A new trading month brings more risk taking with both European and US shares lifting across the board with the S&P500 putting in a new record high and traders expecting a solid jobs report from the NFP later tonight. While the latest ISM manufacturing slipped slightly it was very robust with initial weekly jobless claims coming in lower than expected.
Bitcoin continues to taper, falling back to below the $34K level, ready to make a new low for the week. Momentum is getting into oversold territory and price action looks like setting up for a proper breakdown back to sub $30K lows:
Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite regained its early morning losses to be square at the close at 3595 points, while the Hang Seng Index was closed yesterday. On the open today, price action is likely to continue below the low moving average for a possible return to daily ATR support at the 28100 point level:
Japanese stocks were still weak despite a weaker Yen with the Nikkei 225 losing 0.3% to close at 28707 points. Daily futures continue to suggest a flat start as heavy resistance remains at the 29000 point level even though a much weaker Yen is not providing any sort of support:
Australian stocks moved from unsettled to concerned due to the widening COVID crisis with the ASX200 losing nearly 0.7% to close below the 7300 point level at 7265 points. SPI futures are up 25 points with both price action and momentum readings in a neutral positive setting but a bounce off trailing ATR support at 7150 points is still possible:
European markets are in whipsaw mode yet again, with another bounceback across the continent, with the German DAX lifting 0.5% to take back half of its previous session losses at 15603 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 contained:
Wall Street starts the new month/quarter/year with a solid finish across the board with the S&P500 gaining another 22 points or 0.5% to finally push above the magical 4300 point level for a new record high. Momentum has picked up again so this trend is more and more supported as there are no more sellers available:
Currency markets continue to move out of the pre-NFP holding patterns with USD strength still holding against all of the majors, with Euro having a very brief lift higher until retracing in full to be below the previous weekly lows at the low 1.18 level. Momentum remains oversold and ripe for more downside before the US jobs report:
The USDJPY pair continued its breakout overnight with a move to the mid 111 level. Notably short term momentum and price action is indicating some exhaustion here so watch for a possible reversion below the high moving average to watch out for going into tonight’s jobs reports:
The Australian dollar was again pushed lower against USD, this time breaking the previous weekly low and remaining well below the 75 handle. Momentum remains oversold as we go into tonight’s NFP print but there is the possibility of this reverting violently higher if the print doesn’t come out as expected:
Oil prices are still seeing some overheard resistance as the OPEC+ meeting gets underway with Brent crude trying to breakout above the $76USD per barrel level but pulled back to the recent daily highs. 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 with a very small bounce overnight to finish at the $1776USD per ounce level staving off any further lows. 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!