US inflation data was slightly weaker than expected but this buoyed Wall Street – outside tech stocks – as the Fed’s expectations of more accomodation were met. The USD continued its minor pullback, extending losses against the major currencies with gold trying to stay above the $1700USD per ounce level. Ten year Treasury yields eventually fell back to the 1.5% level while commodities were mixed as oil continued its very minor retracement as copper and iron ore bounced.
Bitcoin is continuing its breakout to almost equal its previous record high just below the $57K level (upper black horizontal line):
Looking at share markets in Asia from yesterday’s session where the Shanghai Composite was up nearly 1% from the open, but managed to finish with a scratch session at 3357 points while the Hang Seng Index was pulling back, but managed a late surge to finish up 0.4% to 28907 points. The daily chart is still tracking lower with negative daily momentum still pointing to a possible return to the January lows at just above 28000 points, but no new session lows does suggest support building:
Japanese markets also put in scratch sessions with the Nikkei 225 closing only 0.1% higher at 29036 points. Futures are pointing to a slightly lower start this morning despite the better direction on Wall Street as the trendline from the December lows remains key, negative momentum readings need to flip soon or there will be a follow through selloff:
The ASX200 suffered from a lack of confidence via RBA Governor Lowe, finishing 0.8% lower at 6714 points. SPI futures are up nearly 30 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 but fails to gain traction:
European markets remained bullish across the continent, although the FTSE pulled back with a minor scratch session as the German DAX extended its gains above previous resistance at the 14000 point level, closing 0.7% higher at 14540 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 and the market makes new decade highs:
Wall Street again had various results with the headline DOW up over 1.4% while the NASDAQ had a scratch session, the S&P500 finished in the middle of the pack to be 0.6% higher at 3898 points. The four hourly chart shows the bounce off the lower trend channel has been fulfilled to push above resistance at the 3860 point level with the 3900 point psychological level the key one to beat:
Currency markets kept selling off USD in the wake of the lower than expected but still firm inflation print overnight with the Euro lifting through the 1.19 handle as price action is pointing to a possible bottom. The recent selloff was overdone, but I’m watching for a proper bullish breakout above trailing ATR resistance at the mid 1.19 level:
The USDJPY pair continued its own mild pullback, having found resistance at the 109 handle its has deflated nicely to remain 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 again but this time was not thwarted by a drop in commodity prices, breaking above the 77 handle 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 finishing just above the $68USD per barrel level overnight. The 2019 highs at the $74 level still look good but this breather is much warranted and required – and possibly over already before even going as low as trailing ATR daily support at the $63 level before re-engaging:
Gold’s nascent bounceback continues with its move back above the $1700USD per ounce level extending to $1726USD per ounce overnight on the CPI print. This could be good news for gold bugs, but I still consider this a short term short covering move up to former support, now strong resistance at the $1770 level, 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!