Risk markets moved on geopolitical and outright political shenigans overnight with Apple pushing the NASDAQ over 1% higher while possible good news over Ukraine – via the US bullying India into submission over its Russian oil purchases – and more speculation about changes at the US Federal Reserve kept the USD significantly weak. Only Yen really held the line while Euro broke out to new highs and the Australian dollar lifted above the 65 cent level. US Treasuries saw yields lift across the curve again with the 10 year now at the 4.25% level.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets had a solid session with the Shanghai Composite closing 0.4% higher to extend above the 3600 point level while the Hang Seng Index has only put on 0.2% or so to just get above 25000 points.
The daily chart shows a complete fill of the March/April selloff with momentum reversing after failing to make new highs. Resistance at the 25000 point level has turned into a reversal here with support at the 24000 point level holding:
Japanese stock markets were able to do better with the Nikkei 225 closing 0.6% higher at 40794 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. ATR support has been ratcheting up for awhile but the potential for a pullback is still there:
Australian stocks were the best in the region again, with the ASX200 closing more than 0.8% higher at 8843 points. SPI futures are down 0.3% despite the rally on Wall Street overnight.
The daily chart pattern was suggesting further upside still possible with a base built above the 8500 point level but daily momentum has regained its overbought status:
European markets are still rising but with more moderation with the Eurostoxx 50 Index up just 0.2% to finish at 5263 points.
Weekly support hadn’t moved in a few months but has now been decisively breached, with the market unable to get push any further above the pre “Liberation Day” highs and now react sharply to Trumpian volatility. There could be daylight below but momentum does seem quite oversold so this might be overdone:
Wall Street was able to get back on track mainly due to tech stocks with the NASDAQ pushing more than 1% higher while the S&P500 lifted some 0.7% to close at 6345 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 were made. However ATR support on the daily chart has been clearly broken here taking out all of the previous month’s gains with price action suggesting a fill but this could reverse smartly:
Currency markets remain against USD following a succession of poor US domestic economic prints night’s poor NFP print with the latest ISM print not helping. Euro is now extending above its Friday night highs to break above the 1.16 handle proper.
The union currency had been building strength continuously as bad domestic economic news from the US overshadowed any continental slowdown but had reversed that trend in recent weeks. Short term momentum was suggesting a proper rout with a new weekly low at the 1.14 handle but this is a strong reversal that may have more upside:
The USDJPY pair oscillated around a point of control at just below the 148 level again overnight without much upside potential building here after its sharp retracement on Friday night from the latest US jobs print.
The previous price action was sending the pair beyond the March highs and had the potential to extend those gains through to start of year position at the 158 handle but the jobs surprise puts this all on the backburner:
The Australian dollar recently took a big hit on the weaker unemployment print and struggled to not make new weekly lows on more USD strength, but managed a small lift overnight to break through the 65 cent level as its likely the RBA cut will cut first before the Fed.
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, as this reversal is not that impressive as momentum remains negative in the short term:
Oil markets declined on Friday night with Brent crude continuing to fall back, with an dip below the $67USD per barrel level 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 rally up to the $80 level after making new substantive daily highs was gaining traction but needs more support in the short term:
Gold like other undollar’s reversed course on Friday night on the NFP print, getting back above the $3300USD per ounce level to make a new weekly high and held on to those gains again overnight to finish just below the $3370 level.
Short term support had been under threat most of the last three weeks with price almost returning to the late June lows as the USD gained strength. Daily momentum is getting back into the positive zone but only just, as this needs more support going forward:
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!