After a very solid start to the trading week, Wall Street stumbled overnight yet again on more FedTaper talk as officials were unable to allay fears about”transitory” inflation. Despite strong house price results, the USD and Treasury yields pulled back again in unison, while European markets largely tread water which should translate into tepid sessions here in Asia. Commodity prices were mixed with oil and copper largely unchanged, but gold almost broke through the $1900USD per ounce barrier.
Bitcoin and other crypto’s are flat lining with the former unable to get back above the $40K level as volatility reduced overnight, leaving it just shy of the $38K level. Technically, it still needs to clear the $42K level from the intrasession high on Friday before calling this a bottom, but daily and four hourly momentum remains negative:
Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite was the strongest, closing more than 2.4% higher at 3584 points while the Hang Seng Index eventually played catch up after being down mid session, finishing 1.7% higher at 28910 points. The daily chart continues to position itself here for a bounce off the March lows with resistance overhead at the 29000 point level not that far away now, but still proving a little too hard to clear, although yesterday’s price action could prove enough to get momentum moving:
Japanese stocks are also putting on solid gains with the Nikkei 225 closing 0.6% higher to 28553 points. Daily futures are looking a little flat given the moves on Wall Street and Yen overnight with more hesitation and lack of direction. I still contend this mild move higher remains a swing long short term play only as the medium term pattern points to a capitulation here below the 27400 point level:
The ASX200 nearly put on a perfect 1% up day, finishing above the 7100 point level to close at 7115 points. SPI futures however are poised to taken back at least a third or more of those gains wtih a 30 point slump expected at the open, so that 7100 point level could prove to be only a transitory move higher as the rounding top bearish pattern is still forming on the daily chart:
European markets were all over the place with peripheral bourses pulling back while the German DAX returned from its holiday to lift higher , but only putting on 0.2% to finish at 15465 points. Sentiment is still slowly moving to a more bullish phase but actual price action has yet to confirm this breakout through overhead resistance and the previous April high:
Wall Street was unable to make its return to form stick last night with minor scratch sessions across the board, the NASDAQ unchanged while the S&P500 rolled over late in the session to finish 0.3% lower at just below the 4200 point barrier. Price action on the four hourly chart shows an inability to clear that 4200 level with momentum waning and getting back below overbought readings. I’m still waiting for a return to the early May highs:
Currency markets were not that moved around by Fed taper talk nor the mixed consumer confidence figures with USD pulling back only lightly against the majors although Euro was able to push above the 1.2250 mid level overnight, breaching resistance at the 1.2240 level but still looking contained. This is nominally a bullish move but there’s a lot of intrasession selling on the four hourly candles showing another line of resistance above, so I’m watching that resistance level closely if it can turn into proper support going forward:
The USDJPY pair tried to get out of its selloff phase with another small bounce up toward the 109 handle but was thwarted yet again, pushed down below former ATR support at the 108.70 level where it finished this morning. Considerable resistance at the 109.20 level remains key with momentum readings still well into the negative side so watch for more downside:
The Australian dollar can’t find much momentum either despite the lower overall USD with no real move overnight. Resistance has continued to build here, pushing ever lower – first at the 78.20 area, and then at 77.80 even as commodity prices continue to lift. As I said in my notes last week, I’m watching for a return to last week’s low and for a potential capitulation below the 77 cent level proper:
Oil prices rose only slightly overnight in the wake of Iranian production talks with Brent crude hovering just above the $68USD per barrel level. The current price action remains a bit confused, but not yet fully bearish as price is able to get back above the $67 support level but it needs to clear $69 or $70 very soon so watch daily momentum readings for signs of an inversion:
After slowing down following a very steady run above the $1800USD per ounce level, gold surged overnight to almost close above the $1900USD per ounce level, fulfilling this target stage of its new uptrend. The next level to reach are the November 2020 highs at the $1960 level, with a clear uncle point at the low moving average to continue to add to positions, but watch for any pullback on profit taking:
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!