An inability to find confidence hindered risk markets overnight, with only commodities putting on gains with European and US stocks pulling back after what was a solid finish on Friday night. A lack of economic catalysts and concerns over Middle East tensions may be the underlying cause, but some dovish comments from both BOE and Fed officials hampered expectations of the post-COVID “boom” return to normalcy. Gold continues to advance, up more than 1% while oil prices restabilised and lifted nearly 2%.
The crypto world is still facing massive change with Bitcoin continuing its post Musk pump and dump, now hitting the $43K level although the four hourly chart is quietly forming a tentative bottom if it stop making new session lows:
Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite continued its bounceback, lifting 0.7% to push above the 3500 point barrier, while the Hang Seng Index also went higher, up 0.6% to 28194 points. A nice bounce off of the March lows (solid black line) could have more legs here but requires a solid break above the high moving average at the 28400 point level before considering a swing trade:
Beleaguered Japanese stocks still can’t find some momentum, with the Nikkei 225 closing 0.9% lower at 27824 points. The daily futures are looking troublesome here given the lack of any lead on Wall Street overnight, with a deep hole to get out of. I’m watching for another capitulation here below the 27400 point level:
The ASX200 was looking to put in a solid session to start the week but has barely moved, lifting only 0.1% to remain just above the 7000 point support level at 7023 points. SPI futures are up a handful of points so we should see some upside, especially given the return to form for iron ore and other commodities. However, the daily chart and price action are suggesting a possible topping action here if the 7100 point barrier is not breached soon:
European markets were quite mixed across the continent, with only a peripheral market or two putting on any gains as hesitation ruled. The German DAX fell back 20 points or 0.1% to the 15396 point level. The psychologically important 15000 point level remains supported despite some big intrasession volatility last week, but sentiment is oscillating too wildly here before putting on larger market positions, so I’m still looking for a proper breakout above the early April high:
Wall Street stumbled a little further than European stocks with the NASDAQ still leading the way, down over 0.3% while the broader S&P500 fell back 0.2% to start the week at 4163 points. The four hourly chart shows a lot of hesitation at the mid point of last weeks trend channel, despite getting out of the danger zone as price action is now back above the mid April support and daily ATR support levels. I’m looking for the low moving average to be supported here at the 4140 point level in the short term:
Currency markets are still pushing USD slightly lower but it was a case of steady as she goes on Euro overnight due to the lack of economic events on the calendar. The union currency remains just above the mid 1.21 level but notably just below last week’s highs, so while momentum has switched back to slightly positive readings, resistance at the 1.2160 to 1.2180 may prove too tough to beat:
The USDJPY pair continues to wane with strong Yen buying seeing it pushed back down towards the 109 handle. Four hourly momentum remains nominally positive but for now this is just a reversion to mean trade in the short term without much potential:
The Australian dollar is trying to get out of its depressed state and despite some big runs on commodity prices overnight, is failing to find buyers here and remains stuck at the 77.70 level. Very short term it is setting up for a breakout here with price hovering around the high moving average, but real resistance overhead at the 78 handle might thwart anything in the medium term:
Oil prices are now properly stabilizing and moving higher in the wake of the growing unrest in the Middle East with Brent crude pushing more than 1% higher to be well above the $69USD per barrel level overnight. Daily momentum has now pushed into the properly overbought mode to confirm this as a comeback, with price action making a new weekly high:
Gold is no longer restrained by a strong USD with Friday nights session setting a new weekly and monthly high and thus opening the floodgates for buyers to step in, pushing strongly up through the $1860USD per ounce level overnight. This advance above the psychologically important $1800USD per ounce level now has a lot of legs to continue up to the November 2020 highs at the $1960 level:
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!