Last night saw risk markets unable to make headway again, although European stocks sold off across the calendar as the lack of any progress on any trade deals with the Trump regime continues to weigh. Wall Street tried to eke out more record highs but were pulled back in selloffs in tech stocks as more big names make earnings releases while the USD suffered the most against all the major currency pairs again reacting to the pressure on the Fed from Trump with even the beleagured Australian dollar pushed more than 50 pips higher to well above the 65 cent level.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets are lifting again with the Shanghai Composite pushing well above the 3500 point level to close 0.5% higher while the Hang Seng extended its gains to now clear the 25000 point level.
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:
Japanese stock markets reopened from their holiday with the Nikkei 225 drifting 0.1% lower to 39774 points.
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 were listless with the ASX200 basically unchanged 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 nearly 1% lower at 5290 points mainly due to a slump in the German DAX.
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 tried pushed to new record highs but the NASDAQ sold off due to chip stocks, finishing 0.3% lower while the S&P500 eventually closed some 0.1% higher at 6309 points in a unconvincing session.
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, but watch ATR support below:
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 kept rising out of its recent slump to settle well above the 1.17 handle after looking weak here but has gained a lot of 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 sold off completely to get well below the 147 level after reports of no progress on the trade deal.
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 it was still stuck around the 65 handle again as too many domestic and USD factors keep the Pacific Peso on a downtrend. Overnight however saw a significant 50 pip breakout on USD weakness to get back to a new weekly high.
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, but this is looking better:
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 is making a surge play here flying right up through the $3400USD per ounce level overnight for another 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!