Friday night was a subdued session as Wall Street was closed for the (last?) 4th of July celebration while European shares took a drop as the expectations of entrenched tariffs from the Trump regime’s deadline this week look set. The early and surprisingly upbeat NFP print gave the USD a small reprieve in the previous session but saw the undollars regain slightly although the Australian dollar is slowly pushing down in anticipation of tomorrow’s expected cut from the RBA.
Looking at stock markets from Asia from Friday’s session, where mainland Chinese share markets were up with the Shanghai Composite pushing 0.3% higher to extend well above the 3400 point level while the Hang Seng has slipped slightly again to remain below the 24000 point level.
The daily chart shows a near complete fill of the March/April selloff although momentum has now reversed after being slightly overbought as price action meets trailing support at the 23000 point level. This was looking like a strong bounceback with firm support at the 23000 point level as a springboard but resistance is building into a rollover here:
Meanwhile Japanese stock markets were also barely moving as the Nikkei 225 is still just below the 40000 point barrier.
Daily price action was looking very keen indeed as daily momentum has accelerated after clearing resistance at the 36000 point level with another equity market that looks very stretched and breaking out a bit too strongly here. Watch ATR support continue to ratchet up but also for this rally to have a pullback:
Australian stocks are again just treading water with the ASX200 about to close slightly lower at 8597 points. SPI futures are dead flat given the lack of a lead from a closed Wall Street on Friday night.
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 has eased off from its slightly overbought status but still very positive:
European markets failed to come back to their recent good turn of confidence across the continent with the Eurostoxx 50 Index closing nearly 1% lower at 5288 points.
Weekly support hasn’t moved in a few months now indicating a lack of upward momentum with a potential rollover accelerating as daily momentum remains oversold. The market has not broken below the 5200 point level proper so we could see a small rally from here back to the previous highs but the looming tariff deadline is not helping confidence:
Wall Street was closed for the 4th of July long weekend with S&P500 closed nearly 0.9% higher, finishing at 6279 points.
A big beautiful bounceback is seeing the 6000 point level brushed aside as everyone buys everything as the asset owners all got their tax cuts entrenched forever and a day. The market is now waiting on this weeks tariff deal extravaganza:
Currency markets had been selling off King Dollar given the weakening domestic situation in the US but have paused somewhat based on the surprisingly good NFP print although the USD did see a hit with the passage of the Big Stupid Bill in Congress. Euro is slightly off its recent new highs but holding firm above the mid 1.17 level.
The union currency has been building strength continuously as bad domestic economic news from the US overshadowed any continental slowdown. Medium term and short term momentum is still definitely in its favour:
The USDJPY pair had been in the doldrums below the 144 level with momentum waning to the downside but the NFP shoved some life into it, sending up through the 145 handle before stabilising below the mid 144 level.
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. This could be a one off reaction to the NFP so watch for further domestic news around the BOJ and also the non existent trade deal/framework/vaporware:
The Australian dollar remains relatively strong after pushing aside significant resistance at the 65 handle as it slid back to just below the mid 65 cent level despite an imminent RBA rate cut this week.
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 and also the series of lower highs in recent weeks of signs of less internal support:
Oil markets have been licking wounds for awhile but may spike on the reopen this week due to mostly being closed on Friday and the weekend news of an unexpected spike of OPEC+ production. Brent crude saw a small lift higher in the previous session but failed to breach the $69USD per barrel level.
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 building further:
Gold is playing catchup to other undollars as it tries to get back above the $3400USD per ounce level, however it stayed around the $3330 area on Friday night.
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 almost gone:
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!