It’s all about King Dollar overnight with Wall Street regaining its former highs while OPEC+ commitment on supply saw oil break out to new post-COVID highs as Euro and gold dove off a cliff. US Treasury yields made a new one month high as economic data was firmer than expected, initial jobless claims much lower than expected while factory orders surged. The BOE left its settings unchanged at its latest meeting with Pound Sterling doing the usual volatile round trip but remaining steady at the 1.36 handle.
Bitcoin had another solid gain during the afternoon session, pushing up but not through last week’s huge surge high above the $38K level, pulling back slightly with the potential for another go this evening. Watch very short term support at the $36K level however:
Looking at share markets in Asia from yesterday’s session where the Shanghai Composites was down nearly 1% going into the close, before bouncing back for only a 0.4% loss to finish just over the 3500 point barrier. Meanwhile in Hong Kong the Hang Seng Index finished 0.6% lower at 29113 points. This rebound is continuing to stall out with price not yet able to get above the high moving average on the daily chart and needs to make a solid new daily high to get going:
Japanese markets are doing exactly the same, with the Nikkei 225 taking back its previous gains to finish 1% lower at 28341 points. Daily ATR support at the 27500 point level remains very firm, and while yesterday’s selloff has dampened spirits somewhat, the much higher correlated USDJPY pair and futures are indicating a better finish to the week here today:
The ASX200 was the best off relatively speaking, down only 0.8% to finish at 6765 points. SPI futures however are up nearly 1% on the solid lead from Wall Street, but can it crack through resistance which is getting firmer at the 6800 point level and finish the week on a high note:
Only the FTSE tread water overnight as continental markets zoomed higher again after a short pause with the German DAX closing 0.9% higher to finally crack the 14000 point barrier. Price has been bouncing off daily ATR support level and now set to rejoin above the former highs in early January:
Wall Street was finally able to gain momentum last night with all three bourses bursting higher on the strong economic data, the S&P500 lifting over 1% to close at 3871 points. The four hourly chart shows the former January highs have been taken out after a brief mid week pause. BTFD crowd has done their stuff so its more upside from here:
Currency markets continue to firm for a much stronger USD position with only Pound Sterling able to stabilise post its BOE meeting volatility. Euro fell sharply right through the 1.20 handle in a big crowd short trade for a new monthly low as momentum remains very oversold. This could keep going:
The USDJPY breakout has re-engaged after a very brief stall, pushing decisively through the 105 handle overnight on the US data prints. The four hourly chart shows momentum crossing back up through high overbought levels as price remains completely above the high moving average with no slowdown in sight – which usually means a slowdown is coming soon:
The Australian dollar was unable to hold on to some meagre gains from yesterday afternoon and joined the strong USD train, forced back below the 76 handle and almost back to its recent lows. Every time chart is showing weakness building for the Aussie here:
Oil prices continued their breakout with Brent moving higher again on the OPEC news, almost breaking through the $59USD per barrel level, making another new daily high and well above the pre-COVID level trading range. There is a potential upside target here as high as $70 at the 2019 highs:
Gold was presaging a breakdown yesterday with its failure to make a new daily high and has been completely knifed here to fall below the $1800USD per ounce level. As I’ve been saying the daily chart has been broadcasting a potential breakdown here to the November lows, and here we are:
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!