The continual rise in Treasury bond yields post the NFP print from last week and the Federal Reserves likely tapering response is still putting a dampener on other risk markets, with USD remaining extremely strong against the “undollars”. Euro hit a four month low overnight, not helped by an underwhelming German ZEW survey, while commodity markets have bounced back a little following last week’s rout with oil jumping 2%, but gold remains in the doldrums while iron ore also hit a four month low.
Bitcoin keeps the crypto dream alive, hovering at just below the $46K level overnight after a big rally late last week translated into an epic rise early this week. Watch for the $47K level to come under pressure and then whoosh, back up to the previous highs near $60K – but also watch Traitor Ted Cruz’s machinations around crypto in the ongoing US infrastructure package:
Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite was listless until after the lunch break, but then ran higher at the close, finishing 1% higher at 3529 points while the Hang Seng Index has built solidly on its positive start to the week, closing 1.2% higher at 26605 points. The daily chart remains poised here as a potential bottom is still somewhat forming, but the inability to break above the high moving average is the signal everyone is watching for, requiring a substantial breakout above the 26700 point level to call this rout over:
Japanese stocks reopened with the Nikkei 225 closing 0.2% higher at 27888 points. There is a growing possibility of a breakout here above the descending triangle pattern as support at the 27300 point level looks very solid, but we need to see a more substantial move first:
Australian stocks are finding more upside despite the growing COVID outbreak in NSW, with the ASX200 closing 0.3% higher at 7562 points. SPI futures are up 20 points, so this advance should continue as daily momentum readings remain well overbought and the daily chart looks very good in the medium term. Support is quite firm here at the 7300 point level as asset inflation takes hold – damn the commodity torpedoes that are in the water!
European markets put aside some of their hesitation to put some better sessions in across the continent with the German DAX the relative worst, only climbing 0.2% to finish at 15770 points. Again we are seeing price action wanting to get above the previous weekly highs after finding solid buying support at the 15400 point level but despite a very weak Euro, this market is still stuck here:
Wall Street is still in an unsettled, unco-ordinated situation with tech stocks pulling back this time while only big hitters lifting as the headline Dow went up 0.4% the S&P500 only gained a handful of points, up 0.1% to 4436 points. The four hourly chart is showing continued overhead resistance building at the 4430 point level as momentum remains overbought and short term support at the 4420 point level remaining firm, but this isn’t exactly exciting yet:
Currency markets are reducing in volatility but not changing direction with Euro now dicing with the 1.17 handle proper for a new four monthly low after breaking below the previous weekly low (solid black horizontal line) as the USD remains strong in the wake of the NFP print. A short term mean reversion swing has not yet shown itself, but price is decelerating somewhat so watch the 1.1720 level for signs of some stability:
The USDJPY pair extended its gains as it remains well supported above the 110 handle after making a new weekly high, with price hitting the mid 110’s overnight and nominally breaking above the weekly downtrend line (upper sloping black line). Four hourly momentum was getting into extreme overbought mode but this has abated somewhat, with support firming at the 109.80 level at least:
The Australian dollar was able to find a little bounce amid the mayhem but it looks short lived, unable to the break through the mid 73s against USD after heading towards the previous weekly lows at just above the 73 level. The medium term price pattern is still bearish with the inability to break through the 74 cent resistance level while short term the four hourly chart shows no advance past its own high moving average, so I expect another rollover soon and a move below the 73 handle:
Oil prices bounced back sharply with a 2% rise overnight in both WTI and Brent crude, the latter able to close back above the key $70USD per barrel level. The retest of the previous lows at the $68 level is still in play here but its notable that the first stage of a double bottom pattern has been created on the daily chart, so watch for more support to form here:
Gold’s deflation continues following the flash crash that started the week as it fails to make any new session high, falling down to the $1729USD per ounce level overnight. Even though price is decelerating, we are still likely to see the next month of trading push it even lower to the March lows around the $1660 level:
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!