With Wall Street closed for a mid week holiday, risk markets were listless as European stocks faltered after their recent rebound. The USD was mixed again although Euro and Pound Sterling are losing short term momentum while the Australian dollar is still holding on to its post RBA meeting gains well above the 66 cent level.
US bond markets were closed and oil prices were also muted with both WTI and Brent crude futures unchanged, the latter still above the $85USD per barrel level. Gold was able to lift a few dollars but looks lacklustre again just above the $2300USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets are failing in finding some positive momentum with the Shanghai Composite closing 0.4% lower while the Hang Seng Index has surged more than 2.8% in afternoon trade, currently at 18430 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 was looking way overextended but this retracement is now taking some heat out of the market but needs to stop soon before moving into corrective mode:
Meanwhile Japanese stock markets are failing to get out of their holding pattern with the Nikkei 225 up just 0.2% to 38570 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 had been defended with short term price action now rebounding off former support at the 39000 point level with short term momentum still positive although futures are indicating a small lift on the open:
Australian stocks were unable to put in a positive session, with the ASX200 closing some 0.1% lower to 7768 points.
SPI futures are down a few points reflecting the lack of a lead from a closed Wall Street. 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 in mid April. Momentum is finally getting out of its oversold condition but has been unable to get back into positive territory with a return to the 7900 point level not yet on the cards:
European markets remain volatile and unable to continue their rebounds with mild losses across the continent with the Eurostoxx 50 Index losing just over 0.6% to close at 4885 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 with support at the 4900 point level quite firm with resistance still looming at the 5000 point barrier. ATR support has been taken out here which is ominous:
Wall Street was closed with futures indicating a flat open tonight with the S&P500 likely to stay well above the 5400 point level, closing at 5487 points.
The four hourly chart showed the Friday night rebound coming up against a lot of hesitation at the 5300 point level with short term momentum ready to launch higher. The consolidation phase with a small breakout now has legs as the 5400 point target level is swept away:
Currency markets are still somewhat feeling the effects of a dominant USD but Euro is coming back slightly after a week of downside volatility, maintaining its position just above the 1.07 handle but not yet showing any breakout moves.
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 its own inflation print. Medium term support at the mid 1.07 level is still firm but may come under increasing pressure from here:
The USDJPY pair was able to hold on and almost made a new session high overnight, briefly breaching the 158 handle as of this morning and almost matching the previous weekly high.
Short term momentum had gotten out of oversold condition but was not yet positive with price action suggesting a further pause or rollover here before the print with this move taking the pair back to last week’s finishing point. This volatility speaks volumes as it shows the 158 level looming as longer term resistance overall with more range bound price action expected:
The Australian dollar is trying to get back to its post US CPI one off high at the 67 cent level but price seems to be settling just above the mid 66 cent level.
So far the Pacific Peso hadn’t been able to take advantage of any USD weakness with momentum barely in the positive zone in recent weeks with price action whipsawing around the mid 66 cent level as a point of control. Watch the 66 handle to come under threat again however as this remains unconvincing:
Oil markets are almost out of correction mode but had a pause overnight due to closed US markets as Brent crude stays at the $85USD per barrel level.
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 with short term momentum trying to get out of negative mode:
Gold continues to track sideways without any upside potential although it is starting to firm here around the $2330USD per ounce level, remaining in a sideways bearish medium term pattern.
Still the biggest casualty of the US jobs report on Friday night, the shiny metal has bounced off its weekly low with short term momentum now neutral but not yet clearing short term ATR resistance overhead:
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!