Wall Street failed to make new highs overnight as the Federal Reserve held fire on any interest rate cuts with European shares rallying instead as the USD soared to new heights against the major currency pairs. The Trump regime has seen major trade deals with Brazil and India fail due to more bullying from Trump himself as a host of other nations look like missing the August 1st “deadline” on US tariffs. The Australian dollar was pushed almost down to the 64 cent level on the FOMC hold while US Treasuries all saw increases in yields with expectation of a September cut falling.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were up slightly going into the close with the Shanghai Composite just above the 3600 point level while the Hang Seng Index lost more than 1% to retreat to just above 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 but some resistance is building here:
Japanese stock markets remain in the doldrums with the Nikkei 225 pushed 0.2% lower as it falls back below the 41000 point level.
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 the best performing in the region with the ASX200 closing nearly 0.6% higher to extend above the 8700 point level. SPI futures are down nearly 0.2% due to the slip 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 were able to gain traction with most bourses higher across the continent sending the Eurostoxx 50 Index up nearly 0.3% to finish at 5393 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. Watch for further retracement on any Trumpian volatility:
Wall Street tried to push to new record highs but failed to gain traction after the FOMC meeting with the NASDAQ up a handful of points while the S&P500 was pushed 0.1% lower to close at 6362 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 more record highs are made. However ATR support is coming under pressure so far this trading week for watch for the small probability of a dip below:
Currency markets are pushing USD higher in the wake of the Federal Reserve meeting overnight alongside the Bank of Canada hold decision which has pushed the Loonie to a new monthly low. Most currency pairs fell back with Euro the most affected after breaking through the 1.15 handle it almost broke through the 1.14 level this morning on a swift selloff.
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 somewhat overbought stage that has now turned into a proper rout with a new weekly low so watch for potentially more damage from here:
The USDJPY pair has pushed significantly higher on USD strength to extend well above the 149 level to make a new monthly high.
This price action is sending the pair back to the March highs and has the potential to extend those gains through to start of year position at the 158 handle:
The Australian dollar recently took a big hit on the weaker unemployment print and has struggled to not make new weekly lows on more USD strength, but has now broken well below the 65 cent level as a RBA cut looms.
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 not looking better:
Oil markets have been struggling to make significant gains with the trend still sideways but last night saw a follow through of the previous session breakout with Brent crude finishing well above the $72USD 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 rally up to the $80 level after making new substantive daily highs is now gaining traction:
Gold made a false break above the $3400 level recently but plummeted in subsequent sessions, finishing below the $3340 level on Friday night but has since pushed right through the $3300 level on USD strength.
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 quite negative now with short term momentum very oversold:
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!