Another US jobs report – the April non-farm payrolls or NFP – came and went on Friday night with Wall Street zooming higher on the very poor showing as the headline number came in way lower than expected, indicating that the Federal Reserve has some time yet before thinking of pulling the interest rate lever. As a result the USD was pushed significantly lower against most of the major currencies while commodities were mixed although gold surged onwards past the $1800USD per ounce level. Higher domestic currencies could prove a headwind for Asian stocks on the open here on Monday despite the positive mood on Wall Street with futures indicating some flat opens.
Bitcoin is slowly melting higher with a weekly close above the $57K level but is still shy of trailing ATR resistance as seen on the daily chart below as it wants to get back to the $60K level, but daily momentum remains neutral at best:
Looking at share markets in Asia from Friday’s session, where the Shanghai Composite was in front and looked like finishing the week up but sold off fast in the afternoon session, closing down 0.6% to 3418 points, while the Hang Seng Index made no headway at all, finishing at 28610 points. While daily momentum is no longer stuck in the oversold zone, price action remains neutral and below considerably daily resistance at 29000 points which will be the point to watch this week:
Japanese stocks are seeing a similar wait and see attitude, with the Nikkei 225 closing nearly unchanged at 29357 points. This doesn’t build on its returning mid week trading session although futures show more potential upside despite a big rise in Yen due to the NFP on Friday night. I’m looking for another positive session here before confirming this outbreak with the upside target at the 30000 point level:
The ASX200 on the other hand had a solid finish to the week, closing up 0.3% to 7080 points as it extends its gains above the 7000 point barrier. The daily chart still shows momentum slightly below the previous overbought levels but price remains in an obvious bullish mood higher higher. SPI futures are down 4 points despite the solid run on Wall Street so we could see a mixedstart the trading week on the open here:
European markets all surged forward after their previous mid week modest sessions with the German DAX advancing over 1.3% to close well above the 15000 point level at 15399 points. Sentiment and momentum is trying to get back into the overbought mode after the recent break down below daily ATR trailing support, and Friday night’s close should provide the confidence to advance past the previous high at the 15500 point level, although a surging Euro may not help here:
Wall Street loved the bad jobs news and saw a concerted strong gain across the board with the S&P500 finishing 0.7% higher to a new record high at the 4234 point level. The daily chart is now getting back in the overbought mode having bounced off considerable support at the 4100 point level so watch for a further follow through as this bubble inflates higher:
Currency markets got what they wanted with a big selloff in USD following the NFP as Pound Sterling broke out of its recent funk while Euro zoomed through the 1.21 handle and made a new weekly higher. After recently breaking out above trailing ATR resistance at the 1.2060 level, this catalyst saw another 100 pips added and is looking done already, but don’t be surprised for more upside here as the weekly stops are taken out :
The USDJPY pair was pushed lower as a result, breaking below both the 109 handle and four hourly ATR support but the falls were relatively smaller compared to other currencies. The bullish chart picture that has been building for two weeks now has been completely negated as the lack of buying support above the 109.40 level was more than evident before the NFP print:
The Australian dollar broke out to a new high, almost hitting the 78.50 level in the process as it tries to get back to the 2021 nominal high at the 80 handle proper. The slow buildup during the week has paid off for Aussie bulls and could see them extend further gains but overbought momentum is suggesting a minor pullback on the open on Monday:
Oil prices failed to continue their rebound with yet another minor reversion on Friday night as Brent crude remained just above the $68USD per barrel level. The previous price move almost took out resistance overhead at the former highs which I’ve been saying is the real level to watch out for, with daily momentum requiring another kick into the properly overbought stage before engaging again:
Gold was able to advance on its recent breakout above the psychologically important $1800USD per ounce level lifting another $15 or so to finish the week at the $1830 level. The signs were all there with daily momentum in a nominal overbought mode and price bunched up at the previous resistance level with no new lows, as I said last week, we now watch for everyone to rush in and start a new trend here with the inevitable pullbacks on overbought momentum to catchout the too eager:
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!