The latest FOMC meeting did not translate into a lot of volatility overnight with Wall Street largely unchanged while Treasury yields eventually clawed back some intrasession gains due to the lack of an outright tapering signal. Currency world saw more volatility with Euro ranging through nearly 80 pips while the Aussie had similar volatility but eventually everything settled back to the start of session settings. Commodities were mixed again as oil prices continued to moderate while industrial metals fell back as gold continues to battle around the key $1800USD per ounce level.
Bitcoin is not just holding on to its stonking start of week gains, but is gaining momentum as it lifted up towards the $40K level overnight. This should support more upside with trailing ATR resistance at $36K being heavily supported here although momentum is not quite in the overbought stage as the four hourly chart does suggest resistance building above:
Looking at share markets in Asia from yesterday’s session, where Chinese markets remain under the pinch of the self induced regulatory foot shooting with the Shanghai Composite finishing 0.6% lower to 3361 points while the Hang Seng Index finally bounced back after some epic falls, up 1.5% to 25574 points. The daily chart shows a potential bullish engulfing candle that could point to a bottom but this re-weighting has been quite severe and may require a few more sessions to wash out before any upside signal is announced:
Japanese stocks got caught up in the risk off mood, with the Nikkei 225 closing nearly 1.4% lower at 27581 points. Futures however are suggesting some bounceback on the open today but overall this daily chart remains a bearish picture and with COVID breakouts accelerating at Tokyo, the good news is hard to find here:
Australian stocks went a little jittery in the wake of the Chinese tech stock selloff with the ASX200 pulling back 0.7% to finish at 7379 points. SPI futures are up 20 points or so, having looked through the Fed volatility from overnight so while momentum has moved higher into the overbought zone with new weekly highs, another daily high above the May highs is required to keep this going:
European markets had a better result on the back of unchanged consumer sentiment prints but also the FOMC meeting with the German DAX lifting slightly, up 0.3% to finish at 15570 points. Price action remains above previous daily ATR support at the 15300 point level but momentum is still at a neutral/negative setting as price action remains listless. Attempts at breaking through to get back to the previous weekly highs at the 15800 point level continue to fail:
Wall Street was only slightly moved by the FOMC Meeting and tapering language with the headline Dow flat while tech stocks saw a big swing higher with the NASDAQ up 0.7%. Meanwhile the S&P500 finished dead flat at the 4400 point level with the four hourly chart showing price still hovering above trailing ATR support as momentum tapers into the neutral but still bullish setting, so watch for a potential breakout above the high moving average here:
Currency markets was where the volatility was at – but only intrasession with no real new highs or lows being made over the 24 hours. Euro was able to pip slightly higher after a 80 pip range through the FOMC meeting as it builds above the 1.18 handle. This could have further legs so watch for continued closes here above the 1.1850 level:
The USDJPY pair had a mild bounceback in the Asian session before pulled back following the Fed with a return to below the 110 handle overnight. The four hourly chart looks like the Nikkei 225 daily and that means more potential upside for Yen as safe haven buying increases:
Despite the volatility, the Australian dollar remains stuck here below trailing ATR resistance at the 74 level which could be indicating a bunch up of buying support ready to breakout, but yesterday’s inflation print proved no catalyst at all, and neither did the FOMC meeting. I’m still watching for a break above the 74 level and a breakdown below the 73.30 level:
Oil prices moderated once more with flat sessions for both WTI and Brent crude which remained below the $74USD per barrel level as internal buying support keeps it above the previous daily ATR support level. Low volatility with crude always begets high volatility so I’m wary here of a potential explosive blowout or breakout:
Gold put in a wide ranging session overnight, as evidenced by the final four hourly candle on the chart below, eventually finishing back above the $1800USD per ounce level and giving some hope that a bottom might finally be in after a two week long deflation. Four hourly momentum is still nominally negative, but no longer oversold and price action seems to be still finding resistance at the $1810 which bears (sic) watching in the upcoming sessions, so its not all over yet:
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!