Good economic and political news overnight pushed stock markets higher as we near the end of the trading week and the triple witching month/quarter/year. Wall Street made new highs on the back of a new infrastructure bill and better than expected durable goods order report, lifting European bourses along the way as the German IFO survey was also much better than expected. Treasury yields were largely unchanged alongside currencies while commodity prices were mixed yet again as oil made another new high for the year while copper gold and iron ore all fell back.
Bitcoin is trying hard to escape the clutches of the doomsayers with a crack higher above trailing ATR support on the four hourly chart at the $34K level that could have legs here after rebounding 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 was dead flat at 3566 points, while the Hang Seng Index lifted slightly, finishing 0.2% higher at 28882 points. Price action is no longer suggesting more downside as price breaks out above the moving average band and ATR daily support at the 28000 point level holding fast with a potential return to the previous resistance level at 29500 points on a follow through:
Japanese stock volatility has completely disappeared with yet another scratch session on the Nikkei 225, closing at 28875 points. Daily futures are suggesting an uplift to finish the week, helped along by Wall Street although heavy resistance ahead at the 29000 point level will continue to weigh despite a weaker Yen:
Australian stocks continued to pullback due to further COVID restrictions with the ASX200 falling back another 0.3% to 7275 points. SPI futures are up nearly 50 points or 0.7% so maybe Wall Street can pull this out of its funk. Momentum readings are declining but still in the positive zone with a possible bounce off trailing ATR support at 7150 points likely to hold the market in place for now:
European markets are poised here after some mid week turbulence with some solid gains on the back of the German IFO survey holding things in place, with the German DAX gaining 0.8% to 15589 points, almost taking back its previous 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 is picking up the pace again into the bullish zone with the NASDAQ again putting on 0.7% while the broader S&P500 lifted a solid 0.5% to surpass its previous highs and breakout above the key resistance level a 4250 points. Price action on the four hourly chart shows a classic bounce and fill that is now nicely overbought and ready for more highs:
Currency markets are in a holding pattern with USD unable to break any of the majors from their current path, as Euro holds on just the 1.19 handle overnight as the second stage of the swing reversal peters out. 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 continues to find 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 as well. 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 still can’t find much life, with its swing lift back above the 75 handle on classic oversold price action continuing to stall out at overhead ATR resistance on the four hourly chart. 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 soon:
Oil prices were again able to push just a little higher overnight with Brent crude now getting back above the $75USD per barrel level. Price remains strongly supported in this uptrend, with momentum nicely overbought and not over extended as yet, with the 2018 high at $83 still on target:
Gold remains in the doldrums after being the worst hit last week as the inflationary hedge failed miserably, and remains with the weakest comeback too, losing a few dollars to close at the $1774USD 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!