Overnight saw Wall Street stumble for the fifth consecutive session as traders get nervous about tonight’s Jackson Hole meeting and possible big changes at the Federal Reserve proper as the Trump regime wants to install sycophants on the board ASAP. The USD is seeing more signs of a strength with a strong flash PMI overnight helping with Euro and Pound Sterling pushed lower while Treasury yields continue to lift with inflation concerns rising again. The Australian dollar stayed in retreat in sympathy with the Kiwi after the recent RBNZ cut, falling back to the 64 cent level proper against USD early this morning.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were relatively steady going into the close with the Shanghai Composite hovering above the 3700 point level while the Hang Seng Index was down nearly 0.3% as it almost crosses 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 are falling back again with the Nikkei 225 off by more than 0.5% at 42610 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 again the odd ones out in the region with the ASX200 closing up more than 1% higher at a new record high to push above the 9000 point level. SPI futures are down slightly as the poor lead from Wall Street overnight is likely to catch up to end the trading week.
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 but there was some signs of life across the continent with the Eurostoxx 50 Index closing 0.2% lower to finish at 5462 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 again unable to move higher with the NASDAQ finishing some 0.3% lower while the S&P500 lost more than 0.4% to close at 6370 points, taking some heat out of the market.
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 still seeing a slight change in tune as we await the Jackson Hole conference today as Euro is pushed down to the 1.16 level proper overnight.
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, having lost more than 100 pips since the start of the trading week, but coming up to weekly support:
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 more lively here with a breakout above the 148 handle 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 confidence is slowly dissipating with a significant fall down to the 64 cent level after making a new series of lows on the four hourly chart to retrace 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 are trying hard to get any positive momentum going as Brent crude lifts slightly above the $67USD per barrel level after being stuck around the $66USD area after recently making new weekly lows.
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 its trying hard in the face of a lot of selling here as it holds slightly at the $3340USD 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!