Wall Street was on holiday last night but that could not stop the bulls with European stocks putting in a twelve month high as positive risk sentiment across the risk complex cannot be held back. The USD fell back slightly with some intrasession volatility across the majors while futures indicate that Treasury yields will rise again on resumption of trade tonight. Once again, new record highs in commodities with oil prices at a new 13 month high and copper at an eight year high, while gold remains depressed.
Bitcoin restarted the week with a gap above the $48K level before retracing nearly $3K and then filling that overnight to get back to just below its recent record high. In other words, a completely normal 24 hours! You can’t stop the music continues to chime here with support at the $44K firming again:
Looking at share markets in Asia from yesterday’s session where the Shanghai Composite and Hang Seng Index remain closed for Chinese NY holidays. Meanwhile Japanese markets were quite boisterous with the Nikkei 225 finishing more than 1.9% higher to finally get through the 30000 point level. Futures are looking for even more upside on the open today with daily ATR support continues to firm higher, but that trendline in recent weeks is not sustainable, so I expect a pullback soon:
The ASX200 shot nearly 1% higher, confirming its move out of its recent trading range to start the week well above the 6800 point level, closing at 6868 points. SPI futures are up nearly 20 points despite the lack of the usual lead from Wall Street, so it looks like a more substantial move out of this trading range could see it catch up to other equity markets:
European markets were very positive with the FTSE soaring more than 2% higher while the German DAX was the modest of the bunch, only lifting 0.4% to finish above the 14000 point level again at 14109 points. Price is trying to stabilise back above that level as it begins to slowly creep above the former highs in early January which had been firming as strong natural resistance – watch for a potential violent breakout soon:
Wall Street was unironically closed for President’s Day holiday but futures are indicating that the S&P500 wants to lift higher on the open tonight with the four hourly chart showing price inching higher to extend its breakout from late last week just above the 3900 point level:
Currency markets were largely unchanged again with intrasession volatility abating despite the latest EZ industrial production figures potentially spoiling the game. Euro was able to advance above the 1.21 handle to nearly match its Friday night highs as trailing ATR support on the four hourly chart remains firm at the 1.2080 level. Resistance at the 1.2150 level is still quite firm and lines up with previous weekly resistance so that’s the area to watch going forward:
The USDJPY pair was the standout by breaking through its previous resistance area at the 105 handle after building up to it late last week. Short term momentum has switched to positive on the four hourly chart, but this may have already gotten ahead of itself so watch for a potential minor pullback towards the 105.10 to 105.20 area:
The Australian dollar started the week on a bullish tone, with a weekend gap higher that almost saw it clear the 78 handle. My contention of a small pullback was wrong as we make new weekly and monthly highs, clearing the previous weekly highs above the 77.40 level as these levels of momentum do indicate a new trend higher:
Oil prices are putting in more upside with WTI and Brent crude up again, the latter pushing through the $63USD per barrel level overnight for a new daily and weekly high. My contention of an upside target at the $70USD per barrel at the 2019 highs remains intact, but this is starting to get overextended:
Gold continues to fail at igniting the risk spirits – although silver is holding on – with a weak start to the week, closing lower at the $1818USD per ounce level as it stumbles along. Momentum was slowly picking back up but short term resistance was too hard with the high moving average on the daily chart never closed above since early January – more downside ahead:
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)
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!