Last night saw a clear divergence in risk taking with the all-in crowd heading back to US tech stocks with the S&P500 also putting in a nominal new record high as European stocks sold off sharply. Risk markets are waiting for tonight’s OPEC+ meeting with oil prices retracing 2% in anticipation while Treasury yields fell, taking back their Friday gains as currencies were largely unchanged as they await Friday night’s NFP print.
Bitcoin was able to gap higher over the weekend trade and get back to last week’s intrasession high just below the $35K level but remains there this morning without making a new high. While momentum is picking up, this requires a substantial breakout in the short term to overturn the medium to long term downtrend:
Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite went nowhere, losing a single point to remain just above the 3600 point level while the Hang Seng Index eventually opened after a storm scare earlier in the session to also finish dead flat. Price action has broken out decisively here above the moving average band after bouncing off ATR daily support at the 28000 point level. The target to watch here is the previous weekly highs at the 29400 level that if broken will signal a big new trend:
Japanese stocks also faced headwinds with the the Nikkei 225 closing a few points lower due to a stronger Yen at 29048 points. Daily futures continue to suggest a flat start as heavy resistance remains at the 29000 point level and a slightly stronger Yen continues to weigh:
Australian stocks were very unsettled due to widening COVID restrictions with the ASX200 about to put in a scratch session just above 7300 points. SPI futures are down nearly 20 points despite the new highs on Wall Street with momentum readings in a neutral positive setting with a possible bounce off trailing ATR support at 7150 points fading if we get another daily low finish:
European markets remain stuck with a general selloff overnight following last week’s turbulence with the German DAX the best across the continent, only losing 0.3% to 15554 points. Daily ATR support remains firm at the 15300 point level, but resistance at the 15700 point level remains equally strong so this looks fully contained for now:
Wall Street was all over the place with the headline Dow off nearly 0.5% while the NASDAQ put in big session lifting 1% as the broader S&P500 gained 0.2% to 4290 points, to another record high as it continued its breakout above the key resistance level at 4250 points. Price action on the daily chart is ready for more highs despite other risk markets in a holding pattern or even in decline:
Currency markets remain in a holding pattern with USD again unable to assert itself against any of the majors from their current path, as Euro declines slightly to remain just above the 1.19 handle overnight. 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 the 111 handle with last week’s mid-session turnaround still in play as a stronger Yen deflates it back to four hourly ATR support just above the 110.20 level. This does not yet make a new four hourly session low so it still looks somewhat supported in the short term, although momentum has now declined into the negative zone:
The Australian dollar was unable to make a good start to the week to follow through on last week’s small uptrend, deflating back to the four hourly ATR support level just above the mid 75 handle as of this morning. Momentum and price action is still pointing to more downside if we don’t see another strong close above the high moving average on the four hourly chart soon:
Oil prices had a sudden inversion overnight in anticipation of no action from the OPEC+ meeting later tonight with both WTI and Brent crude off more than 2%, the latter pushed down to the $74USD per barrel level. While price has been strongly supported in this uptrend, with momentum nicely overbought and not too far overextended, the 2018 high at $83 maybe too far a bridge to make it:
Gold remains in the doldrums not moving at all overnight to remain at the $1778USD per ounce level. Turn this daily chart upside down and you’d be very bullish as tight daily sessions continue to bunch up around the $1760-1780 level with no new daily highs. The downside target at 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!