With Wall Street closed for a long weekend holiday most risk markets sold off overnight as the blackmail threats on Europe from the Trump regime with counter threats of tearing up the Trump-induced 2025 trade deal heightened concerns of a wider transatlantic trade war. European shares slumped while the USD fell back after firming on Friday against most of the majors, with Euro fighting back while precious metal prices lifted higher as the Australian dollar got back above the 67 cent level.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were up slightly in the afternoon session with the Shanghai Composite closing 0.3% higher to remain above the 4100 point level while the Hang Seng Index finished some 1% lower to crack the 27000 point level.
The daily chart of the Hang Seng Index showed a lot of wish washy action around the 26000 point level in the last couple of months with some recent weakness now turning into strength. The latest small bounce off support is slowing in momentum as it faces resistance overhead:
Japanese stock markets were also in retreat with the Nikkei 225 down nearly 0.6% to stay well below the 54000 point level with markets to react to the snap election called by the Japanese PM overnight.
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 although it has gotten ahead of itself. This looks like a launch point through longer term overhead resistance:
Australian stocks were again the best performers in the region but its all relative with the ASX200 down just 0.3% to 8874 points. SPI futures are down a similar amount again with no lead from a closed Wall Street.
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 now building:
European markets were sold off across the continent as the Eurostoxx 50 Index closed nearly 1.7% lower to 5925 points, breaking down the recent rally after a buildup in overhead resistance.
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 well above recent highs to start 2026 with some gusto, helped by a much lower Euro:
Wall Street was closed but S&P futures are indicating a substantial gap lower on the open tonight with tech stocks likely to take a hit if the EU’s anti-coercion threats are pushed through.
The daily chart showed a belated Santa rally that took back some of the gains to match the November highs but a lift up towards the 7000 point level is still being thwarted by geopolitical and other risk factors with a bearish rising wedge pattern now fully formed:
Currency markets are slowly turning around to go anti-USD amid the Trump regime’s lunatic drive to acquire Greenland, with a hardball Europe not stepping in line, but upping the volatility. The USD had been firming against Euro in particular which was pushed below the 1.16 level but it bounced back somewhat overnight as did other majors across the board.
The union currency had already been pushed down to the 1.17 handle during the Xmas period and after a small bounceback put on a dead cat bounce here as the end of NATO looms on the horizon. Watch for a sustained break below the recent lows at the 1.16 level next:
The USDJPY pair pushed well above the 157 handle on the new year sessions, despite stronger inflation in Japan with a move above the 159 level at the start of the week turned into a reversal back down to the 158 level where it remained 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. A little too much heat has been taken out after being overbought :
The Australian dollar was pushed down to the 67 handle although it is respecting support (big black horizontal line below) albeit with another failed attempt to get back above the 67 level on Friday night, but last night saw a better go at it with almost a new weekly high.
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 short term support is barely shoring up again so I don’t see a lot of upside here:
Oil markets have been on a multi week/monthly downtrend prior to the Venezuelan invasion but shot out of the gate last week with some big gains before getting ahead of itself. Brent crude is now holding around the $64USD per barrel with the potential for more falls if the “peace” Trump regime doesn’t start shooting soon in, let me check my notes – Iran, or Mexico, or Canada, or Greenland…
The daily chart pattern shows an extended downtrend that is now well under threat and broken in the short term so watch for this to potentially turn into a proper reversal although it is well over extended in the short term:
Gold was in a holding pattern, albeit with a very bullish bias above the $4600USD per ounce level after some heat was taken out of silver prices in the last couple of sessions. But its pretty clear that gold is becoming a Minsky Metal yet again with another gap higher over the weekend to almost get to the $4700 level overnight.
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 as short term resistance forms slightly:
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!