By Chris Becker
Risk is awnnn as some big US corporate heavyweights post great Q1 earnings and the buzz around Trump’s tax plan reaches fever pitch. The French election fervour is also being pushed aside as European stocks reach new highs and the USD rose against Yen providing a tailwind for Japanese stocks – alongside a probable still easy BOJ meeting today.
Yesterday in China, the Shanghai Composite put in a small uptick after its bad start to the week, finishing at 3134 points, still well below key support at 3200 points. My call for a sharp retracement back down to previous support at 3100 is holding here but it seems authorities don’t want further falls, and while we might see some intrasession action under that level, I expect it to hold on the close:
Japanese stocks are soaring as the Yen sells off swiftly before the BOJ meeting today. The Nikkei put in a solid session yesterday, finishing up 1% and back above key support at 19,000. Futures are pointing to a large open today as USD firmed against Yen in late overnight trade so we could be heading straight back up to resistance at the 19600 point level very quickly:
The ASX200 was closed yesterday. SPI futures are pushing for a follow through back above the low moving average on the daily chart to 5850 or so, as local traders catch up to the risk on mood:
On to Europe, where stocks were a little positive, but its getting a little overcooked on the continent all major bourses putting in scratch sessions. The German DAX is getting back to its upper trendline channel Another scratch cash session for the DAX is more positive on the futures which have surged above the 12000 point level with support firming:
US stocks continue their upward surge after breaking free on the gap up following the weekend risk on events, with the S&P500 almost getting above rolling ATR resistance on the daily chart and finishing up 0.6% last night. We’re now clearly into long only territory, with positions built on any pullback and/or going higher than the previous daily high back in March:
On to currencies, where the Euro continues to assert itself against the greenback, staying above the 1.09 handle with any retreats back to the high moving average on the four hourly chart bid back immediately. This is way overdone, so I’m watching for swing short opportunities here for very short term only:
Yen is going great – depending on your point of view – as the USDJPY surges back above the 111 handle in a get rounding bottom pattern evident on the four hourly and daily charts here. Where to though, since the price action is looking well overcooked as is momentum as it hits daily resistance at the 111.50 level:
The Aussie dollar is not joining in with the risk on crowd, possibly because of the day off yesterday, so we could see a bounce and respect of the 75 handle here this morning:
Oil prices continue to slip, with the WTI contract still well below its own low moving average level and the key psychological support level at $50USD per barrel here. While momentum remains negative there is some deceleration action in price action itself, so we could find a bottom here soon:
And to gold which is no longer holding on to its gains, flubbing below the $1300USD per ounce price target and heading to former resistance now support at $1255 where it needs to hold firm:
Glossary of Acronyms and Technical Analysis Terms:
ATR: Average True Range – measures the degree of price volatility averaged over a time period
ATR Support/Resistance: a ratcheting mechanism that follows price below/above a trend, that if breached shows above average volatility
CCI: Commodity Channel Index: a momentum reading that calculates current price away from the statistical mean or “typical” price to indicate overbought (far above the mean) or oversold (far below the mean)
Low/High Moving Average: rolling mean of prices in this case, the low and high for the day/hour which creates a band around the actual price movement
FOMC: Federal Open Market Committee, monthly meeting of Federal Reserve regarding monetary policy (setting interest rates)
BOJ/Abenomics: Bank of Japan, economic policy/direction enacted by PM Shinzo Abe
DOE: US Department of Energy
Uncle Point: or stop loss point, a level at which you’ve clearly been wrong on your position, so cry uncle and get out!