Wall Street again lifted overnight, preceded by a strong showing in European stocks as well as markets discount any problem with the upcoming US CPI print. The USD fell back against the major currency pairs while bond yields also retraced slightly, with not much market sensitive news seeing a small retracement in the 10 year Treasury yield back to 1.9%, but no change in how interest rate futures are certain of a rate hike from the Fed next month. The USD lost ground against commodity currencies mainly like the Loonie and Aussie, while gold advanced to the $1830USD per ounce level. Commodity markets remain choppy with oil futures lifting slightly, copper surging more than 3% while iron ore pulled back again.
Bitcoin is still putting in new daily highs, having briefly touched the $45K level but travelled too fast in the short term with a very minor consolidation above the $44K level overnight. Daily momentum however remains well positive and its likely this recovery rally will continue:
Looking at share markets in Asia from yesterday’s session, where mainland Chinese shares got out of their hesitation mode with the Shanghai Composite closing up 0.8% to 3479 points while the Hang Seng Index soared more than 2% higher to close at 24829 points. Price action has now filled in the decline of the previous two weeks, with the daily chart showing it getting back on track to the 25000 point level reached in mid January as momentum gets nicely overbought:
Japanese stock markets also joined the party with the Nikkei 225 finishing up 1.1% to 27579 points. Futures are suggesting a very solid open today as a mixed result in Yen was overshadowed by a very supportive rise on Wall Street. The daily chart is slowly turning this swing play into something more substantial in the short term at least with considerable resistance overhead at the 28000 point level next:
Australian stocks had a very solid session with the ASX200 finishing more than 1% higher at 7268 points. SPI futures are up 0.5% or so due to the steady lift across Wall Street overnight with price looking to firm above the previous weekly/monthly support levels as short term resistance is pushed aside. Daily momentum is not yet positive but all the signs of a swing trade are in place, if slightly overdone:
European shares doubled down on their recent modest rebound, this time surging across the continent, with the Eurostoxx 50 index gaining 1.8% to finish at 4204 points while futures were effectively steady despite the solid finish on Wall Street. The no longer appreciating Euro should provide additional support here in the short term but price action is still contained below trailing overhead resistance at the 4250 point level with momentum in negative/neutral mode. Watch for a subsequent close above the high moving average here again:
Wall Street continued to find solid buying support but it was mainly tech stock dominated as the NASDAQ lifted more than 2% while the S&P500 finished with a solid session, up 1.4% to close at 4587 points. The four hourly chart shows price has moved strongly above the previous bottoming pattern with support at the 4450 level helping it launch back to its previous highs but watch out for tonight’s session as the CPI print comes down:
Currency markets are still somewhat in a USD negative funk but mixed signals continue to be broadcast here as we head into tonight’s US CPI print. Euro continues to consolidate following its gains from Friday night with a retracement back to the 1.14 handle as the 1.15 resistance level firms in the short term before we get to the Fed’s meeting in March. Watch for any break below and above those levels for meaningful trends to eventuate:
The USDJPY pair managed to slip a little higher overnight and matched the previous weekly high as it extended above the 115 handle as the holding pattern evaporates. Momentum is nearly overbought on the four hourly chart now as the risk on mood extends to this pair, so watch for a potential break above the previous weekly high post the CPI print (or a lot of downside volatility if the print comes in unexpectedly low):
The Australian dollar continues to do well, almost hitting the 72 handle overnight and making a new three week high as a result, filling in the previous dips. This is a classic swing play that is firming into an outright new trend, with the 71.50 level cleared and the potential medium term target at 73 cents on the cards if it doesn’t slip with the US inflation print:
Oil markets continued to consolidate overnight with Brent lifting slightly to remain above the $91USD per barrel level. The next target at $100USD per barrel could still be a step to far, as this recent breakout was overextended in the short term, this consolidation is helping to take some heat out of the move without derailing it. This could extend lower to the $90USD per barrel level as I thought previously, or even down to $85-87 proper soon, so watch daily momentum readings to remain above 100 (i.e overbought):
Gold continues its melt up move, making another new daily high to build well above the former $1800USD per ounce support level, closing at the $1832 level. Price action is now back on track above the daily trendline from the December lows (far left on chart) maintaining a solid trend all week, with the next level to beat at $1850, but with an eye on tonight’s CPI print:
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!wrong on your position, so cry uncle and get out!