Its all about the structural “off-America” risk trade with the US dollar index now down to a four month low with the Australian dollar making another new high as it surged through the 69 cent level at the start of the trading week. Gold and silver surged again while Wall Street kept hope alive as this week’s inflation report comes into focus. Oil prices made a new weekly high amid Iranian tensions while and US 10 year Treasury yields were steady but above the 4.2% level.
Looking at stock markets from Asia from yesterday’s session, where Chinese share markets were down slightly in the afternoon session with the Shanghai Composite staying above the 4100 point level while the Hang Seng Index was up a little bit at 26765 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 hit resistance overhead although momentum is still positive but not yet overbought to indicate a breakout:
Japanese stock markets were the odd ones out as Yen volatility amid domestic inflation concerns sent the Nikkei 225 down nearly 2% to retreat 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 were closed for Australia Day yesterday with the ASX200 likely to move higher as SPI futures are following the uplift 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 into what could be a solid breakout:
European markets remain hesitant across the continent as the Eurostoxx 50 Index closed just 0.2% higher to 5957 points, trying to get back on track after 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 remains in a positive mood with the lower USD buoying expectations with the NASDAQ and the S&P500 lifting 0.5% higher, the latter closing at 6950 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 through the gap down level, negating a dead cat bounce as we go through yet another Trump Chicken Outs trade:
Currency markets are moving further and faster into anti-USD mode with big gaps over the weekend amongst all the undollars, with Euro leading the way with surge above the 1.18 handle that held overnight.
The union currency was snapped back below the 1.17 handle previously but has now re-engaged to the upside with a new monthly high surging off short term ATR support – is this a one off move or a game changer?
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 turning into a massive rout against USD as the pair hit the 154 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. As I said last week, this could be the one undollar that accelerates down the tubes:
The Australian dollar has soared higher alongside gold due to USD weakness, now pushing above the 69 handle on overall “Sell America” volatility where it made a new yearly 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 shoring up as overhead resistance is pushed aside 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 but have since settled into a sideways pattern. Brent crude was starting to move higher again with a small breakout above the $65USD per barrel level but this has stalled again:
Gold is now accelerating into a blowoff pattern having blasted through the $5000USD per ounce level in recent sessions. While there was some volatility around the Trump Davos dementia drivel the shiny metal has lifted ever since with acceleration of trend lines pointing to a probable top – although likely short lived:
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!