Wall Street got out of its grumpy start start to the week with a return to new record highs overnight as the latest FOMC minutes indicated any tapering action is still far far away. European markets also got back on the risk-on train with some sharp rebounds despite a drop in German industrial production although this was mainly due to a new low in Euro as USD regained strength as Treasury yields returned to their February lows. Commodity prices were again quite mixed as oil prices dropped nearly 2% while copper and gold lifted with the latter getting back above the $1800USD per ounce level.
Bitcoin is still listless, hovering just below the $35K level with the daily chart looking very uneventful as range trading takes hold with support at the $33K and resistance at $36K the key areas to watch:
Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite bounced back, up 0.6% to close at 3553 points while the Hang Seng Index still sold off, down 0.4% to 27940 points as it seemingly heads into freefall. This continues the breakdown below daily ATR support at the 28100 point level that could now extend to the May lows:
Japanese stocks continue to be hit hard by the COVID problems around the Olympics, with the Nikkei 225 closing down 1% to 28366 points. Daily futures are now suggesting some stabilisation around key daily ATR support at the 28300 point level which remains under threat here:
Australian stocks rebounded sharply on the back of a much lower Aussie dollar with the ASX200 closing up 0.9% to get back above the 7300 point level. SPI futures are up nearly 15 points due to the return of risk on Wall Street with a bullish engulfing candle on the daily chart suggesting a potential bounce off trailing daily ATR support at 7150 points:
European markets are also returning to form on the back of a lower Euro with wide gains across the continent as the the German DAX took back its previous losses to close 1.2% higher at 15692 points. Daily ATR support is still firming here at the 15300 point level as the daily price pattern is starting to lean to an upside breakout above the 15600 point level:
Wall Street found its mojo with some solid gains in industrials as the NASDAQ put in a scratch session while the S&P500 lifted 0.3% to 4358 points to another new record high. The four hourly chart shows momentum returning back to the overbought status after a brief look at breaking below key trailing ATR support that has held for the last three weeks of this uptrend:
Currency markets are seeing a return to USD strength, at least against Euro which is making more new lows on each session, this time remaining below the 1.18 handle with a lot of intrasession selling evident. This continues to set up for more potential downside as momentum remains nicely oversold with the March lows at 1.16 the target here:
The USDJPY pair however is finding some support after deflating back to the previous weekly low although the mid 110 level remains the anchor point. There is still a growing possibility of more Yen safe haven buying but watch for a potential breakout above the high moving average at the 110.80 level:
The Australian dollar remains in sell mode despite some intrasession upside volatility with another return below the 75 handle and a new low for the week. Momentum is still negative and price unable to get above the high moving average with the downside target at 74 cents still in play:
Oil is looking like breaking to the downside with another follow through overnight following the lack of outcomes from the OPEC+ meeting with Brent crude falling nearly 2% to close below the $74USD per barrel level. While price remains strongly supported in this uptrend, momentum is now inverting and almost crossing into negative zone so watch for a potential return to trailing ATR support at $72:
Gold is still trying to finding some life here after being in the doldrums for several weeks as more buying support at the $1800USD per ounce level is building. To keep this moving requires another big move above the high moving average and then way up through 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!