Another sea of red on stock markets overnight as the Ukrainian war escalates and the impact on global finance to the locking out of Russia continues to unfold. European stocks were the most volatile, losing more than 3% all across the continent, while Wall Street fell just over 1% in a wider risk off move. Currency markets are seeing an increase in USD strength with the USD index up nearly 1% but safe haven buying in Yen picked up as commodity currencies including the Aussie and Loonie had mixed sessions. The big moves were in commodity markets with oil soaring higher as both WTI and Brent lift well above the $100USD per barrel level while gold pushed higher on the safe haven bid to solidify its gains above the $1900USD per ounce level.
Speaking of runs on Ruble, Bitcoin continues its breakout after taking out the previous weekly high, stabilising at the $44K level overnight. The four hourly chart had shown price poised here just below the previous ATR resistance level but has now gotten ahead of itself as momentum retraces slightly but without a new session low as a run of Russians buying up crypto continues:
Looking at share markets in Asia from yesterday’s session, where mainland Chinese shares put in a solid lift with the Shanghai Composite closing 0.7% higher to 3488 points while the Hang Seng Index eventually moved up, lifting 0.2% at the close to finish at 22692 points. Price action on the daily chart shows price at the 2020 lows with the possibility of more downside, as monthly support at the 22600 point level evaporates:
Japanese stock markets however did much better, with the Nikkei 225 bouncing 1.2% higher to 26844 points.. Futures are suggesting a pullback on the open that will keep price contained, but as I mentioned yesterday, the daily chart is not looking good but in the short term, as a much higher Yen is still proving a tough headwind as price remains anchored here at or below the January lows:
Australian stocks rallied despite a much higher Aussie dollar with the ASX200 managing to build above the 7000 point level, closing 0.7% higher at 7096 points. SPI futures are off by at least 0.7%, indicating a probable retracement below the 7000 point level although higher commodity prices should help out somewhat. There is still considerable resistance overhead at the previous weekly/monthly support levels so watch daily momentum that needs to get back into the positive zone soon:
European shares had another volatile session session, and it was all downside again with the Eurostoxx 50 index eventually finishing a whopping 4% lower at 3765 points, with the daily futures chart showing not much potential as Wall Street moved in a similar direction. Price action seems to be in freefall and could go further below as this conflict continues, with the potential to correct down to the former 3300 point level that stood as support midway through 2020:
Wall Street sold off across the board, but not at the same intensity, with the NASDAQ losing 1.5% while the S&P500 did the same, finishing at 4306 points. The four hourly chart was looking promising with a V-shaped bottom pattern creating a neckline at the 4400 point zone but this has turned into stiff resistance with price reverting below the low moving average and presaging a move back to the 4250 former point of control going ahead:
Currency markets remain extremely volatile with the USD index gaining again, mainly due to the selling off of Euro which has rolled over and fallen below its big gap on the Monday open, now well below the Friday lows at the 1.11 handle. Price had rallied back up to the previous four hourly ATR resistance level at the mid 1.12’s but as I said previously, there was always a long way to go here for normalisation as momentum was never positive in the short term. Watch for another potential rollover on more risk off moves to take it below the 1.11 level:
The USDJPY pair continued its selloff overnight as Yen safe haven buying accelerated again, sending the pair well below the 115 level. Four hourly momentum is almost at the oversold level despite some solid selling here as price remains anchored at the low moving average on the four hourly chart with the potential to retrace to last weeks low at the mid 114s:
The Australian dollar topped out overnight at just below the 73 handle, matching but not surpassing last week’s intrasession high and unable to translate this short term burst into something meaningful. Volatility continues to reign here as commodity prices go nuts, so watch for a try again at the 73 handle as part of a multi week breakout pattern:
Oil markets broke out and then some again following the big pullbacks on Friday night on profit taking with Brent crude soaring through the $100USD per barrel level and this time sticking with it to finish at the $106USD per barrel. While I’m still wary of a lot of volatility here with profit taking potential rising, there’s also the case to be made this could continue for awhile yet with an uncle point just below the daily low moving average line continuing to work:
Gold also had another wild ride with a continued surge towards the $2000USD per ounce level with another breakout overnight, finishing just below the $1950 level. My contention that more consolidation was ahead was wrong! The shiny metal may well be having its day in the sun, with momentum behind it and price action contained nicely within the moving average band:
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!