The ECB meeting produced no surprises but continued the inflection on USD which 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 were looking to fall back well below the 1.5% level on the back of the latest US fiscal stimulus package but again spiked while commodities were all made major gains as oil bounced nearly 3% on both markers and copper and iron ore headed back to new highs. Wall Street bounced back with aplomb as the S&P500 hit a new record high.
Speaking of record highs, Bitcoin is now inching further towards the $60K level with a new high (solid black horizontal line was the previous high) – nothing going wrong here:
Looking at share markets in Asia from yesterday’s session where the Shanghai Composite put in a proper bullish session, up 2.3% to 3436 points while the Hang Seng Index finished 1.6% higher at 29385 points. The daily chart is still tracking lower with negative daily momentum but yesterday’s bullish engulfing candle could be pointing to a bottom here so watch for a follow through above the high moving average at the 29500 point level:
Japanese markets also found some lost steam with the Nikkei 225 closing 0.6% higher at 29211 points as it tries to get back on its uptrend. Futures are pointing to a slightly higher start this morning as the trendline from the December lows and the previous ATR trailing support level at 29000 remains key, negative momentum readings need to flip soon or there will be a follow through selloff:
The ASX200 is still suffering from a lack of confidence with a dead flat session, closing at 6714 points. SPI futures are up nearly 30 points or 0.5% again with the daily chart still very 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 somewhat bullish across the continent, although the FTSE continues along with minor scratch sessions as the German DAX continued its gains above previous resistance at the 14000 point level, closing 0.2% higher at 14569 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 was this time unified with the NASDAQ soaring ahead, up more than 2% while the S&P500 finished 1% higher at 3934 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 now beaten and new record highs around the corner – nothing like the fiscal and monetary stimulus one-two punch:
Currency markets remain in weak USD mode as the ECB didn’t change its tune overnight as the Euro lifted almost through the 1.20 handle as price action continues to firm to the upside. The recent selloff was overdone, and my call for a proper bullish breakout above trailing ATR resistance at the mid 1.19 level is here with the next upside target at last week support around the 1.2050 level:
The USDJPY pair looks to have finished its own mild pullback, having found resistance at the 109 handle, this deflation puts it just above ATR trailing support at the 108.20 level. This consolidation needs to be watched carefully here at support, watch for a violent breakout either side:
The Australian dollar continues its own comeback as commodity prices re-engaged, almost hitting the 78 handle on the back of continued USD weakness overnight. I said yesterday that a sustained breakout would require at a minimum a move above trailing ATR resistance at the 77.80 level and here we are – almost overbought and ready to tackle last week’s intrasession high:
Oil prices are coming back after a small consolidation with Brent crude jumping back above the $69USD per barrel level overnight. The 2019 highs at the $74 level still look good but this breather was much warranted so watch for a new session high to keep going:
Gold’s nascent bounceback has stalled out despite overall USD weakness with its move back above the $1700USD per ounce level not able to extend past the $1720USD per ounce overnight. 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!