Some soft overnight data sent the USD lower against the majors again, helping Wall Street continue its Christmas rally while European shares couldn’t find any positive sentiment. Euro returned to its recent high with the Australian dollar heading finally breaking through the 68 cent level.
10 year Treasury yields were flat but remained at their five month low at the 3.8% level while oil prices spiked higher as Brent crude again almost finished above the $80USD per barrel level. Gold is getting more positive momentum after holding on to its outsized gains, now pushing up through the $2045USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets were able to bounceback with the Shanghai Composite getting back above the 2900 point barrier, climbing 0.4% to 2918 points while in Hong Kong the Hang Seng Index just treaded water, closing at 16621 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 remained stuck in the 17000 point range before this new losing streak. Daily momentum readings are finally bouncing out of oversold settings as price action wants to get back above the October lows, but so far there has been only a small chance of stabilising here:
Japanese stock markets were the biggest losers in the region however with the Nikkei 225 finishing 1.6% lower to 33140 points.
Trailing ATR daily support was being threatened by price action after this bounce went beyond the September highs at the 33000 point level with daily momentum now fully retracing from the overbought zone but wanting to neutralise. Correlations with a stronger Yen are breaking down here with a selloff back to ATR support at 32000 points unlikely so far but a lack of a new daily high is telling:
Australian stocks took a relatively small hit with the ASX200 closing nearly 0.5% lower to almost retrace below the 7500 point level, closing at 7504 points.
SPI futures are up about 0.3% on the rebound on Wall Street overnight. The daily chart is again looking very optimistic here in the medium term with short term price action following the completion of a bullish reverse head and shoulders pattern with the neckline at the 7300 point area clearly broken:
European markets slipped again overnight, unable to recover their recent falls with the Eurostoxx 50 Index finishing 0.2% lower at 4524 points.
The daily chart shows weekly resistance at the 4300 point resistance level taken out with this large bounce setting up for further gains as momentum remains quite firm and nice overbought. Support is now upgraded to at least the 4300 point level but I’m watching for a potential pause here as futures indicate a rollover:
Wall Street however was totally green across the board with the NASDAQ up nearly 1.3% while the S&P500 closed exactly 1% higher at 4746 points.
Short term momentum is trying to climb out of oversold territory with the four hourly chart showing a desire to return to the previous highs and take another tackle at the 4800 point level before Xmas rolls around. Watch for potential shoring up at the 4700 point level next however:
Currency markets are again rejecting USD as a result of the soft PCE numbers overnight with tonight’s durable goods print to throw further caution on King Dollar. Euro was able to take advantage and returned to the previous weekly high, just pipping above the 1.10 handle this morning.
The union currency is looking very bullish here as short term momentum gets back into an overbought setting with price action bouncing well above trailing ATR support with a further breakout expected:
The USDJPY pair continues its own consolidation that is now turning into a retracement going into today’s BOJ inflation print as it settles well below the 143 level to almost return to the weekly lows.
Four hourly momentum is now dicing with oversold mode after failing to get properly overbought in the recent rally so watch for a battle around this area as the medium term trend remains down:
The Australian dollar is having a great run with the bulls pushing it above the 68 cent level for a new high overnight, mainly on USD weakness however.
While the Pacific Peso remains under medium and long term pressure this looks like a relief valve being let off with short term momentum returning to overbought territory:
Oil markets are reducing in volatility and remain in a downtrend trend with initial USD keeping Brent crude just below the $80USD per barrel level for a nominal new daily high.
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 getting out of oversold settings despite this failed test of support at the August level which should be setting up for further falls below:
Gold continues its consolidation after the wild ride above the $2000USD per ounce level following the recent USD flop and is now pushing back against short term resistance at the $2040 level after failing to exceed its session highs from late last week.
Profit taking seems to have subsided for now with the switch to position buying more evident so watch for a follow through if price holds and then breaks above last week’s resistance level at the $2040 zone:
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!