Risk markets will pivot this week on the volatility around the Trump regime’s invasion of Venezuela as 2026 accelerates the new global order of “take what you want around you”. Watch out Cuba, Columbia, Canada and Greenland! Wall Street remains somewhat in holiday mode but will wake up with a bang tonight with stock markets likely to rally while oil prices could fall further but futures are murky at best. Currency markets still favour a weaker USD although commodity currencies remain under some pressure while Euro is still at its Xmas levels. The Australian dollar looks set to continue to hold around the 66-67 cent level as we prepare for the long wait til the February RBA meeting.
Looking at stock markets from Asia from Friday’s or the last trading session, where mainland Chinese share markets saw a small lift to almost get back to the 4000 point level, closing on the 31st of December with the Shanghai Composite closing at 3968 points while the Hang Seng Index sta.rted the year with a bang, gaining nearly 3% to get well above the 26000 point level.
The daily chart of the Hang Seng Index shows a lot of wish washy action around the 26000 point level in the last couple of months with some recent weakness. The latest small bounce off support did not have a lot of momentum but there is potential to get moving up above that level again:
Japanese stock markets have been given treading water after a few big sessions before Christmas with the Nikkei 225 finishing the year just above the 50000 point level.
Daily price action wavered a little during the BOJ hike in the previous weeks but has firmed up strongly with the 50000 point level forming key support:
Australian stocks had a small Santa rally but are looking to get back recent losses as the new trading year develops with a flat start so far as the ASX200 closed just above 8700 points. SPI futures are up a few points without a solid session from Wall Street recently.
The daily chart pattern shows that short term support has been reinforced after a period of hesitation before Christmas with a bounceback above resistance at the 8800 point area possible:
European markets were very buoyant again despite low trading volumes across the continent with the Eurostoxx 50 Index started the year with a bang, moving more than 1% higher to 5850 points.
The market had been failing to make headway in recent months due to the too high valuations but short term support was very solid and has pushed above recent highs to start 2026 with some gusto:
Wall Street has had an unsteady start to 2026 with muted sessions so far with the to lift slightly higher with the NASDAQ still well off its recent highs while the S&P500 is doing slightly better to close at 6858 points.
The daily chart shows a belated Santa rally that took back some of the gains to match the November highs but it still looking well supported on lower trading volumes. Let’s see how the new Trump Empire doctrine works for stocks:
Currency markets were in a holding pattern due to the looming break over the New Year but are now moving against King Dollar again despite the recent volatility around the BOJ rate hike. Euro continued its bounceback overnight after dwindling down to the 1.17 handle proper as it almost broke through the 1.18 level while Pound Sterling and Canadian Loonie also made new monthly highs. Must be that well performing US economy?
The union currency was pushed down to the 1.17 handle where after threatening to break has now built above that as short term support to launch back to its previous highs:
The USDJPY pair exploded out of the gate more than 200 pips to the 157 handle on Friday night but has nearly given up all those gains in recent sessions, falling back to the 156 level 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 and this recent volatility repeated this move. This could get more exciting in the next few sessions but its significantly overbought in the short term:
The Australian dollar was weakening all last week to stay well below the mid 66 cent level but found some a lot of buying support at the 66 handle proper to breakout above the 67 handle early this morning.
Price action was not looking good for the Pacific Peso in the medium term as the interest rate differential squeeze sent it back to the doldrums, but this has inverted as the RBA moves to a much hawkish position. A new monthly high as we head into the new year:
Oil markets have been on a multi week/monthly downtrend with Brent crude recently pushed below the $59USD per barrel level with the small lift on Friday night extended overnight to push back above the $62 level.
The daily chart pattern shows an extended downtrend that is coming under threat but this really just getting back to the trendline proper and not yet a breakout:
Gold is now using the $4300USD per ounce level as support and made a new high overnight to finish at the $4445USD per ounce level.
As I previously mentioned that after some stability, another large upside potential move was looming again for the shiny metal as the desire for USD dwindles and here we are, albeit very overbought:
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!