After Asian stocks sold off yesterday, last night saw more drifting and hesitation from European and American markets, although the S&P500 did briefly put in a nominal new record high. The USD rose against all the majors except Yen, with gold making a new monthly low, while commodity prices were mixed with iron ore losing ground alongside copper as oil lifted slightly as the OPEC+ meeting gets underway
Bitcoin has turned its gap higher over the weekend trade into a little breakout overnight, breaking through the $36K level to make a new weekly high. Momentum is picking up strongly now, but overall price action 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 fell sharply going into the close, down 0.9% to 3573 points, while the Hang Seng Index was off by nearly 0.9% to close just below 29000 points. Price action had broken out decisively here above the moving average band but again resistance overhead at the previous weekly highs at the 29400 level is proving to strong so far so this could turn into another trend reversal:
Japanese stocks also fell with the Nikkei 225 down 0.8% to close at 28812 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 – nothing to do here yet:
Australian stocks remained unsettled due to widening COVID lockdowns but the ASX200 put in another scratch session just above 7300 points. SPI futures are more bullish, up nearly 40 points or 0.5% with momentum readings still in a neutral positive setting with a possible bounce off trailing ATR support at 7150 points here building:
European markets got out of their stuck phase with a slight bounceback with the German DAX again doing the best across the continent, lifting 0.8% to 15690 points. Daily ATR support remains firm at the 15300 point level, but resistance at the 15700 point level remains equally strong so this still looks fully contained for now until a substantial breakout:
Wall Street was initially following along with European bourses but the three markets all put in scratch sessions at the end of the day, with the broader S&P500 gaining just one point to 4291 points, to another record high. This continues its breakout above the key resistance level at 4250 points and while price action on the daily chart is ready for more highs this is a very slow uptick:
Currency markets are moving out of their holding patterns as the USD gains strength against most of the majors, with Euro declining fast overnight to finally break below the 1.19 handle. This could turn into a further rollover as price approaches the previous weekly lows but momentum is oversold yet reverting:
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 hit hardest to be pushed decisively into the low 75 level against USD, almost hitting the previous weekly low. Momentum and price action had been pointing to more downside here with further falls possible although extreme oversold levels could revert here slightly before the upcoming NFP print on Friday night:
Oil prices are firming slightly as the OPEC+ meeting gets underway with Brent crude bouncing off 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 through this meeting – watch for high volatility here:
Gold remains in the doldrums with a sharp move down overnight that was almost filled but failed to stave off a new daily low, finishing at the $1761USD per ounce level. The downside target at the April lows at $1670 are not far away – watch for any close below the recent lows as a signal for more selling:
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!