Risk markets were relatively quiet overnight as the US holiday following the latest non-farm payroll (NFP) unemployment print on Friday kept sentiment neutral and reduced the chances of any volatile response. European markets were nominally bullish with some mild lifting while the USD and bond markets were relatively unchanged. Commodity prices saw the most action with oil lifting sharply on OPEC’s inability to agree on supply increases, with copper and gold also lifting while iron ore prices slumped.
Bitcoin gapped higher on the weekend trade to almost break the $36K level before getting slammed back down to the average price for last week around the $33 to $34K level. As I said yesterday, such a breakout move requires a proper breakout above the trailing ATR resistance level at $40K:
Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite sold off at the start but managed a swift rally at the close, finishing 0.4% higher at 3534 points while the Hang Seng Index continued going south, down 0.6% to 28143 points. This sets up a breakdown below daily ATR support at the 28100 point level that could overshoot to the May lows:
Japanese stocks were in a similar boat with the stronger Yen not helping as the Nikkei 225 loses 0.6% to close at 28598 points. Daily futures continue to suggest more flat to declining sessions ahead as heavy resistance remains at the 29000 point level with a stronger Yen on Friday night not helping here:
Australian stocks shuffled along without much direction, with the ASX200 closing up only 6 points higher to remain just above the 7300 point level. SPI futures are up nearly 15 points despite the lack of a lead from Wall Street as traders await the RBA response today. Momentum readings remain in a neutral positive setting with a bounce off trailing ATR support at 7150 points is still possible:
European markets all had positive sessions, but all relatively mild in response to Friday’s US NFP print after being unsettled all of last week. The German DAX stood out by almost not moving at all, up a handful of points to close at 15661 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 was closed for the July 4th holiday long weekend with futures indicating the S&P500 pushed to a new record high, up 0.7% to 4352 points. The four hourly chart shows momentum retracing ever so slightly but this is likely to pick up again into an outright overbought mode on the return of US traders tonight for yet more upside:
Currency markets were again in holding patterns with Euro remaining steady right on the previous weekly lows just below the 1.19 handle. Momentum is still 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 is hanging on as well after completely reversed its breakout from Friday night with a retracement back to four hourly ATR support just below the 111 handle still holding here. There is still the possibility that if risk markets here in Asia do not respond to the Wall Street rally this could produce more Yen safe haven buying:
The Australian dollar is still holding on to its recent proper move in against USD, maintiaining itself above the 75 handle after previously breaking below the last weekly low. Momentum is now pushing into the overbought zone and up through trailing resistance on the four hourly chart as traders await today RBA meeting but the upside target here could be relatively small at just above the 76 level at last weeks inversion high:
Oil prices have pushed aside overheard resistance as the OPEC+ meeting remains unforced with Brent crude able to close at the $77USD per barrel level last night for a new high as supply doesn’t seem imminent at all. Price remains strongly supported in this uptrend, with momentum nicely overbought and not too far overextended, with the 2018 high at $83 looking better and better each day:
Gold is finding some life here after being in the doldrums for several weeks now below the $1800USD per ounce level with another advance and new daily high to close at the $1791USD level overnight. Another big move above above the high moving average could see a bounce back to previous ATR support at the $1840 level but would require a lot more USD weakness:
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!