Bond yields fell back slightly alongside the USD overnight on the back of mixed US economic data and reactions to a slew of Fed speeches, while stock markets coasted through without much volatility. The US Dollar Index is off over 0.4% against the undollars with the Australian dollar surging well above the 66 handle to extend its new three month high while Euro also advanced further to almost reach the 1.10 level.
US bond markets saw falls across the yield curve with 10 year Treasury yields falling to 4.3% while oil prices rebounded after their Friday night pullback as Brent crude lifted some 2% to get back above the $80USD per barrel level. The USD weakness helped gold push well beyond the $2000USD per ounce level to over $2040 in a strong sign that support is clearly building for the shiny metal.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets were back in the green near the close with the Shanghai Composite up 0.3% at 3030 points while in Hong Kong the Hang Seng Index has lost ground, closing some 1% lower at 17354 points.
The daily chart was showing a significant downtrend that had gone below the May/June lows with the 19000 point support level a distant memory as medium term price action remains stuck in the 17000 point range. Daily momentum readings are retracing back to positive settings with the potential for a fill in rally here towards the ATR resistance at the 18000 point level evaporating:
Japanese stock markets also couldn’t get back into the positive mood either with the Nikkei 225 losing 0.1% to 33408 points.
Trailing ATR daily support is a long way below the current bounce that has now exceeded the September highs at the 33000 point level with daily momentum still in the overbought zone but not over-extended. I’m still watching correlations with Wall Street and Yen to see if there is more upside here but a stall is evident:
Australian stocks were the best performers in the region with the ASX200 closing some 0.4% higher, getting back above the 7000 point support level to close at 7015 points.
SPI futures are some 0.3% higher again in line with the positive session on Wall Street overnight so we should see the 7000 point level again fight out for either support or resistance. The daily chart was trying to look more optimistic here in the medium term with short term price action filling a hole against the tide, but its falling over now:
European markets were slightly mixed across the continent with peripheral markets lifting but still hesitant overall due to the lack of direction from Wall Street with the Eurostoxx 50 Index falling nearly 0.2% to finish at 4348 points.
The daily chart shows weekly resistance at the 4300 point resistance level taken out with this large bounce setting up for further gains if that level can be pushed aside proper. Support at the 4250 level should be quite firm on any pullback but I’m watching the much higher Euro possibly providing a headwind:
Wall Street was positive across the three main bourses but it was only minor advances as the NASDAQ lifted nearly 0.3% while the S&P500 barely gained 0.1% to continue this lacklustre trading week at 4553 points.
Short term momentum was overextended as price action bounced strongly off the recent low at the 4100 point level for the potential for a retracement back to trailing ATR support on the four hourly chart building here. Watch the 4500 point level to hold though:
Currency markets are still seeing a weaker USD with the latest soft US house price and consumer confidence data helping with Euro leading the way, almost breaching the 1.10 handle.
The recent consolidation was after the union currency was able to fend off more Fedspeak in recent weeks and remain in a bullish, albeit neutral condition. Support at the recent weekly lows around the 1.06 level was not tested with new short term support upgraded to the 1.08 mid level at a minimum, but watch out here as short term momentum gets quite overbought:
The USDJPY pair has fully retraced its recent bounce back after consolidating at the mid 149 level without making a new daily high to now fall back to the early November lows well below the 148 level proper.
Four hourly momentum showed the way with the inability on the recent bounce to get back into overbought mode with price action rolling over and now into oversold settings. Watch for a breakdown below the 147 level next:
The Australian dollar continues to firm higher overnight with USD unable to push it around as price action breaks out further above the 66 cent level for a new three month high that is now looking overextended.
The Pacific Peso remains under medium and long term pressure but was able to test the mid 63 level following the RBA’s recent rate hike with momentum now overbought and looking very positive as we continue this new trading week, but watch for a potential pullback to the 65 handle proper:
Oil markets remain in flux with the growing conflict in the Middle East and potential OPEC cuts adding to volatility with a rebound session overnight that saw Brent crude get back above the $81USD per barrel level.
After almost reaching $100 in mid September, price was looking to return to the August levels around the $85 area where a point of control had been established before the recent breakout. Daily momentum is still in oversold settings with this failed test of support at the August level setting up for further falls below:
Gold is not just holding on to its recent advances but continuing its two week long uptrend despite the decoupled USD correlation against other undollars, with its recent fallback below the $2000USD per ounce level finding some later dip buyers to push well above that level on the weekend gap open. Overnight price action is well above the trendline however and looks like overshooting here at the $2040 level.
Daily support is building strongly again as the four hourly chart shows short term resistance pushed aside and price action on track with a lot of dip buying potential at any retracement toward trailing ATR support:
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!