See the latest Australian dollar analysis here:
Expectations of a more accomodative Federal Reserve later in the trading week kept Wall Street up at first overnight before late selling saw a mixed result. The latest durable goods orders disappointed to the downside, adding to the slight aversion to risk taking with the German IFO survey equally dampening spirits with a less than stellar result. In currency world, USD was largely unchanged overall but remains weak against Euro and Yen with bond markets also range trading without much effect. Commodity markets had more spunk, particularly iron ore and agricultural goods, with copper hitting a ten year high and gold lifting slightly.
Bitcoin is being Bitcoin with a big gapdown event to start the week that then turned into a 11% plus rally within 12 hours before “stabilising” at the $53K level this morning. It’s still under a lot of stress here with four hourly ATR resistance at closer to the $55K level not yet cleared so we could see another selloff today:
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Looking at share markets in Asia from yesterday’s session where Chinese markets took the biggest hits with the Shanghai Composite falling nearly 0.9% to 3441 points while the Hang Seng Index fell back 0.4% to close just below 29000 points. Futures are suggesting another staid open this morning with this market struggling to get out of its funk and unable to make any big move above 29000 points to at least return to the March highs. The technical pattern and positive daily momentum do point to a possible bottom here – the key neckline being the 29500 point ATR daily resistance level, but it better do it quickly:
Japanese markets finally found some life with the Nikkei 225 closing up nearly 0.4% higher at 29126 points. The daily chart shows futures suggesting a flat open as well given the continued big gains in Yen, as I remain very wary of the continued oscillation and muddled technical outlook. The next technical level below at the 28200 point level is not that far away, so I’m positioning for a proper break above the high moving average before getting excited:
The ASX200 had a mild selloff again, losing only 0.2% to finish above the 7000 point barrier at 7040 points. SPI futures are up only 6 points or so due to the mixed lead on Wall Street so we’re unlikely to see much excitement today although daily momentum remains nicely overbought and the Aussie dollar is not yet providing a headwind:
European markets had a very mild start to the trading week and while all bourses across the continent lifted, they were only modest rises with the German DAX up just 0.1% to finish at 15296 points. Sentiment remains nominally bullish but neutral so far with daily ATR support still firm at the 15000 point level as I remain cautious as momentum readings subside and do not yet indicate a re-entry position:
Wall Street had a nominally good session but it was quite spread out with the Dow losing 0.2% while the NASDAQ lifted nearly 1% and the broader S&P500 up just 0.2% to start the week back at the previous highs at 4187 points. Price is back on the recent highs after bouncing off tentative support at the 4100 point level with the daily chart poised here with momentum readings nicely overbought and ready for the next up-leg:
Currency markets are somewhat mixed with USD still in the weaker zone against most of its majors, although Euro pulled back on the weak IFO survey result after recently hitting a new weekly high above the 1.21 handle on Friday night. While the union currency is in a much stronger position to keep accelerating against King Dollar, I’m watching for overbought momentum to remain at these levels and not flat line as it did last trading week:
The USDJPY pair saw a little blip higher with a move slightly above the 108 handle as traders are positioning for today’s BOJ interest rate meeting. With daily ATR support still under stress alongside negative momentum readings and price action well below the March support levels, this still gives all the weight to the Yen bulls, but watch for a potential swing breakout here as the technical setup is complete:
The Australian dollar had a much better session overnight with a rapid acceleration back up to last week’s highs with a quick peekaboo above the 78 handle proper that was thwarted in the early hours this morning. This negates the bearish head and shoulders setup from last week as momentum gets nicely overbought but does not yet clear overhead resistance at the 78 level, so watch for any pullback below the high moving average:
Oil has been unable to join in the buying frenzy on other commodity markets with another tepid session again as Brent crude remained just above the $65USD per barrel level after a mid session selloff. As I noted previously, daily momentum was never overbought so this move above the $60-61 zone remains a relief rally and not a new trend. Watch for a potential bearish follow through below the low moving average:
Gold is still getting a little upside traction in the wake of a weaker USD with a meek finish just above the $1780USD per ounce level as it tries to get back above the psychologically important $1800 handle. While the longer term charts continue to signal a downside target at the 2019 pre-breakout highs around $1500, this could have more legs if the USD remains weak against the major currencies:
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!