Wall Street yet again reversed risk sentiment overnight with big rallies across tech stocks, the latest GDP print coming in as expected and while the ECB meeting left knobs and dials in their current settings, but it was enough to see USD sold off wildly, with the Aussie dollar pulled along for the ride. Bond markets cooled off ever so slightly with the 10 year Treasury bouncing off the 1.5% level while commodity markets were quite mixed as oil markers oscillated heavily before finishing with a minor fall, gold lifted slightly but still unable to cross the $1800 barrier while natural gas and iron ore both plumetted.
Bitcoin remains in trouble here despite wild oscillations overnight, with the continued inability to follow through on its recent new record high last week as it finishes just below the $61K level this morning. Short term momentum has returned to a neutral setting but the medium term trend has turned downwards here despite some support building at the $58K level:
Looking at share markets in Asia from yesterday’s session, where Chinese shares again moved sharply lower with the Shanghai Composite pushed more than 1% lower, closing at 3512 points while the Hang Seng Index tried to hold on to a scratch session result, but fell back nearly 0.3% to close at 25555 points. Price action is showing a rollover is imminent, as the solid level of resistance at the key 26000 points level at the previous September highs remains out of reach. The daily chart is suggesting a follow through on this rollover is possible, so watch for a close below the 25000 point level next:
Japanese markets continued their rollover with the Nikkei 225 closing nearly 1% lower at 28820 points. The daily futures chart however shows price poised here with a fill probable after Wall Street’s rally last night. Overhead trailing ATR resistance at 29300 points remains a stumbling block, with daily momentum still negative, so don’t get excited until we see the recent highs cleared at the 29300 point level or support failing at the 28500 level:
Australian stocks also followed the crowd with the ASX200 falling 0.2% to finish at 7430 points. SPI futures are up barely 20 points despite the big rally on Wall Street overnight so while daily momentum are well into positive readings, its not yet overbought indicating that this uptrend is short term in stature only, despite a desire to return to the former highs in August:
European markets diverged in fortunes with peripherals markets leaping ahead while the FTSE and German DAX lost ground again, the latter closing 0.1% lower at 15696 points. The daily chart is still showing a near completion of the fill back to trailing ATR resistance, but it has not yet been breached, although momentum readings do look good for another attempt tonight despite a much higher Euro:
Wall Street zoomed higher with the NASDAQ making the biggest gains, up 1.4% while the S&P500 finished nearly 1% higher at 4596 points. The four hourly chart showed a mid week pause after the latest ramp up, and as I said, you shouldn’t fight the Fed even if there is the potential for a sharp retracement here below key ATR support. The 4600 point level beckons:
Currency market volatility was put to the fore by the ECB meeting and US GDP prints with the USD reversing against almost all the major currencies, with Euro bursting right through the 1.16 level for a new weekly high in a near 100 pip move. The union currency has obviously reset following the ECB meeting with the 1.17 handle the next target here but I’m waiting for some consolidation and a weekly close at around this new level:
The USDJPY pair remains on a downwards path and while intrasession it was pushed below the previous Friday lows a mild recovery saw it match that level this morning to start the end of week session at the mid 113 level. Short term price action is now obviously in a downtrend but that level of support and then another at the 113 handle proper could come into play here, so again watch levels of support and resistance that might break:
The Australian dollar found some strength after very slowly lifting throughout the trading week even as commodity prices fail to re-engage to the upside. The ECB meeting was a good catalyst to get things moving following the local inflation print which had almost no immediate effect, with price action finally pushed beyond last week’s intrasession high and get past the mid 75 level. I’m watching for the 75 handle proper to remain defended as solid support however amid the Chinese property market fallout:
WTI and Brent crude futures followed up their biggest falls in weeks with a volatile session overnight, with the latter dipping into the $81USD per barrel zone before recovering to just below the $84 level this morning on the back of the US GDP print. This almost triggered a rounding top pattern for a short trade overnight and another close below the low moving average would seal the deal, at least in the short term with a target down to the $76 area:
Gold still can’t clear that key $1800USD per ounce level even as all other undollars shot higher overnight with yet another attempt overnight thwarted. Short term sentiment is really building to a bullish case for gold, with daily momentum well into the positive zone, and price action both rising and all contained within a lifting average band, but the potential for a medium term uptrend looks like an actual resistance level at $1830 or so that needs proper clearance:
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!