In a demented, incoherent hour long speech at Davos, Trump finally revealed his master plan by chickening out yet again on his threats to tariff Europe takeover Greenland. Wall Street loved the parade of lies and swung back while the USD firmed slightly against an overbought Euro it continued to lose ground against others, particularly the Australian dollar which made a new high for the year. Gold surged again alongside silver while oil prices lifted and US 10 year Treasury yields came back slightly.
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 just staying above the 4100 point level while the Hang Seng Index gained at the close to finish 0.4% higher at 26585 points.
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. However the latest small bounce off support has now reversed as resistance overhead is too strong although momentum is still positive:
Japanese stock markets were still in retreat mode with the Nikkei 225 down more than 0.4% to extend below the 53000 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 although it has gotten ahead of itself. This was looking like a launch point through longer term overhead resistance but the selloff in Japanese bonds and the election snap call is worrying here:
Australian stocks are not doing well either with the ASX200 down 0.3% to 8782 points. SPI futures are up nearly 0.6% however due to the rally on Wall Street overnight.
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 building but this is not yet confirmed as a solid breakout:
European markets were hesitant across the continent again with German stocks still in retreat as the Eurostoxx 50 Index closed nearly 0.2% lower to 5882 points, continuing the breakdown of the recent rally.
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 stronger than expected. Watch for any support levels to be built here after the Davos Diatribe:
Wall Street loved the Emperor’s new clothes with the NASDAQ and the S&P500 both lifting around 1.2% higher, the latter closing at 6876 points.
The market manipulation here has been interesting to watch from the inverted J pattern bottoming out at the 6800 point level on the four hourly chart and now this one sided bid to take the market up to – but not through – the gap down level. Is this a dead cat bounce?
Currency markets are turning around to go anti-USD amid the Trump regime’s lunatic but what looks like a failed drive to acquire Greenland, with volatility in USD seeing a reversal in Euro overnight but not so much amongst other majors.
The union currency was snapped back below the 1.17 handle overnight after stalling out at the mid 1.17 level and could fall below given that the tariffs and counter tariff threats appear off the table. I’m watching for a break below short term ATR support:
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 now pushed into the 158 level where it lifted slightly 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 but this could be one undollar that accelerates down the tubes:
The Australian dollar has so far respected support (big black horizontal line below) and due to USD weakness has pushed back above the 67 handle on overall “Sell America” volatility where it actually extended those gains overnight to make a new high for the year.
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 shoring up as overhead resistance is waning 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 starting to move higher again with a small breakout above the $65USD per barrel level 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 last week. There was some volatility around the Trump Davos dementia but the shiny metal has settled at the $4840 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 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!