Wall Street finally got some relief overnight with some inflation talk from the Fed and the latest BOE hold decision with further speculation the ECB may join the rate cut train sooner as well. The USD fell back as a result, pushing Euro higher and helping the Australian dollar rise back above the 66 cent level.
10 year Treasury yields moved higher to get back above the 4.5% level, while oil prices did better to stabilise as Brent crude pushed above the $84USD per barrel level. Meanwhile gold was finalyl able to capitalise on its recent rebound as it soared back above the $2300USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets saw a good lift with the Shanghai Composite up more than 0.8% while the Hang Seng Index also had a strong session, closing more than 1% higher at 18528 points.
The Hang Seng Index daily chart was starting to look more optimistic with price action bunching up at the 16000 point level before breaking out in the previous session as it tried to make a run for the end of 2023 highs at 17000 points with the downtrend line broken. Price action looks way overextended without any retracement to take heat out of the market, but futures look very optimistic indeed:
Meanwhile Japanese stock markets were unable to make any gains with the Nikkei 225 eventually closing more than 0.3% lower at 38073 points.
Price action had been indicating a rounding top on the daily chart with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level almost in full remission. Short term resistance has been defended with short term price action now retracing to support at the 39000 point level. Watch the 38000 support level to remain solid here:
Australian stocks fell the sharpest with the ASX200 closing 1% lower as it failed to hold above the 7800 point barrier, finishing at 7721 points.
SPI futures are up 0.3% due to the breakout on Wall Street overnight so we should see a good finish to the week. The daily chart was showing a potential bearish head and shoulders pattern forming with ATR daily support tentatively broken, taking price action back to the February support levels. Momentum is finally getting out of its oversold condition with this breakout setting up for potential upside:
European markets were somewhat positive across the continent, but the returns were more mixed as the Eurostoxx 50 Index finished just 0.3% higher, closing at 5054 points.
The daily chart shows price action off trend after breaching the early December 4600 point highs with daily momentum retracing well into an oversold phase. This was looking to turn into a larger breakout but this retracement below short term support is unlikely to turn into a larger reversal unless support at the 4900 point level is breached again:
Wall Street finally found its mojo with a breakout session so while the NASDAQ only gained 0.3%, the S&P500 finished more than 0.5% higher, closing above the 5200 point level.
The four hourly chart was showing a fairly wide trend channel forming after bottoming out at support at 5000 points but lost significant momentum following Friday’s rebound, and thus a full retracement through trailing ATR support at the 5100 point level. Price action was stalled at the 5200 point area with momentum now getting back into nicely overbought settings:
Currency markets came back against USD with more rate cut talk from the Fed helping the majors lift against King Dollar, led by Euro as it took back some ground it gave up during the week.
The union currency had previously bottomed out at the 1.07 level at the start of April as medium term price action with a reprieving reversal in price action back towards the 1.09 level before last week’s inflation print. Short to medium term support at the 1.0630 level has been respected so far, with a breakout now back to the 1.08 level although momentum is not quite overbought:
The USDJPY pair is stalling out a little after climbing back higher after its wild ride last week, last night time steadying at the mid 155 handle to nearly complete a rebound from its weekly low on Friday night.
This is not looking good in the short term for a lot of traders but looking through the volatility I thought we’d see some stability return around the 155 handle but not yet – watch for a potential breakout above trailing ATR at the 155 handle next:
The Australian dollar got some relief overnight from a weaker USD as it pushed back above the 66 cent handle to almost match its previous weekly highs.
The Aussie has been under medium and long term pressure for sometime before the RBA and Fed meetings and while the previous temporary surge looked strong, it wasn’t overbought on the four hourly chart and had not surpassed support from last week’s consolidation phase. This tentatively looks good for the Pacific Peso but I’m watching the mid 66 handle next:
Oil markets are just holding on after a lot of intrasession volatility despite the latest round of Middle East conflicts with volatility seeing Brent crude lift just above the $84USD per barrel level after briefly touching the $81 area.
After breaking out above the $83 level last month, price action has stalled above the $90 level awaiting new breakouts as daily momentum waned and then retraced back to neutral settings. Watch daily ATR support here at the $86 level which is still broken and will likely be resistance for sometime:
Gold finally got back on trend following the inflation talk from the Fed overnight with a big surge that has seen it recover all of its retracement earlier in the month with a return to well above the $2340 level.
While the recent rebound was not enough to get over shorter term ATR resistance this one has surpassed this and taken the shiny metal back up to but not above the late April highs at the $2350 level with momentum now fully overbought:
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!