Equities were aligned finally last night as US tech stocks rebounded sharply as the USD finally reversed direction after making new highs against almost every undollar asset out there in the wake of the bond market implosion. Ten year Treasury yields fell back as well, pushing back towards the 1.5% level while commodities came off the boil slightly with oil retracing 1%, copper down 2% while gold bounced 2% higher on the back of the USD reprieve to get back above below the $1700USD per ounce level.
Bitcoin is continuing its breakout above the $52K level that failed last week, heading above the $54K overnight where its taking a pause before the probable next leg higher:
Looking at share markets in Asia from yesterday’s session where the Shanghai Composite accelerated its falls going into the close, finishing 1.8% lower at 3359 points while the Hang Seng Index closed up 0.8% to 28773 points. The daily chart is still tracking lower as this series of new daily lows and negative daily momentum still points to a possible return to the January lows at just above 28000 points, but there is support building there as evidenced by no new session lows:
Japanese markets are re-surging however with the Nikkei 225 closing 1% higher at 29027 points to get back on its uptrend. Futures are pointing to a slightly higher start this morning given the better direction on Wall Street. This trendline is key and while only a nominal break with some intrasession buying support, negative momentum readings need to flip soon or there will be a follow through selloff:
The ASX200 was lagging behind the crowd again, finishing 0.4% higher at 6771 points. SPI futures are up nearly 20 points with the daily chart remaining messy here as the market again tries to push through heavy resistance at or around the 6900 point level:
European markets remained bullish but with more modest sessions as the German DAX moving 0.4% higher to extend its gains above previous resistance at the 14000 point level, closing at 14437 points. Momentum remains off the charts so its questionable if this move is sustainable, but there’s not many short positions out there given this pattern has come to fruition:
The NASDAQ had a massive fill, lifting more than 3.5% to get back above 13000 points while the S&P500 finished 1.4% higher at 3875 points. The four hourly chart shows the bounce off the lower trend channel has been fulfilled to pushed above resistance at the 3860 point level at the upper end of the channel, with the 3900 key psychological level the next one to beat:
Currency markets remain volatile in the wake of a very strong USD but a reversal overnight has seen the Euro lift up towards but not through the 1.19 handle in a possible bottoming action. The overall move remains overdone, but is likely not finished, I’m watching for a proper bullish breakout above 1.19 and then trailing ATR resistance above:
Due to the USD reversal, the USDJPY pair pulled back from its way overdone move, having found resistance at the 109 handle its now deflated to hover just above ATR trailing support at the 108.20 level. As I’ve been saying previously, any warnings about overdone price action and momentum were not proof that this is over yet but consolidation needs to be watched carefully here at support:
The Australian dollar came back slightly but was thwarted by a drop in commodity prices, getting slightly above the 77 handle this morning after finding a modicum of support or a possible bottoming action at the 76.50 mid level. This could be the first stage in a comeback but would require at minimum a move above trailing ATR resistance at the 77.80 level:
Oil prices are again pulling back after going way too high on Friday night with Brent crude losing 1% to sit just above the $67USD per barrel level overnight. The 2019 highs at the $74 level still look good but this breather is much warranted and required, possibly going as low as trailing ATR daily support at the $63 level before re-engaging:
Gold bounced over 2% to get back above the $1700USD per ounce level in what maybe a short term reprieve. As I’ve been warning, while momentum remains considerably oversold there is no likely upside potential here save a very short term short covering move, with the longer term chart is more illustrative of where this can go (aka the 2019 pre-breakout highs around $1500):
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!