Last night saw risk markets barely move on a quiet economic calendar or geopolitical catalysts with only the USD having any reactions as continued trade concerns with the Trump regime pushing for a baseline 15-20% tariff on all EU products sending King Dollar down against everything. Wall Street eked out more record highs with minimal gains while European stocks continued to inflate. The Asian session today will pivot on the result of the Japanese upper house election with all eyes on the BOJ while the release of the latest RBA minutes will make for interesting reading. The Australian dollar still looks weak at the 65 cent level despite a small uplift while US Treasury yields pulled back slightly across the curve.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets lifted strongly with the Shanghai Composite pushing well above the 3500 point level going into the afternoon session while the Hang Seng is extending its gains well above the 24000 point level, closing 0.6% higher at 24994 points.
The daily chart shows a complete fill of the March/April selloff with momentum building again to make new highs. This is still looking like a strong bounceback with firm support at the 23000 point level as a springboard:
Meanwhile Japanese stock markets were closed due to the long weekend with Nikkei 225 futures a slow start on the open today.
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 potentially have a pullback:
Australian stocks are pulling back sharply despite imminent interest rate relief with the ASX200 down more than 1% but still remains above the 8600 point level. SPI futures are up slightly given the small gains on Wall Street overnight.
The daily chart pattern is still suggesting further upside is still possible with a base being built here and although daily momentum has eased off from its slightly overbought status its still very positive:
European markets remain unsettled with not much positive movement on the continent with the Eurostoxx 50 Index closing 0.3% lower at 5342 points.
Weekly support hasn’t moved in a few months but it was never fully breached, giving time for the market to build a base and breakout here back to the pre “Liberation Day” highs. This looks like a strong, if somewhat overdone breakout with some positive momentum to the upside but watch for further retracement on any Trumpian volatility:
Wall Street pushed to new record highs with the NASDAQ edging 0.3% higher while the S&P500 eventually closed some 0.1% higher at 6305 points.
The four hourly chart was looking confused with recent support at the 6200 point level coming under pressure before resistance at the 6350 point level was taken out as it looks like more record highs are forthcoming:
Currency markets focused on trade again with the USD losing out against most of the majors, particularly the Canadian Loonie and Pound Sterling. Euro also rose out of its recent slump to settle just below the 1.17 handle after looking weak here but seems to be building more short term support.
The union currency had been building strength continuously as bad domestic economic news from the US overshadowed any continental slowdown but has reversed that trend in recent weeks. Short term momentum was suggesting a proper reversal with support at the 1.1650 mid level taken out but this could be building a base here of consolidation:
The USDJPY pair was able to break through the 148 handle on the recent US CPI print, but faced a proper stall here before the Japanese election and has now reverted back to the low 147 level after failing to make a new daily high.
I think my contention of a completion of the multi year bearish head and shoulders setup by breaking below the 139 level is off the cards for now, but watch for the inevitable pullback on too much strength here and of the course the TACO trade as the lack of any news around a trade deal is building risk against the pair:
The Australian dollar recently took a big hit on the weaker unemployment print, although it managed to claw back most of that later last week its still stuck around the 65 handle again as too many domestic and USD factors keep the Pacific Peso on a downtrend.
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 were able to put in a small bounce on the unexpected spike of OPEC+ production a week or so ago but are still struggling to make significant gains with the trend starting to weaken as Brent crude stays around the $69USD per barrel level yet again overnight.
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 still there if it cannot make a substantive new daily high.
Gold was struggling after managing to get out of its recent hole to bounce back above the $3300USD per ounce level last week but finally make a surge overnight, this time flying right up to the $3400USD per ounce level for a new daily high.
Short term support has been under threat most of the last three weeks with price almost returning to the late June lows as the USD gains strength. Daily momentum is very positive now with short term momentum perhaps somewhat overbought but looking good for further gains:
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!