Share markets remain fragile following what looked like Russia backing down from Ukraine remained unclear as positive risk sentiment abated as the latest Fed minutes implied more tightening. Stronger US data helped somewhat with higher than expected retail sales numbers while UK inflation remained high, pushing Pound Sterling up. The USD index retreated once more, down 0.2% while the bond market again saw the 10 year Treasury yield range traded but remained above the 2% level with interest rate futures firming a possible 50 bps rise by the Fed next month. Commodity markets were more positive, although oil prices still lost a little ground while gold came back after its mid week slump.
Bitcoin is slowly lifting after going nowhere in the last week, once more pushing up towards the $44K level overnight but not moving any further after being anchored here at the $42K level. This has been a remarkably low level of volatility compared to real currencies as daily momentum picks up, staving off the potential for a rollover. Watch for a clearance of the recent daily highs above $45K:
Looking at share markets in Asia from yesterday’s session, where mainland Chinese shares lifted again going into the close with the Shanghai Composite up 0.6% to 3465 points while the Hang Seng Index reversed direction finishing up 1.5% to 24718 points. Price action on the daily chart continues to look jumbled with the 25000 point level still proving too strong as resistance as daily momentum tries to pick up again on the back of the inversion in risk sentiment. I remain wary of that double top bearish pattern forming but it could be cleared soon:
Japanese stock markets also moved higher with the Nikkei 225 surging some 2.2% to close at 27460 points. Futures are suggesting an uneasy start on the open despite support building here at around the 27000 point level with the daily chart indicating a possible breakout is building as momentum builds up towards the positive line. Any further upside must clear short term resistance at the 28000 point level and turn momentum positive or a return to the January lows remains the dominant direction:
Australian stocks also joined in with the rebound as the ASX200 finishing 1% higher at 7284 points. SPI futures are relatively stable, with a possible small gap down to start the trading session today on the Wall Street fragility overnight as price action wants to clear above the previous weekly/monthly support levels. While daily momentum has not been positive since this reflation trade started, the signs of a rollover are abating here as earnings season ramps up and risk sentiment firms:
European shares all took a breather in unison with the Eurostoxx 50 index pulling back around 0.3% after the stonking previous session, finishing at 4137 points. The surge towards the 4300 point level hasn’t eventuated here as markets remain distrustful of Russia’s next move in Ukraine, sow while price bounces off quite strong support at the 4000 point level it remains contained below resistance at the 4250 point level with no new significant session high:
Wall Street had an fragile session overnight with all three bourses unable to make any meaningful returns, with the NASDAQ finishing 0.1% lower while the S&P500 lifted the same amount to finish at 4475 points. The four hourly chart still shows a solid bounce off of support at the 4350 point level and a clearance above the high moving average, but no positive momentum yet, indicating a swing play only is underway so far. While price is above the previous “bottom” highs at the 4440 level (mid black horizontal line), again this may not be enough to get back to the previous highs:
Currency markets reduced in volatility somewhat overnight as the USD weakened slightly as Euro continued its bounce back to push up towards the 1.14 handle. This takes it almost back to the Friday night break so while this fill is complete, the trend must continue above trailing ATR resistance at the 1.14 handle proper or we could get another retracement below:
The USDJPY pair failed to breakout higher as the rising wedge pattern on the four hourly chart presaged a breakdown instead back to its anchor point somewhat near the mid 115 level as Yen safe haven buying is not yet hover. Momentum has switched back into negative mode so watch for a retracement below the mid 115 level again:
The Australian dollar had a much better run higher, eventually breaching the 72 handle this morning and almost getting back to its previous intraweek high, all on positive risk sentiment and some better iron ore price volatility. The four hourly chart shows this trend gaining momentum – maybe a little too fast – as momentum passes into overbought settings, so watch for a potential short term retracement to take some heat out here:
Oil markets are moderating somewhat with Brent crude pulling back slightly overnight to finish just above the $92USD per barrel level, but still holding on to its near decade high. The next target at $100USD per barrel was considered a step to far, as this recent breakout was overextended in the short term, but it could be just the first target if Ukraine falls into conflagration. Momentum remains considerably overbought:
Gold is making a comeback, almost back to its previous high overnight, pushing up above the $1870USD per ounce level, again exceeding its October 2021 highs (top black horizontal line). This overdue pullback was short lived as ATR support on the four hourly chart remained intact as did positive momentum, so no surprise here. Watch for an attempt to break above the $1880 level next:
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!