short-term resistance

Dow Jones Industrial Average has underperformed against the S&P 500 and Nasdaq 100 in the past 2 sessions. Broke minor support yesterday now turns into key short-term resistance at 34,310. Sill sandwiched within a complex sideways range configuration in the medium-term horizon with its range resistance at 34,630.   The Dow Jones Industrial Average (DJIA) has continued to be one of the underperformers among the major US benchmark stock indices ex-post Q2 “Triple Witching” options expiration since last Friday, 16 June. In the past two sessions, the DJIA has declined by -1.03% versus the S&P 500 (-0.84%), Nasdaq 100 (-0.76%), and small-cap concentrated Russell 2000 (-1.2%).   Sandwiched within a medium-term complex sideways range in the past 6 months   Fig 1:  US Wall St 30 medium-term trend as of 21 Jun 2023 (Source: TradingView, click to enlarge chart) The price actions of the US Wall St 30 Index (proxy of the Dow Jones Industrial Average futures) have continued to churn within a medium-term complex sideways range configuration in place since 13 December 2022. The recent minor up move from the 25 May 2023 low of 32,561 has managed to stage a retreat right below the upper boundary of the range configuration now acting as resistance at 34,630 (see daily chart).   Minor support broke but still above the 200-day moving average     Fig 2:  US Wall St 30 minor short-term trend as of 21 Jun 2023 (Source: TradingView, click to enlarge chart)   Yesterday, the Index has broken below its minor ascending trendline support from the 1 June 2023 low now acting as a pull-back resistance at around 34,310 which also confluences with the 61.8% Fibonacci retracement of the current minor decline from the 16 June 2023 high to yesterday, 20 June 2023 low (see 1-hour chart) Short-term momentum is still showing no clear signs of a bullish reversal as indicated by the 1-hour RSI oscillator that is still below a corresponding resistance at the 49% level. A break below the 33,830 near-term support exposes the next support at 33,470 (minor swing low area of 7 June 2023 & close to the 50% Fibonacci retracement of the prior up move from 25 May 2023 low to 16 June 2023 high). On the flip side, a clearance above 34,310 key short-term pivotal resistance negates the bearish tone for the next resistance to come in at 34,630 (medium-term range top as illustrated on the daily chart).

Bearish elements have emerged at a key inflection/resistance level of 15,415. The leader of the AI boom, Nvidia has shaped a bullish exhaustion where its initial price actions’ exuberance dissipated ex-post Q2 earnings result release. 15,135 key short-term resistance to watch on the Nasdaq 100 to maintain bearish bias.   This is a follow-up analysis of our prior reports, “Nasdaq 100 Technical: Minor countertrend rebound” and “D-day for the US stock market as Nvidia earnings loom” published on 15 August 2023 and 23 August 2023 respectively. Click here and here for a recap. The price actions of the US Nas 100 Index (a proxy for the Nasdaq 100 futures) have indeed shaped the expected minor countertrend rebound sequence from the 18 August 2023 low of 14,553 and rallied by +5.6% to print an intraday high of 15,375 during yesterday’s 24 August European opening hour. The upward spurt seen on Thursday, 24 August at the start of the Asian session has been primarily attributed to a strong upmove of +6% seen in the share price of Nvidia in the after-US hours trading session of Wednesday, 23 August right after the release of its stellar fiscal Q2 earnings result. Interestingly, the exuberance of Nvidia that has triggered an initial positive feedback loop into the benchmark US stock indices dissipated as the US session got underway yesterday. In addition, several key bearish technical elements emerged which suggests that the potential impulsive down moves of the short to medium-term bearish trend of the US Nas 100 Index has resumed.   Daily bearish Marubozu candlestick formed right a key inflection/resistance zone   Fig 1: US Nas 100 medium-term trend as of 25 Aug 2023 (Source: TradingView, click to enlarge chart)     Fig 2: Medium-term trend of Nvidia & SPDR S&P Semiconductor ETF as of 24 Aug 2023 (Source: TradingView, click to enlarge chart) As seen in Figure 1, several bearish elements have been detected on the daily chart of the US Nas 100 Index. Firstly, its price actions have formed a firm bearish tone candlestick pattern called “Marubozu”, a long-body candle where its opening price and closing price were almost the same as its intraday high and intraday low respectively.   Secondly, the emergence of such a key bearish reversal candlestick pattern is being formed right at a key inflection zone where the 50-day moving average and the former swing low of 24 July 2023 confluence at a 15,415 resistance level adds credence to a potential future bearish movement in price actions of the Index. Thirdly, the current conditions of the daily RSI oscillator suggest that medium-term downside momentum remains intact. The price actions of Nvidia as seen in Fig 2 have also depicted similar bearish elements where it ended yesterday’s 24 August US session with a daily bearish “Marubozu” and reintegrated below a key resistance of 474.10 with a high-volume reading. The US Nas 100 slipped back below the 20-day moving average Fig 3: US Nas 100 minor short-term trend as of 25 Aug 2023 (Source: TradingView, click to enlarge chart) The hourly chart of the US Nas 100 has indicated the potential continuation of the impulsive down move of its short-term downtrend phase as the minor countertrend rebound from the 18 August 2023 low is likely to be over. Watch the 15,135 key short-term pivotal resistance (also the 20-day moving average) to maintain the bearish tone and a break below 14,580 exposes the next support at 14,300/250 (Fibonacci extension cluster & and a graphical support, refer to the daily chart in Fig 1). On the other hand, a clearance above 15,135 negates the bearish tone to see a retest on the 15,415/460 medium-term resistance.    

In the past three weeks, AUD/USD has been trading within a minor range configuration between 0.6510 and 0.6385. Price actions have been dictated primarily from external factors especially economic news flow out from China. Consensus is expecting another third consecutive month of no change in the policy cash rate at 4.1% in today’s RBA monetary policy decision. The medium-term trend of AUD/USD remains bearish below its 50-day moving average now acting as a resistance at 0.6600 and 0.6510 remains the key short-term resistance to watch. This is a follow-up analysis of our prior report, “Potential minor countertrend rebound in progress” published on 28 August 2023. Click here for a recap. Since its minor range swing low of 0.6338 printed on 17 August 2023, the price actions of AUD/USD have been primarily driven by external factors; especially economic news flow out from China as Australia’s commodities producers/trading firms are dependent on either direct or indirectly on the fortunes of the currently cash-stripped Chinese property developers. In the past week, the AUD/USD has rallied as expected and hit the 0.6510 countertrend rebound resistance, it printed an intraday high of 0.6522 last Wednesday, 30 August before upside momentum fizzled out to trade back down within its minor range configuration in place since 17 August 2023. In the past two trading sessions, the price actions of AUD/USD have been whipsawed around its downward-slopping 20-day moving average as we await the outcome of the key RBA monetary policy decision out later today at 0430 GMT. Today’s RBA monetary policy meeting will be the last one chaired by the current Governor Phillip Lowe before he hands over the reins to Michele Bullock, an RBA “lifer” since 1985. In the run-up to today’s meeting, the consensus is expecting another third consecutive month of no change in the policy cash rate at 4.1% as the recently released monthly CPI indicator for July has slowed to 4.9% y/y from 5.4% y/y in June, its slowest pace of increase since February 2022 and below consensus of 5.2% y/y. Interestingly, the ASX 30-day interbank cash rate futures on the September 2023 contract have indicated a 14% chance of a 25-basis point cut on the cash rate to 3.85% for today’s RBA meeting based on data as of 4 September 2023. That’s a slight increase in odds from a 12% chance of a 25-bps rate cut inferred a week ago. Let’s now examine the AUD/USD from the lens of technical analysis. Medium-term momentum remains bearish   Fig 1:  AUD/USD medium-term trend as of 5 Sep 2023 (Source: TradingView, click to enlarge chart) Since the bearish breakdown of the AUD/USD below its former medium-term ascending trendline support from the 13 Oct 2022 swing low on 11 August 2023, its price actions have continued to thread lower below its downward-sloping 50-day moving average now acting as a key medium-term resistance at 0.6600 which also confluences with the former swing low of 29 June/6 July 2023 where the bulls got rejected on 4 August and 10 August 2023 after attempts to break above it. Also, the daily RSI indicator, a measurement of momentum has managed to stage a retreat right after a retest on former parallel ascending support now turns pull-back resistance right below the 50 level in the past week which indicates the revival of medium-term bearish momentum that advocates further potential downside pressure in the price actions of AUD/USD going forward. 0.6510 is the key short-term resistance to watch on the AUD/USD   Fig 2:  AUD/USD minor short-term trend as of 5 Sep 2023 (Source: TradingView, click to enlarge chart) If the 0.6510 key short-term pivotal resistance is not surpassed to the upside and a breakdown below the intermediate minor support of 0.6440, the AUD/USD may see a further slide to retest the minor range support of 0.6385. Thereafter, a break with a daily close below 0.6385 may kickstart another leg of a potential impulsive down move sequence within its medium-term downtrend phase to expose the next support at 0.6310 in the first step. On the flip side, a clearance above 0.6510 negates the bearish tone for a squeeze-up to see the 0.6600 medium-term resistance next.    

Bearish readings seen in the daily and hourly RSI momentum indicators have reinforced the weakening medium-term and short-term impulsive up moves of CHF/JPY. Watch the key short-term resistance at 169.65 for CHF/JPY. The major uptrend phase of the CHF/JPY has started to show signs of bullish exhaustion at this juncture which increases the risk of a multi-week corrective decline to retest its 50-day moving and the median line of a major ascending channel in place since 13 January 2023 low, acting at a support zone of 166.55/165.10.       Fig 1:  CHF/JPY major & medium-term trends as of 27 Nov 2023 (Source: TradingView, click to enlarge chart) The medium-term bullish momentum of CHF/JPY from the 3 October 2023 low of 160.00 has started to dissipate where the daily RSI momentum indicator has staged a recent bearish breakdown on 20 November and retested its former parallel support at the 60 level.     Watch the key short-term resistance at 169.65   Fig 2:  CHF/JPY minor short-term trend as of 27 Nov 2023 (Source: TradingView, click to enlarge chart)     In the shorter time frame as seen on the 1-hour chart, the price actions of CHF/JPY have started to oscillate within an impending minor descending channel from its recent all-time high print of 170.54 on 16 November 2023. Also, the hourly RSI momentum indicator has flashed out a bearish divergence condition at its overbought region. All in all, these observations have advocated the start of a potential multi-week corrective decline scenario for CHF/JPY. If the 169.65 key short-term pivotal resistance is not surpassed to the upside, the CHF/JPY cross pair may see a slide to retest the near-term support of 168.00 (also the 20-day moving average), and below it exposes the next intermediate supports at 166.55 and 165.90 next (also the 50-day moving average and the lower boundary of the minor descending channel). However, a clearance above 169.65 invalidates the bearish scenario for a retest on the 170.50 major resistance.   Fig

The 2-day rebound seen in USD/JPY has reached 146.20/70 minor resistance zone. The movement of USD/JPY in the past month has a significant direct correlation with the US 10-year Treasury/10-year JGB yield spread. The short-term to medium-term trends of the US 10-year Treasury/10-year JGB yield spread remain bearish. Watch the 146.70 key short-term resistance on USD/JPY. This is a follow-up analysis of our prior report, “USD/JPY Technical: Potential counter-trend rebound within medium-term downtrend” published on 8 December 2023. Click here for a recap. USD/JPY has rebounded and hit the short-term resistance zones of 144.80/145.30 and 146.20/70 as highlighted in our previous analysis reinforced by the better-than-expected US non-farm payrolls data for November and a media report released yesterday, 11 December that stated the Bank of Japan (BoJ) officials were in no rush to scrap short-term negative interest in the upcoming 18 to 19 December monetary policy meeting according to sources. This latest set of “BoJ’s monetary policy thought process” reported by the media contrasted with the hawkish remarks made by BoJ Governor Ueda and Deputy Governor Himino last week that increased market speculations that the decade-plus of short-term negative interest rate policy in Japan may be scrapped sooner than expected. The USD/JPY extended its gains from last Friday and rallied by +0.86% to print an intraday high of 146.59 as seen in yesterday’s 11 December US session on the backdrop of the media report. It’s all about the yield spread between the US 10-year Treasury & 10-year JGB Fig 1: Movement of USD/JPY and US 10-year Treasury/10-year JGB yield spread as of 12 Dec 2023 (Source: TradingView, click to enlarge chart) Interestingly, the movement of the USD/JPY in the past month has moved in sync with the yield spread of the US 10-year Treasury/10-year Japanese government bonds (JGB) which can be considered as an indirect summation net effect of monetary policy guidance from the Fed and BoJ. Their current 20-day rolling correlation coefficient is at 0.90 which suggests that the movement of the US 10-year Treasury/10-year JGB yield spread has a significant direct influence on the movement of the USD/JPY. If the US 10-year Treasury/10-year JGB yield spread compressed (inched downwards), the movement of the USD/JPY reflected a similar directional move on the downside and vice versus if the yield spread expanded to the upside. Overall, the short to medium-term trend phases of the US 10-year Treasury/10-year JGB yield spread is still bearish as it continues to trend below its downward sloping 13-day moving average. Hence, it may put further downside pressure on the USD/JPY. USD/JPY’s recent minor rally may have exhausted Fig 2: USD/JPY short-term minor trend as of 12 Dec 2023 (Source: TradingView, click to enlarge chart) The price actions of the USD/JPY have staged a bearish reaction after 2-day of counter-trend rebound at the 146.70 short-term pivotal resistance (former minor swing lows area of 4/5 December 2023 & 50% Fibonacci retracement of the prior minor downtrend phase from 13 November 2023 high to 7 December 2023 low). In addition, the hourly RSI momentum indicator has flashed out a bearish divergence condition at its overbought condition during yesterday’s US session which suggests that the bullish momentum of the 2-day rally is likely to be exhausted. Near-term support will be at 144.20 and a break below it exposes the next intermediate support zone of 142.20/141.60 (coincides with the 200-day moving average). On the flip side, a clearance above 146.70 sees a potential extension of the counter-trend rebound towards the medium-term resistance zone of 147.40/148.60 (coincides with the downward sloping 20 and 50-day moving averages).