Wall Street extended its rally to five days with concerns around Fed tapering and COVID-19 continuing to dwindle (until the next bad news print) with the latest German IFO survey leading to a minor pullback locally while the US durable goods orders didn’t surprise either way. Commodity currencies like the Australian dollar continued their bounceback while Treasury bond yields lifted to a new weekly high. Oil continued its own backfill rally, up nearly 2% while gold failed to maintain its breakout above the $1800USD per ounce barrier, heading back to last week’s trading levels.
Bitcoin continues to stall on its breakout towards the $50K level, retracing down to trailing ATR resistance on the four hourly chart overnight to the $47K before having a mild surge later this morning. I’m still wary of intrasession selling overhead where $50K may turn out to be a natural resistance point again:
Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite extended its gains, closing 0.6% higher at 3537 points while the Hang Seng Index pulled back 0.4% to finish at 25628 points. The daily chart has been trying to form a bullish short term double bottom pattern and while momentum has switched into swing long mode with price action breaking above the low moving average, the weight of selling over the last couple months continues to push expectations lower. I’m still watching for a potential upside break above ATR trailing resistance:
Japanese stocks were also in hesitation mode, with the Nikkei 225 unable to extend on its recent breakout, finishing dead flat at 27724 points. The daily pattern is similar to Chinese stocks, with a very solid bounce off the bottom of the previous descending triangle pattern but its still not enough to clear ATR trailing resistance and the recent daily daily high above the 28000 point area with daily momentum still nominally negative:
Australian stocks were the relative best performers in the region however with the ASX200 gaining 0.4% to 7531 points. SPI futures are looking to pullback half of those gains however as daily momentum wanes, even though obvious support at the 7400 is still quite firm and should remain so this week:
European markets were mixed again with peripheral bourses lifting while the German DAX pulled back slightly, taking back its previous gains to finishing 0.3% lower to 15860 points. The daily chart is still showing a lot of intrasession volatility and hesitation with support at the trailing ATR level around 15500 points remaining firm but not yet providing a platform to bounce higher. I’m still watching for a potential move below the low moving average as the series of lower daily highs suggest this isn’t over yet:
Tech stocks continue to push Wall Street into the stratosphere although the air is thinning with only marginal gains with the NASDAQ and S&P500 up barely 0.2% each, but a record high is a record high. The four hourly chart shows buying is not yet over as the formation of a classic bearish rising wedge pattern was pushed aside at the key 4500 point level beckons:
Currency markets are still showing some short term weakness in USD as Euro continues its bounce off its previous weekly low to extend above the mid 1.17 level overnight. This swing trade more well turn into something more substantial with the previous weekly high at the 1.18 handle the first upside target to reach. Momentum readings are now properly overbought, indicative of a potential rally:
The USDJPY pair was able to push back towards the 110 handle overnight, but the short term price pattern is putting in a bearish triple top if it can’t substantially break over that key level in trading today. Four hourly momentum has switched quickly to the positive side but this maybe over before it begins so watch the low moving average for more downside pressure:
The Australian dollar continued it clawback rally after a small pause yesterday with a move through the mid 72’s against USD and up towards the 73 handle. This almost complete’s the fill from last week’s selloff, providing some traders with excellent returns here in the short term but not providing a proper signal for longer term positions. Again, iron ore is key and since it rallied strongly again yesterday and with momentum on the four hourly chart nicely overbought, the 73 level is likely to be broken soon:
Another positive session for oil overnight, although smaller than the preceding big fills with Brent lifting nearly 2% to almost get through the $72USD per barrel level. This takes it almost through overhead trailing ATR resistance on the daily chart but not past the previous daily highs in late July/early August, so watch for daily momentum that needs to exceed this neutral setting for more upside:
Gold deflated through the key $1800USD per ounce level overnight, not yet breaking its new uptrend, just running out of momentum as it retraces back to four hourly support at the $1790 level. While previous resistance has been pushed aside, the question still remains if it can make it back to the mid July $1830 highs as daily momentum is nowhere near overbought and ready for a proper rally:
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!