MI2 TD Chart Point: Reality Bites

Comment 

As we have discussed, the US market and economy have been locked in a reflexive cycle, which, while seemingly self-perpetuating, was inherently vulnerable. The only question was what, if anything, could upend these dynamics. One possible catalyst was the Trump Administration’s policies in terms of tariffs and immigration, which were fundamentally not business friendly.  Fast forward to this weekend’s headlines, and investors may be waking up to this hard reality (“The Three Stages of a Trump Presidency” 8^th Nov).  Add in DeepSeek, which raises questions regarding the profitability of the AI trade, and the odds of a significant risk-off event are building (“Bursting the AI Bubble” 10^th Sept).  This is against the technical setup in US stocks, which are extended and show clear signs of exhaustion (“MI2 TD Chart Point: Next Week Decisive” 24^th Jan). Hence, as you are all busy, we simply want to highlight levels and price action across major markets to watch for signs of a material change. 

S&P 500: Last week, we cautioned about the bearish pressures mounting with a TD 13 Sell signal from 24^th January still influencing market dynamics. The index’s recent encounter with resistance at 6118 halted upward momentum, as anticipated. This week, the focus shifts to the critical level of 6067.70. A close below this on Monday could provide the price flip bears are seeking, solidifying the bearish outlook. 

Resistance Levels: 

• 6118 – Last week’s resistance, confirming the TD reference level. 

• 6167 – TD risk level, a breach here could intensify bearish momentum. 

• 6409 – Long-term TD reference, marking a significant barrier. 

Support Levels: 

• 5990 – TD Prop level, immediate support. 

• 5887 – TDST support, a crucial defensive point. 

• 5286 – TD Prop exhaustion, a potential target in a deeper bearish scenario. 

 
CCMP: Last week, we noted that “Bulls were in control.” However, a bearish price flip last Monday marked a turn in market sentiment, favouring the bears. The ensuing rally hit a significant roadblock at 19955, a critical resistance point that halted upward momentum. As we look to the next session, our focus is on the 19733 level. Closing below this would maintain the inactive TD 13 Sell from 6^th January, signalling a shift to a neutral stance. This highlights the market’s current instability and the balance between bullish recovery efforts and bearish pressures. Traders should stay alert, as a sustained move under this threshold could indicate further declines. 

Resistance Above: 

• 19955 – Major hurdle where this week’s rally stumbled. 

• 20173 – Key level for shorts, significant for future bullish efforts. 

Support Beneath: 

• 19733 – Critical watch point for confirming bearish trends. 

• 19341 – Initial support level. 

• 18714 – Further support, key if momentum continues downward. 

 
EURUSD: Up until 27^th January, EUR/USD exhibited strong bullish momentum, reaching a high of 1.05146, with “Bulls in Control.” However, this bullish phase was short-lived as market sentiment shifted abruptly with a bearish price flip on 30^th January, signalling a significant reversal from the earlier gains and suggesting potential further weakness ahead. 

Resistance Above: 

• 1.0278 – Initial resistance level where minor pullbacks could occur. 

• 1.0430 – Mid-point resistance that could challenge any short-term bullish recovery. 

• 1.0527 – High resistance near the recent peak, critical for assessing the strength of any upward movements. 

Support Beneath: 

• 1.0077 – Key support level; a breach here could indicate a substantial downturn. 

• 0.9974 – Lower support level; falling below this could signal deeper potential falls. 

 
The 10-year US Treasury: Yields have pulled back but found solid support at 4.5219/4.5163. Currently positioned at TD 12 of 13, the market is set up for a potential rebound. Traders should watch key resistance levels to determine the strength of this move. 

Resistance Above: 

• 4.6214 – TD reference level, the first key test for upward momentum. 

• 4.7800 – TD prop level, marking a significant resistance zone. 

Support Beneath: 

• 4.5219/4.5163 – Solid support levels that have held firm, reinforcing the potential for a rebound. 

Gold-GCA Update: Last week, we highlighted the gold market’s strength, stating, “Bulls firmly in control.” This sentiment continues to hold true this week, with Gold-GCA demonstrating sustained bullish dominance. The metal, currently trading at 2831, is operating under a TD Sequential 8 of 13, indicating strong upward momentum. This ongoing bullish control reflects robust market confidence as prices push towards higher resistance levels. Traders should closely monitor these developments for potential further advancements or signs of retraction towards the outlined support levels. 

Resistance Above: 

• 2843/2846 – Immediate resistance levels. 

• 2931 – Next significant resistance threshold. 

Support Beneath: 

• 2797 – Current support level. 

• 2766 – TD reference support. 

• 2700 – TD prop exhaustion, potential low if a pullback occurs. 

USDJPY Market Update: The yen remains in an uptrend, with USDJPY currently at TD 8 of 13, signalling further upside potential. Despite the recent pullback, the trend remains intact, with key targets at 156.28, 159.62, and 163.94. This presents a potential buying opportunity for traders looking to position for continued strength. 

Resistance Above: 

• 156.28 – First upside target. 

• 159.62 – Mid-level resistance in the current uptrend. 

• 163.94 – Long-term resistance, marking a key bullish extension. 

Support Beneath: 

• 154.29 – Initial support, critical for maintaining near-term strength. 

• 153.28 – TD prop level, deeper support on any extended pullback. 

• 149.37 – TDST support, a break here would signal a more significant reversal.