A weaker than expected US inflation print overshadowed the not-a-deal US-China trade talk announcement from the Trump regime that looks almost exactly like a return to the early April settings. Wall Street couldn’t swing either of these events as positive with European shares also continuing their pullback as the USD fell back against most of the major undollars. The Australian dollar was an outlier however as it lost ground to finish just above the 65 cent level on the back of its own domestic inflation numbers.
Oil prices had been building strength recently which has helped lift both WTI and Brent crude to new levels on increased US/Iranian tensions, with the latter soaring through the $70USD per barrel level while gold continued its recent bounceback to finish slightly above the $3350USD per ounce level this morning.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets are getting of their recent holding pattern as the Shanghai Composite jumped more than 0.6% in the afternoon session to get above the 3400 point level while the Hang Seng Index also zoomed nearly 1% higher to get back above the 24000 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 but this looks a good breakout:
Japanese stock markets were still trying to continue their bounce back with the Nikkei 225 moving 0.5% higher to 38421 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 the worst relative performers on the consumer confidence print with the ASX200 closing just 0.1% higher at 8597 points.
SPI futures are up 0.2% which maybe hopium given the lack of a rise on Wall Street 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 can’t find positive momentum and fell back again with the Eurostoxx 50 Index slipping 0.4% lower to close at 5393 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 trying to be positive about the China “deal” but big tech snapped back to reality with the NASDAQ losing 0.5% while the S&P500 finished 0.3% lower at 6022points.
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. Hopium is still giving a lot of support to rising prices above the 6000 point level:
Currency markets are again moving against USD although not in an united fashion with King Dollar mainly losing ground against Euro and Pound Sterling overnight as the weaker than expected US inflationary print was digested.
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 now fully underway to briefly breach the 1.15 level. Medium term momentum remains very positive here:
The USDJPY pair could not make its recent rebound stick and was mildly sold off overnight to retreat below the 145 level and is looking to get above that zone again as short term momentum reverts to neutral settings 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 was the odd one out, possibly on speculation about the AUKUS submarine deal or other machinations with China with a drop back to 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 had been building stronger following a positive reaction to Friday’s NFP report but escalating US tensions with Iran sent Brent crude well above the $70USD per barrel level overnight to extend its 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 has managed to get back on track despite a weak inflation print to close above the $3350 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!