Another night of divergent fortunes as the triple witching month/quarter/FY end weighed on stocks markets with European markets selling off after Asian hesitation while Wall Street continued to rock higher into orbit, although tech stocks pulled back slightly into the close. The latest German unemployment figures came is as expected, while UK GDP slipped further. The USD rose against all the majors including Yen this time while gold found a little bit of buying support after recently making a new monthly low, as oil and other commodity prices also rose.
Bitcoin’s little breakout tapered again, falling back to the $35K level, unable to hold on to a new weekly high. Momentum is still a little neutral even after the recent pickup with overall price action still requiring 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 rebounded after the previous sharp move lower with a 0.5% bounce that almost took it back to the 3600 point level, while the Hang Seng Index sold off again, down by over 0.5% to 28827 points. Price action has reversed decisively here after the recent move above the moving average as resistance overhead at the previous weekly highs at the 29400 level continues to be too strong so watch for a return to daily ATR support at the 28100 point level:
Japanese stocks are still wavering with the Nikkei 225 putting in a scratch session to close at 28791 points. Daily futures continue to suggest a flat start as heavy resistance remains at the 29000 point level but a much weaker Yen overnight should provide somewhat of a tailwind but there’s still nothing actionable here yet:
Australian stocks remain unsettled due to COVID but the ASX200 put in some mild gains to finish 0.1% higher at 7313 points. SPI futures are down a few points with both price action and momentum readings still in a neutral positive setting although a bounce off trailing ATR support at 7150 points here is likely:
European markets immediately took back all of their previous gains with near 1% losses across the continent, the German DAX losing 1% to back where it started the week at 15532 points. Daily ATR support remains firm at the 15300 point level, but resistance at the 15700 point level remains equally strong so again, price action still looks fully contained for now:
Wall Street was able to finish the financial year with mild scratch sessions with the NASDAQ slipping slightly while the S&P500 gained 5 points to almost get to the magical 4300 point level, up 0.2% to another nominal record high. While this continues its breakout above the key resistance level at 4250 points, and you shouldn’t step in the way of record high bull markets, the inflation and acceleration is waning:
Currency markets continue to move out of the pre-NFP holding patterns as the USD gains strength against all of the majors, with Euro declining again to match its previous weekly lows at the mid 1.18 level. Momentum remains oversold and ripe for more downside before the US jobs report:
The USDJPY pair finally broke out of its recent deflationary decline, rebounding sharply off of four hourly ATR support just above the 110.20 level, breaking through the 111 handle overnight. This means a new weekly high as well, with the latest ADP employment report presaging a more robust NFP print tomorrow night so this is likely to hold:l
The Australian dollar was left alone in the main overnight after being pushed decisively into the low 75 level against USD, as it resists getting back to the previous weekly low. Momentum is slightly reverting here as price action wanes, so despite robust commodity price action, its unlikely the Pacific Peso will revert here before the upcoming NFP print on Friday night:
Oil prices are sitting still as the OPEC+ meeting gets underway with Brent crude remaining above the $74USD per barrel level overnight. Price remains strongly supported in this uptrend, with momentum nicely overbought and not too far overextended, but 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 although the previous selloff did find a modicum of support to push the shiny metal up to a rare new daily high overnight, finishing at the $1770USD per ounce level. The downside target at the April lows at $1670 are still 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!