Risk markets were able to lift slightly on Wall Street overnight, with European bourses still in hesitation mode and UK markets closed for the Queen’s funeral. The USD pulled back slightly as Euro lifted a little above parity, with a similar move higher for the Australian dollar while Pound Sterling is still on the ropes. Bond markets had some mild volatility across the yield curve with 10 year Treasury yields lifting slightly to the 3.49% level with interest rate expectations still locking in a 75bps rise at the next Fed meeting. Crude oil closed slightly lower with Brent unable to climb above the $92USD per barrel level while gold tries to stabilise after breaking sharply below the $1700USD per ounce level.
Looking at share markets in Asia from yesterday’s session where Chinese share markets continued their selloffs with the Shanghai Composite down more than 0.4% to 3112 points while the Hang Seng Index doubled down on its bear market, down more than 1% at 18556 points. The daily futures chart was showing a bearish engulfing candle mid week which forecast this slump as it continues with a distinct lack of buying support. The bear market continues with daily momentum nowhere near out of its negative funk:
Japanese stock markets were closed for yet another holiday. The daily chart for the Nikkei 225 shows price action slammed back to the 27000 point level where there is a modicum of support despite wiping out all the gains of the previous trading week. Daily momentum remains negative and nearly oversold so watch for some support to be tested at the recent daily low sessions around the 27500 point level:
Australian stocks were looking very unsteady with the ASX200 finishing some 0.3% lower at 6719 points. SPI futures are indicating at least a 0.8% gain on the open in line with Wall Street’s lift from overnight with the daily chart showing similar price action to other Asia stock markets. Price is below the August lows as daily momentum has switched to full oversold mode, but the long tail of buying support is indicative that key support at the 6700 will be tested next:
European stocks were mixed with the German DAX lifting while peripheral bourses kept retreating, with the Eurostoxx 50 Index finishing flat, down 1 point to 3499 points. The daily chart was looking a lot like a dead cat bounce, following the moves off the June lows at the 3300 level that look like the next target to reach. Another bearish engulfing candle and a failure of daily momentum to get back above positive readings suggesting another leg down, however that long tail of buying support intrasession maybe pointing to firmer support building here:
Wall Street finally found some confidence or more likely short covering in the wake of the recent steep falls, with the NASDAQ up nearly 0.8% while the S&P500 finished 0.7% higher at 3899 points. The four hourly chart is showing a potential swing play here above the 3900 point level, with short term resistance at the 3950 point level equating with overhead ATR resistance the area to beat as momentum retraces from being sharply negative:
Currency markets remain relatively calm with the USD Index pulling back slightly as Euro lifted above parity in a small melt up move. The union currency is likely to hover here until the next Fed meeting as I still contend that parity is actually permanent resistance. Momentum has switched to slightly overbought on the four hourly chart which indicates selling pressure hasn’t re-engaged yet:
The USDJPY pair is in a similar position but with some mild deceleration following on from Friday night following the bounce up to the previous weekly highs at the 145 handle, still hovering around the 143 level. Short term momentum has switched from neutral to slightly negative, but price action in the short term is holding, so watch for any further moves below the low moving average at the 143 area:
The Australian dollar is still locked in place here at the 67 handle albeit with a small uptick in price action as commodity prices rebounded slightly overnight. My contention that resistance is just too strong at all the previous levels with the 68 handle the area to beat in the short term, with price action now back on the lower trendline and weekly lows. Price action is likely to invert below the 67 handle again if it can’t make the usual swing long play after being oversold move stick:
Oil markets are still chugging along on the bottom here, with not much stability at the start of the new trading week as Brent crude is unable to climb back above the $92USD per barrel level. Daily momentum is still persistently negative although potentially swinging higher as price action wants to get off the floor here at the recent weekly lows, but its a very low probability trade:
Gold like other undollars remains depressed but was able to bounce back to the Friday night highs after sharply inverting below the key $1700USD per ounce support level, finishing at the $1675USD per ounce this morning. A potential short swing play but this keeps the shiny metal at the 2020 lows and closing up a monthly bearish setup :
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!