Its been a very cautious start to the trading week with more selling but not quite dumping on Wall Street overnight with a parallel selloff in Bitcoin not helping. The run back to USD continues even though without any key economic indicators being published by the Trump regime in the last two months, this looks more like safe haven moves than anything permanent. Euro and Yen fell back but most selling was in Australian dollar as news came in that Korea is giving up coal by 2040, sending the Pacific Peso well below the 65 cent level.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets fell back into the close with the Shanghai Composite down 0.6% to 3966 points while the Hang Seng Index was down nearly 1%, closing at 26384 points.
The daily chart of the Hang Seng Index shows a complete fill of the March/April selloff with a resumption of buying above 26000 points as momentum builds properly again but I do note some resistance building here, so watch for a proper rollover soon:
Japanese stock markets were off only slightly however with the Nikkei 225 down more than 0.2% to almost retreat below the 50000 point level.
Daily price action was looking extremely keen indeed as daily momentum accelerated after clearing resistance at the 42000 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 as the 50000 point level becomes the crucial pivot point going forward:
Australian stocks were the odds one out and finished in the green with the ASX200 up 1 point or so at 8636 points. SPI futures are down 0.6% or more due to the poor session on Wall Street overnight.
The daily chart pattern was suggesting further upside still possible with a base built above the 8700 point level as daily momentum tried to maintain its overbought status. Short term support is no longer holding on, as momentum builds for a broader selloff:
European markets were again in sell mode across the continent with the Eurostoxx 50 Index closing some 0.9% lower at 5640 points.
Weekly support has been respected after a brief touch below the 5200 point level as the recent rebound on Euro weakness shows a complete fill. The market has been failing to make headway here due to the too high valuations but I’m wary of short term support breaking here as well:
Wall Street started off uneasy and then sold off throughout the session with the NASDAQ and the S&P500 both losing 1.2% with the latter closing at 6647 points.
The four hourly chart shows that resistance at the 6900 point level is still quite relevant after the bounceback from the supposed end of the US government shutdown rally. Watch for a potential rollover below the 6600 point area here more on macro/political catalysts:
Currency markets are still broadcasting the fact that King Dollar’s days are numbered as we await the delayed releases of job numbers tomorrow night, with most undollars pulling back from their Friday night surge. Euro failed to hold on to those gains with a retreat below the 1.16 level overnight.
The union currency is building strength as it climbs above previous ATR resistance at the 1.1580 area but momentum is no longer overbought in the short term so I’m expecting some weakness to develop around the 1.16 handle this week:
The USDJPY pair put in a consolidation phase before rallying on the Fed cut, then in the post non-NFP period it has now exceeded the previous highs as it broke above the 154 handle and then again rallied over the 155 level last night.
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 and this recent volatility is wanting to repeat this move:
The Australian dollar was looking to breakout last week but has been flummoxed by poor Chinese data and the Korean no-coal-for-you news overnight, sending it back below the 65 cent level swiftly.
There continues to be buying support in the Pacific Peso in the short term on the probability of no more cuts from the RBA, but I’m still watching for a rollover below short term ATR support at the 65 handle in the event of a proper risk off event:
Oil markets have been trying to remain stable with a potential breakout building but continue to be thwarted by macro-political concerns as Brent crude stayed at the $64USD per barrel level overnight.
The daily chart pattern shows the post New Year rally has a distant memory with any potential for a rally up to the $80 level completely dissipating. There was potential here for a run down to the $60 level next so I’m watching to see if the previous daily highs become resistance areas next:
Gold was having a much better run than other undollars and zoomed through the $4200USD per ounce level during last week but has since given up all those gains and then some, almost finishing below the $4000 level overnight in a big reversal.
This could be another slightly overdone in the short term ride but then after some more stability, yet another large upside potential move is looming again for the shiny metal as the desire for USD dwindles:
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!