Risk markets remained upbeat again overnight but with more modest sessions as the bounceback from the Fed’s seismic shift continues. Wall Street closed about 0.5% higher across the board while the bond market saw Treasury yields fall back as US existing home sales also declined while house prices continued to rise. The USD continued its mild falls in USD, while commodity prices were all over the place with oil steady, copper up over 1%, gold and silver slipping and iron ore zooming higher once again!
Bitcoin had yet another volatile selloff last night, cracking the $30K level in style before rebounding over 10% to be just above the $32K level this morning. This in the wake of China’s crackdown on miners which continue provide more headwinds but notably price has rebounded off previous weekly support, so watch for a potential lift higher above the four hourly high moving average level:
Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite finally found some life with a 0.8% surge higher to 3557 points, while the Hang Seng Index stood out by pulling back and closing more than 0.6% lower at 28309 points. Price action is still suggesting more downside as the moving average band continues to point down, but ATR daily support at just above the 28000 point level is just holding here for now:
Japanese stocks volatility continues to be epic with the Nikkei 225 closing over 3% higher to 28884 points. Daily futures are suggesting a very modest session today alongside Wall Street on the open as heavy resistance ahead at the 29000 point level will continue to weigh despite a weaker Yen:
Australian stocks rebounded in kind with the ASX200 able to take back most, but not all of the previous losses, closing 1.5% higher at 7342 points. SPI futures are down a handful of points despite the modest bounce on Wall Street overnight. Momentum readings are still positive with a possible bounce off trailing ATR support at 7150 points likely to hold the market in place for now:
European markets did not follow through as strongly as expected with mild lifts across the continent, with the German DAX gaining only 0.2% to 15636 points, still not enough to get back its Friday night falls. Daily ATR support remains firm at the 15300 point level, but notably resistance is very strong overhead at the 15700 point level so this looks more like containment rather than any new trend higher:
Wall Street was a little more ebullient with the NASDAQ again putting on 0.7% while the broader S&P500 lifted a solid 0.5% to get back all of its Friday losses and then some, finishing at 4246 points. Price action on the four hourly chart shows a classic bounce and fill that has now exceeded the intrasession high on Friday so this could well be a clear return to form as momentum in the short term switches back to the positive zone:
Currency markets are showing a little more USD weakness creeping in with Euro continuing its bounceback above the 1.19 handle overnight as the second stage of the swing reversal reveals itself. While another rollover is always possible, watch for any break above trailing four hourly ATR resistance above to define a new trend higher:
The USDJPY pair found heavy resistance at last week’s intrasession high just above the mid 110 level but did not selloff this morning, placing in a holding pattern instead for Japanese traders to mince on when Tokyo opens soon. Another confused chart that should be pointing to more upside but there is some point of control action going around the 110 handle here that could spark some more volatility so I’m wary of an upside position just yet:
The Australian dollar count find much life, with its meagre swing lift back above the 75 handle on classic oversold price action only just sticking above the mid 75 level overnight. This still keeps it well below the March lows and could have more downside if we don’t see another strong close above the high moving average on the four hourly chart today:
Oil prices were more modest too overnight with Brent crude remaining above the $74USD per barrel level. Price remains strongly supported in this uptrend, with a norminal retracement to be expected as price action was looking a little toppy on its way up to the 2018 high at $83:
Gold was the worst hit last week as the inflationary hedge failed miserably, and it still has the weakest comeback too, losing a few dollars to close at the $1778USD per ounce level overnight. As I asked last week, how far will this fall now that the Fed has rate hikes in sight? At a glance, the April lows at $1670 are not far away – watch for any close below the recent lows as a signal:
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!