Fibonacci retracement. Our bullish bias is supported by the ichimoku cloud indicator as price is trading above it.

Areas of consideration:

• H4 1st resistance 1.36461
• H4 1st support 1.35043

USD/CHF:

On the H4 timeframe,in reference to last week’s analysis price indeed bounced at the 1st Support level. Price is abiding to the daily ascending channel signifying an overall bullish momentum. We can expect the price to bounce from 1st Support in line with 78.6% Fibonacci projection and 61.8% fibonacci retracement towards 1st Resistance in line with 61.8% Fibonacci projection and previous swing high. Our bullish bias is further supported by the RSI indicator where it is at the support level. Traders should wait for prices to swing higher or lower before entering.

Areas of consideration:

• Watch 1st Support at 0.91750
• Watch 1st Resistance at 0.93175

EUR/USD :

On the H4 chart, price is near the 1st resistance level of 1.14816 which is also 61.8% Fibonacci retracement. Price can potentially dip to the 1st support level of 1.13523 in line with 38.2% Fibonacci retracement and 78.6% Fibonacci projection. Our bearish bias is supported by the stochastic indicator as price is trading below it.

Areas of consideration :

• H4 1st support at 1.13523
• H4 1st resistance at 1.14816

USD/JPY

On the H4 chart,in reference to last week’s analysis, price indeed bounced at 1st Support and it is reaching our potential 1st Resistance level @ 115.598.

Price is trading in an ascending channel signifying an overall bullish momentum, however, we can expect a short-term bearish drop from 1st Resistance level in line with horizontal resistance and 78.6% Fibonacci projection towards 1st Support in line with previous swing low and 100% Fibonacci projection. Our bearish bias is further supported by the stochastic indicator where the %K line is at the resistance level.

Areas of consideration:

• H4 1st support at 114.025
• H4 1st resistance at 115.598

AUD/USD:

Price is abiding to the descending channel, signifying an overall bearish momentum. We can expect price to drop from 1st Resistance in line with 61.8% Fibonacci retracement towards 1st Support in line with previous swing low and 100% Fibonacci projection. Our bearish bias is further supported by the stochastic indicator where the %K Line is at the resistance level.

Areas of consideration:

• H4 1st Support level 0.69865
• H4 1st resistance level 0.71403

NZD/USD:

On the H4 timeframe, prices were on bearish momentum and are abiding to our descending trendline. We see potential for prices to dip from our 1st resistance at 0.66474 in line with 61.8% Fibonacci retracement towards our 1st support at 0.66198 in line with 61.8% Fibonacci retracement. Our bias is further supported by RSI being at levels where dips previously occurred. Alternatively, our stop loss will be placed at 2nd resistance at 0.66735 in line with 100% Fibonacci retracement and 61.8% Fibonacci extension.

Areas of consideration:

• H4 time frame, 1st resistance at 0.66451
• H4 time frame, 1st support at 0.66198

USD/CAD:

On the H4, with prices moving above the ichimoku cloud, we see the potential for a bounce from our 1st support at 1.26519 in line with horizontal swing low support and 100% Fibonacci projection towards our 1st resistance at 1.277779 in line with horizontal swing high resistance. Alternatively, price may break 1st support structure and head for 2nd support at 1.25644, in line with the horizontal overlap support.

Areas of consideration:

• H4 time frame, 1st support at 1.26519
• H4 time frame, 1st resistance at 1.277779

OIL:

On the H4, with prices moving above the ichimoku cloud, we see the potential for a bounce from our 1st support at 90.15 in line with horizontal overlap support towards our 1st resistance at 95.76 in line with the 127.2% Fibonacci extension and -61.8% Fibonacci expansion. Alternatively, price may break 1st support structure and head for 2nd support at 86.09, in line with the horizontal swing low support and 127.2% Fibonacci extension.

Areas of consideration:

• H4 time frame, 1st resistance of 95.76
• H4 time frame, 1st support of 90.15

Dow Jones Industrial Average:

On the H4, with price moving above the ichimoku cloud, signifying an overall bullish momentum. We can expect price to rise to our 1st resistance at 36020 in line horizontal graphical swing high resistance and 78.6% Fibonacci retracement from our 1st support in line with horizontal overlap support and 23.6% Fibonacci retracement level at 35024. Alternatively, price may break 1st support structure and head for 2nd support, which coincides with 50% Fibonacci retracement level at 34430.

Areas of consideration:

• H4 time frame, 1st resistance of 36020
• H4 time frame, 1st support of 35024

Daily Pivots: (S1) 1.1392; (P) 1.1421; (R1) 1.1445; More...

Intraday bias in EUR/USD remains neutral for the moment. A medium term bottom could be in place at 1.1120, on bullish convergence condition in daily MACD. Break of 1.1482 resistance will target 38.2% retracement of 1.2348 to 1.1120 at 1.1589 next. Sustained break there will argue that whole fall from 1.2348 has completed too and target 61.8% retracement at 1.1879. On the down, however, break of 1.1265 support will dampen this bullish view and bring retest of 1.1120 low instead.

In the bigger picture, the decline from 1.2348 (2021 high) is seen as a leg inside the range pattern from 1.2555 (2018 high). Sustained trading above 55 week EMA (now at 1.1613) will argue that it has completed and stronger rise would be seen back towards top of the range between 1.2348 and 1.2555. However, firm break of 1.0635 (2020 low) will raise the chance of long term down trend resumption and target a retest on 1.0339 (2017 low) next.

Daily Pivots: (S1) 1.3516; (P) 1.3540; (R1) 1.3572; More...

Outlook in GBP/USD is unchanged and intraday bias stays neutral first. On the upside, break of 1.3627 will resume the rebound to 1.3748 resistance. Firm break there will revive the bullish case that correction from 1.4248 has completed with three waves down to 1.3158. Further rally should then be seen to retest 1.4248 high. On the downside, however, break of 1.3356 will bring retest of 1.3158 low.

In the bigger picture, as long as 38.2% retracement of 1.1409 to 1.4248 at 1.3164 holds, up trend from 1.1409 (2020 low) is still in progress. On resumption, next target will be 38.2% retracement of 2.1161 to 1.1409 at 1.5134. Nevertheless sustained break of 1.3164 will argue that whole rise from 1.1409 has completed and bring deeper fall to 61.8% retracement at 1.2493.

Daily Pivots: (S1) 0.9231; (P) 0.9247; (R1) 0.9268; More....

Range trading continues in USD/CHF and intraday bias remains neutral. Further rise will remain mildly in favor as long as 0.9090 support holds. break of 0.9372 will resume the choppy rally from 0.8925 to 0.9471 high. However, break of 0.9090 will turn bias back to the downside for 0.8925 support instead.

In the bigger picture, medium term outlook will be neutral at best as long as 0.9471 resistance holds. Larger down trend could still extend through 0.8756 (2021 low). However, firm break of 0.9471 will argue that the trend has already reversed and rebound the rally from 0.8756 with another impulsive move.