Friday night saw the release of the latest US unemployment aka non-farm payroll figures and while they underperformed they came in as expected, giving a relief valve to Wall Street which managed a meagre rally to end the trading week still at a new low. European stocks pulled back but then managed more gains in futures as the Euro zoomed ever higher against the failing USD as the Trump Trade War continues to make holes in Diaper Don’s feet and underwear, although the Chinese are now picking on the Canadians with tariffs too. The USD managed a very late rally against most of the undollars but remains under the pump with the Australian dollar retracing back to the 63 cent level.
10 year Treasury yields shifted slightly higher above the 4.3% level while oil prices managed a wild session but eventually finishing flat US recession fears mount with Brent crude holding at the $70USD per barrel level. Gold was largely unchanged as it tries hard to get back on trend to remain just above the $2900USD per ounce level.
Looking at stock markets from Asia from Friday’s session, where mainland Chinese share markets moved a little lower in afternoon trade with the Shanghai Composite down around 0.2% to 3375 points while the Hang Seng Index lost over 0.5% to finish the week at 24231 points yet still at a new monthly high.
The Hang Seng Index daily chart shows how this recent move looked unsustainable to the upside after recently setting up for another potential breakdown around the 20000 point level but has brushed this caution aside. Momentum remains overbought after beating the previous monthly highs at the 21500 level but as I warned last week – be cautious here in the face of another reversal:
Japanese stock markets however are still giving up their recent gains with the Nikkei 225 down more than 2% to close at 36887 points.
Price action had been indicating a rounding top on the daily chart for sometime now with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level now in full remission. Yen volatility remains a problem here, with a sustained return above the 38000 point level unlikely with futures indicating a rocky start to the new trading week at these new lows:
Australian stocks continued their own steep selloff with the ASX200 closing nearly 2% lower at 7948 points, wiping out all of the gains for 2025.
Although SPI futures are up nearly 1% due to the bounceback on Wall Street from Friday night I still expect volatility to rule this week. The daily chart pattern suggests resistance overhead at the 8500 point level is far too heavy for the market to overcome with short term momentum oversold and ready to go lower:
European markets had uneasy sessions across the continent, although sentiment remains high as the Eurostoxx 50 Index finished some 0.8% lower at 5468 points, although it did recover substantially in post close futures.
This no longer looks like a rally that is running out of steam as daily momentum reverts back from overbought to positive readings in a steady consolidation. Daily candlestick analysis showed some buying exhaustion setting but optimism might be coming to the fore again so watch for a breakout above the 5500 point region:
Wall Street saw some bottom picking on the NFP print but it was really just a bounce off support that may not have legs as the NASDAQ gained 0.7% while the S&P500 lifted 0.5% to finish at the 5770 point level, still well off its recent highs.
This should have set up a rally into the 6200 point area but the good old Trump pump and dump scheme is working a treat here as overhead resistance rejected further calls to launch higher above that level. Short term momentum is setting up for a swing trade here but be wary of the dead cat bounce:
Currency markets remain strongly against King Dollar on the burgeoning trade wars although Friday night’s NFP took some wind out of the sails for Euro which held fast just above the 1.08 handle to make yet another new weekly and monthly high.
The union currency surged as the bluffs were called on Trump’s tariffs, with short and medium term support building at higher levels. Momentum was overextended earlier in the week and has now reverted so watch for a potential pullback on the weekend gap and newsflow:
The USDJPY pair is still failing to get out of its funk after a very brief deceleration phase into the early February lows around the 151 level although short term momentum is fighting back with a slight push above the 148 level on Friday night.
Short term momentum was extremely oversold before the start of week bounce but required price action to at least get over the 156 level to call this a proper trend higher. As USD weakens structurally overall and domestic policies continue to strengthen Yen I’ve been warning for sometime about a strong break below the 151 level:
The Australian dollar is trying to get back into the swing of things with some upper movement around the 63 cent level but USD weakness can only take it so far with some mid week reversion pulling it back somewhat.
The recent follow through to the high 62’s and low 63’s was always high risk going into the live February RBA rate meeting and after the Trumpian tariff crusade although this bounceback could of shot over the 200 day MA (moving black line) with a clear inverted head and shoulders pattern – but did not come to pass:
Oil markets are failing to get back on track with Brent crude pushed further down all week before a late reprieve saw it steady at the $70USD per barrel level but remains weak internally.
The daily chart pattern shows the post New Year rally that got a little out of hand and now reverting back to the sideways lower action for the latter half of 2024. The potential for a return to the 2024 lows is building here:
Gold has managed to get back above the $2900USD per ounce level but continues to meet short term resistance around the $2920 level with support not yet clear slightly below.
Price action has always found a lot of resistance just under the $2960 zone so that is the likely target in this move:
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!