Risk markets had a small reprieve overnight as Fed Chair Powell indicated a more hawkish position, albeit taking into account the Ukrainian war and its impact on global finance. This saw bond yields spike but still off their recent highs while currency markets saw a mild reversal in USD strength although Euro remains somewhat weak for obvious reasons as commodity currencies including the Aussie and Loonie had solid sessions. Commodity markets continued to do well with oil soaring higher again, while copper and other energies lifted, gold pulled back just over 1% but remains highly bid above the $1900USD per ounce level.
Bitcoin is consolidating its breakout after previously making a new weekly high, stabilising at just below the $44K level overnight. The four hourly chart is showing price matching but not exceeding the early February highs (upper black horizontal line) 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 are putting in a small pullback with the Shanghai Composite currently down 0.3% to 3479 points while the Hang Seng Index is selling off again, down more than 1.8% to 22343 points. Price action on the daily chart shows price struggling at just below the 2020 lows with the possibility of more downside, as monthly support at the 22600 point level evaporates, but momentum is extremely oversold here so watch for a potential if short lived bounceback:
Japanese stock markets had similar falls, taking back all their recent gains with the Nikkei 225 dropping 1.6% to 26393 points. Futures are suggesting a small lift on the open that may be somewhat contained, as the daily chart is still not looking good but in the short term, as price remains anchored here at or below the January lows:
Australian stocks rallied despite a gap down to start the session in a poor state with the ASX200 managing to maintain itself above the 7000 point level, closing 0.3% higher at 7116 points. SPI futures however are quite bullish with a 1% liftoff expected on the open as the 7000 point level proves solid short term support, helped by commodity prices booming again. 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, but this time it was finally to the upside with the Eurostoxx 50 index eventually finishing 1.5% higher at 3820 points, with the daily futures chart showing not much potential as Wall Street moved in a similar direction. Price action remains in a near 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 bounced back across the board with the NASDAQ up more than 1.6% while the S&P500 did even better, advancing 1.8% to finish at 4386 points. The four hourly chart maybe looking promising again as that V-shaped bottom pattern re-engages as the neckline at the 4400 point zone becomes a more probable breakout point:
Currency markets are calming down somewhat although Powell’s comments saw the USD inverted again, with only a mild bounce in Euro which has steadied here at the just above the 1.11 handle. It remains under a lot of pressure here with price still away from the high moving average on the four hourly chart, so watch for another potential rollover on more risk off moves to take it below the 1.11 level:
The USDJPY pair however has had a big turnaround as Yen safe haven buying dropped off and Powell’s comment saw it accelerate higher again overnight, sending the pair well above the 115 level, but stopping at the mid 115 zone yet again. This is yet another swing play in an oscillation between the low 114’s and mid 115 level that has lasted for several weeks now, with no discernible medium term direction:
The Australian dollar was looking to top out again but is being buoyed by very strong commodity prices, almost hitting the 73 handle overnight to finally surpass last week’s intrasession high. Volatility continues to reign here as commodity prices go nuts, but any solid move above the 73 handle could be part of a multi week breakout pattern:
Oil markets broke out and then some again following the previous breakout above the $100USD per barrel level, with Brent crude finishing at just below the $115USD per barrel overnight for some stonking recent gains. I did mention yesterday that while technically the volatility here could result in more profit taking, there’s also the case to be made this could continue for awhile yet but this getting out of hand!
Gold however had a milder ride with a small pullback this is well overdue, sending it back to the $1930USD per ounce level with a consolidation period after getting ahead of itself trying to get up to the $2000USD per ounce level. Daily momentum remains positive and price action is contained nicely within the moving average band but watch for any overshoots below the low moving average as a potential topping sign:
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!