Overnight saw the Trump regime’s tariffs put back in place on appeal, causing more indecision and uncertainty in risk markets coupled with a series of bad domestic economic news for the USA. Corporate profits are down in their fastest drop in over 5 years while GDP estimates are for at least a 0.2% contraction as initial jobless claims also spiked as everything gets “Great Again”. Meanwhile the flipflop on tariffs saw the recently resurgent USD lose ground against the major currency pairs while Treasury yields actually contracted across the yield curve. The Australian dollar was one of the weaker undollars but is managing to stay above the 64 cent level against USD.
Oil prices remain somewhat weak with Brent crude unable to get back above the $64USD per barrel level as OPEC starts to mildly panic while gold was able to climb back above the $3300USD per ounce level overnight.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets are surging in the afternoon session with the Shanghai Composite up more than 0.6% while the Hang Seng Index is doing even better, up by more than 1.3% to extend well above the 23000 point level.
The daily chart shows a near complete fill of the March/April selloff although momentum is now picking up again and remains slightly overbought as the 90 day “relief” continues without any further positive news. Watch for any crack below the low moving average or 23000 point level:
Japanese stock markets were outperforming everyone however with the Nikkei 225 up more than 1.8% to 38435 points.
Daily price action was looking very keen indeed although daily momentum has slowed down somewhat this week after clearing resistance at the 36000 point level with another equity market that looks stretched and ready to rollover again here. Watch ATR support closely which appears to be firming in recent sessions:
Australian stocks were able to eke out a small lift higher with the ASX200 closing up 0.1% to 8409 points.
SPI futures are down slightly as traders balance the falls on European shares and the small lift on Wall Street overnight. The daily chart pattern suggests further upside is still possible as the inverted head and shoulders pattern is nearly complete with the RBA cut helping boost this but correlation with other risk markets will come into play here – watch as daily momentum is firming again:
European markets failed to continue their rebounds with the German DAX doing the heavy lifting with a 0.4% loss as the Eurostoxx 50 Index finished just 0.1% lower at 5371 points.
Support at the previous monthly support levels (black line) at 5100 points is now firmly held with the bounce off the 2024 lows at the 4400 point level indicating a massive fill of this dump and pump action with the former February highs nearly complete. A rollover could be forming here so watch for support at the 5200 point level proper:
Wall Street had a strange session again but eventually moved higher with the NASDAQ up nearly 0.4% while the S&P500 finished up the same at 5912 points.
The four hourly chart was previously supporting a potential slowdown action here that could be translating to a top on the daily chart as prices gets back above the pre-Trump Tariff Tax day. But this rollover was another orchestrated dump and pump with a BTFD in place:
Currency markets had been moving back towards King Dollar strength despite the latest FOMC warnings but this was flipped again overnight on the appeal on the Trump regime tariffs. Euro was pushed back above the 1.13 level after briefly breaking into the low 1.12 zone to almost get back to its previous weekly high.
The union currency was pushed back below the 1.13 handle previously but support bounced back at the 2023 and 2024 highs with a breakout above trailing ATR resistance on the four hourly chart. Medium term momentum remains quite positive here but watch for any break below last week’s low at the mid 1.12 level:
The USDJPY pair rebounded most of this week and got way ahead of itself on the Trump tariff court defeat to spike up to the 146 level before a solid 200 pip retracement last night saw it move back to the 144 handle exactly where its found some tentative support.
I still contend we need to watch for any sustained break below the 139 level which completes a multi year bearish head and shoulders setup that could see the 110 to 120 level revisited. Watch the short term support that could come under pressure here first:
The Australian dollar was also pushed down on USD resurgence after blasting through the 65 cent level previously but managed a small reprieve overnight that was shortlived as it was weighed down by short term resistance at the mid 64 cent level.
Stepping back for a longer point of view (and looking at the trusty AUDNZD weekly cross) price action has crossed back above the 200 day MA (moving black line) after bouncing off a near new five year low. Keep an eye on temporary support at the 63 cent level:
Oil markets are still trying hard but failing to hold onto the post tariff bounce with Brent crude pushed down below the $64USD per barrel level again after failing to make a new weekly high.
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 still building here as domestic demand in the US is likely to continue to decline as the Trump Taxes take effect:
Gold had briefly retraced below the $3300USD per ounce level after deflating all week but managed like the other undollars to find some life overnight, popping back above that level proper this morning.
Short term support had firmed immensely in recent sessions showing real strength but momentum became considerably overbought so this was inevitable as price action has reverted back to the uptrend line from the April lows. There is further support at the $3200 level that could be tested next on the overshoot:
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!
