Risk markets were not happy following the BOE and ECB meeting’s where policy tightening against inflation is mounting, but it was a Federal Reserve member on Friday night that made markets break for the safe havens, with a “live” March meeting – and hence a quicker response – was raised. Already spooked equities fell back with Wall Street losing around 1% or so with the bond market seeing another strange strengthening with the the 10 year Treasury yield briefly falling back below the 1.4% level. Commodity markets didn’t see any relief from selling with oil prices down more than 2%, while gold eventually finished just shy of the $1800USD per ounce level.
Bitcoin is losing ground fast, unable to gain traction as it retraces back down to the $47K level, making a series of new daily lows last week. The technical picture still remains grim for crypto with the next support levels are quite far away at the September lows around $43K, with daylight below to $30K next:
Looking at share markets in Asia from Friday’s session, where mainland Chinese shares put in a very poor session to finish the week, with the Shanghai Composite down over 1% to 3632 points while the Hang Seng Index slumped again, down 1.2% to 23192 points. As this dead cat bounce turns into a full on correction, I’m still watching for further price moves below the 23000 point level that would wipe out any support:
Japanese markets retrace most of their very bullish previous session with the Nikkei 225 down nearly 1.5% to 28662 points. Futures are indicating another pullback on this result due to the losses on Wall Street, and I still note that daily momentum remains negative and there’s a lot of resistance to clear overhead here with the daily pattern remaining bearish:
Australian stocks stood out due to putting in a positive return, but only just, with the ASX200 closing 0.1% higher, just above the 7300 point level. SPI futures are not looking good with a 30 point drop expected on the open, with the 7200 point level coming under threat again as the market returns to the November lows. The daily chart does not look pretty with daily/weekly support coming up very quickly:
European markets all had lower finishes although the FTSE managed a minor lift while the German DAX managed to finish 0.7% lower at 15531 points. This wobble was due to Euro-wide inflation print which came in as expected, but the German IFO survey missed expectations, pulling back confidence even before Wall Street opened and then fell later in the session. Price remains unable to get clear of the former trailing ATR resistance level at around 15800 points with the possibility of making new daily lows as we start the new trading week. Watch the low moving average here which must firm as short term support, but notably daily momentum remains negative:
Wall Street flipped yet again although the NASDAQ finished dead flat while the S&P500 lost 1% on the Fed comments, keeping it well below the 4700 point level, closing at 4620 points. The four hourly chart is a jumble and awash with volatility and as I mentioned previously, caution still requires watching for a clearance of the former highs instead of relying on a one session – or subsequent overreaction:
Currency market volatility remains extremely high with big reversals on the inflation prints and Fed comments post the ECB meeting, with the Euro slumping down to the 1.12 handle after almost breaking through the 1.14 level mid week. The four hourly chart shows price action breaking through the previous ATR support at the mid 1.12 level that has nominally held the last few weeks, finishing right on the extreme lows. Momentum has just crossed to oversold so we could see more downside on the open here:
The USDJPY pair also went back to its mid week point of control at just below the 114 level in a mild bounceback on the inflation prints, basically ending the week where it started despite a wide ranging session. The four hourly chart is hard to decipher again with that point of control keeping prices stuck at just below the 114 handle, although a new weekly low has not yet been made, momentum remains neutral at best and the high moving average is not under threat to the upside:
The Australian dollar had a similar ride to Euro although at the end it didn’t push below the intrasweek low at the 71 handle despite further selling on commodity markets, making for a very interesting short term picture. The failure to breakout after clearing the previous weekly highs but then snapped back below the longer term downtrend does spell more downside volatility for the Pacific Peso as we start a new trading week. Watch ATR support at at the 71.20 level that must hold:
Oil prices are still struggling to get moving again with Brent crude pulling back to the intraweek low just below the $73USD level, capping off an unconvincing week of price action. The former monthly resistance level at $77 and then former support at the $80 level remain the targets to get back to in any bounceback, but so far this has turned into a dead cat bounce as daily momentum inverts and price moves down towards the psychologically important $70 level:
Gold has had a volatile week to say the least but Friday night gave it the best chance to get moving after the previous session saw a big reversal that almost saw it break through the $1800USD per ounce level, which then finally happened – before retracing back below again! Some manipulation going on here methinks as without a significant new daily high, sentiment alone cannot push the shiny metal higher:
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!