A new non-farm payroll (NFP) unemployment print in the US has reset the tone for US stocks at least with a good headline but mixed internal report equating to an unlikely early taper by the Federal Reserve. This embiggened traders on Wall street to push the S&P500 to a new record high but other stock markets are less sanguine. The USD retraced against the majors with oversold Aussie dollar bouncing back as did Yen, both of which should provide headwinds for Asian stock markets on the open, as Chinese bourse also remain in near freefall.
Bitcoin has steadied somewhat in recent days, finding a modicum of support at the $32K level before weekend trade saw it gap higher to almost break the $36K level this morning. This could be the start of a rebound with the previous falling wedge pattern presaging but quickly reigning in such a move, so watch for a proper breakout above the trailing ATR resistance level at $40K:
Looking at share markets in Asia from Friday’s session, where the Shanghai Composite sold off sharply, down nearly 2% to close at 3518 points while the Hang Seng Index reopened and followed a similar path, down 1.8% to 28310 points. This week could see a breakdown below daily ATR support at the 28100 point level that could overshoot to the May lows:
Japanese stocks finally found some life helped by a weaker Yen with the Nikkei 225 gaining 0.3% to be at 28783 points. Daily futures continue to suggest a flat session as heavy resistance remains at the 29000 point level with a stronger Yen on Friday night not helping here:
Australian stocks have moved out of their unsettled state as the lockdowns start to reduce across the country with the ASX200 up nearly 0.5% to almost break the 7300 point level. SPI futures are flat as it looks like an unsettled start to the week with a slightly stronger Australian dollar possibly weighing on sentiment locally as traders await the RBA response tomorrow. Momentum readings remain a neutral positive setting but a bounce off trailing ATR support at 7150 points is still possible:
European markets were in wait and see mode before the NFP print but in the end were largely unchanged with scratch sessions and mild pullbacks to finish the week unsettled again. The German DAX stood out by lifting 0.3% to finish at 15650 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 loved the good but not so good unemployment print with tech stocks leading the way, the NASDAQ up 0.8% while the S&P500 pushed to a new record high, up 0.7% to 4352 points. The daily chart shows how momentum has picked up strongly again into extreme overbought mode so this trend is more and more supported as there are no more sellers available:
Currency markets moved out of their pre-NFP holding patterns with USD strength reversing against all of the majors, although Euro had only a very brief lift higher to still finish the week at the previous weekly lows just below the 1.19 handle. Momentum however is setting up for a swing trader higher so watch trailing overhead ATR resistance at the 1.19 level proper for a breakout possibility:
The USDJPY pair however completely reversed its breakout on Friday night with a retracement back to four hourly ATR support just below the 111 handle. While this doesn’t take away all of the week’s positivity it does set up for more retracing on the open if risk markets here in Asia do not respond to the Wall Street rally:
The Australian dollar was able to get a proper move in against USD, swinging up through the 75 handle after previously breaking below the last weekly low. Momentum is now in the positive zone and up through trailing resistance on the four hourly chart as traders await tomorrow’s RBA meeting but the upside target here is relatively small at just above the 76 level:
Oil prices are starting to push aside overheard resistance as the OPEC+ meeting remains unforced with Brent crude able to close above the $76USD per barrel level on Friday night. 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 is trying to find some life here after being in the doldrums for several weeks now below the $1800USD per ounce level. Friday night saw it make a new daily high to close the week at the $1787USD level but it must move above the high moving average and respect support at the $1750 level because the downside target at the April lows at $1670 is not that far away:
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!