Risk sentiment was contained somewhat overnight on Wall Street as the USD rose alongside bond markets in the absence of any major economic news. European stocks still can’t find much confidence with futures indicating a flat finish to the trading week here in Asia. The Australian dollar fell back amid USD strength and has again retreated below the 65 cent level.
10 year Treasury yields eventually finished back above the 4.1% level while oil prices rebounded with Brent crude gaining more than 2% to get above the $81USD per barrel level. Meanwhile gold is still under pressure but holding on just above the $2030USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets are still moving higher with the Shanghai Composite up nearly 1.3% to 2865 points while in Hong Kong the Hang Seng Index is going the other way, down 1.3% to 15878 points.
The daily chart still shows the significant downtrend from the start of 2023 with the 19000 point support level a distant memory as medium term price action remains stuck below the 17000 point zone. Another rollover is now underway despite price bouncing off support at the 16000 point level as daily momentum was barely positive:
Japanese stock markets finally found their confidence with the Nikkei 225 closing more than 2% higher at 36863 points.
Trailing ATR daily support was never threatened by price action after this bounce went beyond the September highs at the 33000 point level with daily momentum getting back to overbought readings with a significant breakout. A selloff back to ATR support at 32000 points remains unlikely as the November highs are wiped out in this breakout but I’m cautious of a strong pullback here on any volatility:
Australian stocks continued their lift higher with another push above the 7600 point level for the ASX200, up nearly 0.4% at 7645 points.
SPI futures are down around 0.1% in line with the wobbly sessions on Wall Street overnight. The daily chart is looking firmer with the medium term uptrend and short term price action coming together to take out the previous December highs. I would still watch for any continued dip below the low moving average and conversely with a breakout above the 7600 point level:
European markets were able to bounce back across the continent although the FTSE refused to join in, with the Eurostoxx 50 Index eventually finishing 0.7% higher at 4710 points.
The daily chart was showing price action meandering and not yet making a solid attempt at breaching the early December 4600 point highs before this surge with daily momentum still well overbought and price exceeding the highs from December. There are some hopeful signs this could turn into a larger breakout overall:
Wall Street tried to be positive again but was unable to make substantive gains across all three bourses with only the NASDAQ advancing some 0.3% while the S&P500 was flat and closed just shy of the magical 5000 point level.
Short term momentum has retraced fully out of oversold territory on the four hourly and daily chart, now getting very overbought as the 5000 point level remains the target ahead, despite the “good” economic roadblocks due to the stronger NFP and USD:
Currency markets saw another mild pullback against USD overnight with Euro remaining on the floor following Friday’s NFP print, holding well below the 1.08 handle to finish slightly above the recent new weekly low.
The union currency had been somewhat weak before Friday night, after tracking sideways for nearly three weeks as short term momentum switched to negative as price action remained contained well below trailing ATR resistance. This is not looking good with the 1.07 handle to come under threat next if the 1.0720 area is broken:
The USDJPY pair is breaking out after stabilising in the previous session with a surge through the 149 handle, taking back and extending through the Friday night gains.
This is looking very optimistic as Yen sells off due to BOJ meanderings but I’m wary of a pullback to the recent highs at the mid 148 level:
The Australian dollar remains one of the weakest undollars and rolled over again overnight after failing to find some life after overcorrecting from the recent RBA meeting, taking it back below the 65 handle.
The Aussie has been under medium and long term pressure for sometime with the latest rally just a relief valve being let off before this realignment back to a strong USD with rate cuts a possibility later today. There are some signs of deceleration here so watch the 65 level for a possible inversion:
Oil markets have been able to stabilise and then launch higher with a solid breakout overnight taking Brent crude nearly 3% higher to almost get above the $81USD per barrel level.
After retracing down to trailing ATR daily support at the $77 level, price is now back above the weekly resistance levels that so far have held from the January false breakout.
Gold remains a bit wobbly after its short term rally following the FOMC and BOE meetings, managing to hold just above the $2030USD per ounce level overnight.
Daily momentum is still in a negative mood and short term support at just above the $2000 level will likely come under threat next here if the USD gains further strength:
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!