Key GDP and unemployment data in the US overnight put paid to the idea that the Fed may still be hesitant to normalise interest rates with the USD falling back against all the majors while Wall Street remained elevated. Commodities all rose in response to the weak USD with gold surging strongly above the key $1800USD per ounce level while the Australian dollar put in a new two week high.
Bitcoin is still holding on to its start of week gains, but momentum is wavering here as it hits resistance at the $40K level overnight. The four hourly chart shows a tightening symmetrical pattern that should result in a volatile breakout either way, watch trailing ATR resistance at $36K which has been heavily supported here:
Looking at share markets in Asia from yesterday’s session, where Chinese markets bounced back strongly following the recent self induced regulatory foot shooting with the Shanghai Composite finishing 1.4% higher at 3411 points while the Hang Seng Index had its second bounce, up 3% to 26315 points. The daily chart was showing a potential bullish engulfing candle that is likely pointing to a short term bottom and yesterday’s surge should see more stabilisation to finish the week but its not out of the woods yet:
Japanese stocks bounced back after recently getting caught up in the risk off mood, with the Nikkei 225 closing 0.7% higher at 27781 points. Futures are a little mixed with the overall daily chart remaining in a bearish mood and with COVID breakouts accelerating at Tokyo, the good news is hard to find here unless price breaks well above the key 28000 point level at the high moving average:
Australian stocks brushed off the Chinese tech stock selloff with the ASX200 taking back some of its recent losses, finishing up 0.5% to 7417 points. SPI futures are effectively stable, absorbing the rise in the Australian dollar but with momentum moving higher into the overbought zone with new weekly highs, watch for a breach above the May highs to keep this going:
European markets were buoyed by a higher than expected German CPI print with the German DAX up 0.4% to finish at 15640 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 after all the economic prints with the headline Dow playing catchup while tech stocks were quite flat. The S&P500 finished 0.4% higher to remain above the 4400 point level but the four hourly chart showed a lot of late session selling as price is still hovering above trailing ATR support but not yet pushing to new highs here:
Currency markets remained high in volatility as the mid week weakness in USD turned into outright selling in the wake of the GDP print with the Euro able to almost cross through the 1.19 handle on a strong surge that has now run out of puff. The four hourly chart clearly shows momentum extremely overbought with price action pointing to a possible rollover or a pause at least tonight:
The USDJPY pair pulled back again on the back of the weaker USD, almost matching the recent weekly low in the process at the mid 109 level. The four hourly chart continues to look like the bearish Nikkei 225 daily and that means more potential upside for Yen as safe haven buying increases:
The Australian dollar was finally able to get out of its stuck mood here with a push above trailing ATR resistance at the 74 level although it couldn’t quite stick the landing in the wee hours of the morning session, so watch for a potential pullback during the final sessions today. The key areas to watch remain a proper break above the 74 level and a breakdown below the 73.30 level:
Oil prices pulled out of their funk on the weak USD with Brent crude lifting nearly 2% to surge through the $74USD per barrel level overnight. Internal buying support has been keeping it above the previous daily ATR support level and momentum is now moving towards the overbought stages after being neutral most of the week:
Gold finally found some life and then some with a great surge and clearance of the troubled $1800USD per ounce zone after giving some hope that a bottom might finally be in after a two week long deflation. Price has surged back up to the recent weekly high nearer the $1830USD per ounce level with four hourly momentum switching quickly to extremely overbought so we could see a mild pullback in the Asian session before another potential push higher to finish the week:
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!