Another light news session overnight as speculation mounts of potential trade deals and tariff pullbacks with US-China talks progressing. Wall Street took any positive news as good news and was bid strongly while European shares pulled back on some not so good unemployment data and increased concerns over defence spending. Currency markets are in a holding pattern as no news about the “stupid debt grenade tax bill” is being overshadowed by the 1930’s tripback into fascism in LA with most undollars unchanged overnight with the Australian dollar staying above the 65 cent level again.
Oil prices continue to build strength recently with WTI and Brent crude almost making a new breakout overnight with the latter settling at the $66USD per barrel level while gold hesitated in its recent bounceback to finish slightly below the $3320USD per ounce level this morning.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were trying hard to get out of their recent holding pattern but the Shanghai Composite slumped nearly 0.5% in the afternoon session after failing to get above the 3400 point level while the Hang Seng Index finished dead flat at 24162 points.
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 but this looks a good breakout:
Japanese stock markets were still trying to continue their bounce back but it was a weaker effort with the Nikkei 225 moving just 0.2% higher to 38178 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 reopened from the long weekend with the ASX200 closing some 0.8% higher playing catchup at 8587 points.
SPI futures are up 0.3% reflecting the rise on Wall Street from overnight. The daily chart pattern is still suggesting 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 slipped back again mainly due to a fall in the German DAX with the Eurostoxx 50 Index slipping 0.1% lower to close at 5415 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 still be forming here so watch for support at the 5200 point level proper:
Wall Street was mildly positive with the NASDAQ gaining more than 0.6% while the S&P500 finished 0.5% higher to close at 6038 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 try to get back above the pre-Trump Tariff Tax day. This was again looking like a TACO trade as resistance seemed weak overhead although the potential for trade deals and hopium are still giving a lot of support to rising prices above the 6000 point level:
Currency markets are moving to a broader holding pattern as the battle between the looming debt grenade on King Dollar versus a trade war amongst the undollars goes into the “mid” zone. Euro firmed again at the 1.14 level overnight and looks moderately supported here in the short term although resistance continues to build at the 1.15 handle proper.
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 still underway. Medium term momentum remains very positive here but watch for a potential pullback to the mid 1.13 level again:
The USDJPY pair pushed its rebound higher again on Friday night to make a new weekly high just below the 145 level and is looking to get above that zone again although short term momentum is only mildly positive for now.
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. So despite this short term move on a potential trade deal, I’m still watching short term support that could come under pressure here again:
The Australian dollar just can’t be pushed down on USD resurgence as it held above the 65 cent level overnight after a mild pullback following Friday night’s NFP print, matching the previous weekly highs.
Stepping back for a longer point of view (and looking at the trusty AUDNZD weekly cross) price action has remained supported by 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 but this is still looking promising for the Pacific Peso:
Oil markets are trying to build stronger following a positive reaction to Friday’s NFP report with Brent crude attempting to push further above the $67USD per barrel level to make a new monthly 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 but watch for any breakout above the $66-67 zone:
Gold was moving like the other undollars against USD after finding some stability last week but suffered the most on Friday night with a steep fall back to the low $3300USD per ounce level but managed a small reversal over the weekend gap to close at the $3320 level 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. This line had appeared broken but could be a false positive on temporary USD 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!