Another night dominated by central bank decisions contrasted with indecisions around the Israeli war on Iran with the Swiss bank cutting rates to zero while the BOE held fire, just after the Fed a few days ago, while the Trump regime again goes to the TACO truck when talking about non-existent negotiations with the Iranian regime. This still led to more USD weakness with Euro and Pound Sterling recovering somewhat from their recent small losses while the Australian dollar was under more pressure due to the latest unemployment print, unable to hold above the 65 cent level. A closed Wall Street for a holiday is proving a poor lead for equity markets here in Asia.
Oil prices are spiking across both markers with Brent crude now accelerating above the $78USD per barrel level while gold took another hit, losing $20 or more to finish at the $3360USD per ounce level.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were down sharply in afternoon trade as the Shanghai Composite fell more than 0.7% to extend well below the 3400 point level while the Hang Seng Index also lost significant ground, down 2% to 23237 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 that could halt this breakout:
Meanwhile Japanese stock markets were playing catchup with the Nikkei 225 down more than 1% to 38488 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 are again in hesitation mode with the ASX200 closing 0.1% lower at 8523 points. SPI futures are down more than 0.3% given the lack of a lead from a closed 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 now rolling over:
European markets are rolling over after failing to find any positive momentum with the Eurostoxx 50 Index closing nearly 1.3% lower overnight at 5197 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 is accelerating here so watch for support at the 5200 point level proper:
Wall Street was closed for a holiday overnight with futures somewhat mixed at first before spiking at the end of the session.
The four hourly S&P chart was previously supporting a potential slowdown action here that could be translating to a top on the daily chart as prices fail to get back above the pre-Trump Tariff Tax day. A rollover is looming here so watch the 6000 point level to turn into resistance:
Currency markets want to return to an anti-USD mood but a dovish SNB and BOE still saw King Dollar pushed slightly lower overnight with Euro almost recovering above the 1.15 level after recently making a new weekly low.
The union currency had been building strength continuously as bad domestic economic news from the US overshadowed any continental slowdown. Medium term momentum was very overbought before the Israeli strike so this reversal is not unexpected. Watch for internal support in the short term at the 1.15 level:
The USDJPY pair is coming back on USD strength as it continued through the 145 handle overnight to make a new weekly and monthly high.
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. I’m still watching short term support that could come under pressure here again:
The Australian dollar was showing a lot of internal support on the short and medium term charts as it held around the 65 cent level but is starting to waver here on both the Middle East turmoil and weakening domestic economic data with a fall below overnight.
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:
Oil markets are obviously highly volatile and spiked higher again overnight with Brent crude lifting through the $78USD per barrel level for 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 previous lows is obviously off the table until the conflagration between Tel Aviv and Tehran subsides:
Gold is continuing its slippage below the $3400USD per ounce level as it looks set to cross its key uptrend line, falling to the $3360 level overnight.
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. The desire to climb back above the recent weekly/monthly highs and still have another crack at the $3400 level is weakening:
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!