Overnight saw Wall Street stumble again, as big tech stocks couldn’t do the heavy lifting while European markets also pulled back slightly although the rising FTSE was an outsider. The release of the latest FOMC meeting minutes saw them highlight inflation and tariff risks with politics pushing in again as the Trump regime places pressure on more Fed members to resign so they can takeover the Federal Reserve. The USD was saved somewhat by the hawkish tone of the minutes with Euro and Pound Sterling pushed lower while the Loonie stabilised at a recent monthly low. Meanwhile the Australian dollar stayed in retreat in sympathy with the Kiwi after yesterday’s RBNZ cut, falling back to the low 64 cent level against USD.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets rebounded strongly going into the close with the Shanghai Composite finishing more than 1% higher to extend well the 3700 point level while the Hang Seng Index was able to eke out a scratch session as it almost crossed below the 25000 point level.
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 breakout play here with support at the 24000 point level as the springboard:
Japanese stock markets fell back further however with the Nikkei 225 off by more than 1.5% at 42888 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 is not stopping:
Australian stocks were the odd ones out in the region with the ASX200 closing 0.2% higher at 8915 points. SPI futures are up slightly despite the poor lead from Wall Street overnight which again is likely to see extended volatility today.
The daily chart pattern is suggesting further upside still possible with a base built above the 8500 point level as daily momentum has maintained its overbought status:
European markets fell back slightly after their recent rebounds across the continent with the Eurostoxx 50 Index closing 0.2% lower to finish at 5472 points.
Weekly support hadn’t moved in a few months but has now been decisively breached, with the market unable to push any further above the pre “Liberation Day” highs. There could be daylight below but momentum was quite oversold so this might be overdone as this rebound shows a complete fill:
Wall Street was also unable to move higher with the NASDAQ finishing some 0.7% lower while the S&P500 lost 0.2% to close at 6395 points.
The daily chart still looks like a stairway to heaven while the four hourly chart shows the 6500 point barrier becoming a little too high to overcome as short term momentum switches to oversold mode. Watch for a resolution at support here:
Currency markets have been against USD last week following a succession of poor US domestic economic prints with the latest inflation prints actually absorbed by the majors as “King Dollar” wasn’t able to regain strength. This week is seeing a slight change in tune as we await the Jackson Hole conference on Friday with more hawkish Fedspeak from the FOMC minutes overnight still pushing the majors back as Euro remains around the mid 1.16 level.
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 looking steady here:
The USDJPY pair had been getting pushed down on temporary Yen weakness following the Japan/US trade “deal” and USD weakness around the CPI print, but is again getting tested here with a retracement towards the 147 continuing overnight.
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. There could be another attempt here to get back to the 150 handle in the short term however:
The Australian dollar has been largely unchanged by the recent but well expected RBA cut where it held above the 65 handle but yesterday saw confidence disappear in full with a significant fall down to the mid 64 cent level after making a new series of lows on the four hourly chart. This was further exacerbated by the RBNZ cut and further selling off overnight saw it get back to its July lows.
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 there is potential for a further rollover if Fed signalling does not become more dovish, with weekly support now taken out.
Oil markets still really can’t get any positive momentum going as Brent crude remains stuck around the $66USD per barrel level after recently making new weekly lows, although a late session rally saw it almost breach the $67 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 a lot more support in the short term:
Gold had been failing to revive its recent bounceback as it flopped down towards the $3300USD per ounce level after making a series of new lows on the four hourly chart but it too had a late rally and lifted towards the $3350USD per ounce level overnight.
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 was getting back into the positive zone, as support was being somewhat built but that series of new lows was too telling:
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!