Friday night saw a huge reversal in precious metals fortunes perhaps triggered by the Trump regime’s nomination of Kevin Warsh as the next Fed Governor or the technical overbought status of both gold and silver. Silver dropped over 30%, gold fell more than 10%, taking both back to where they were just two weeks ago. Meanwhile the USD got a solid bid across the board, sending Euro significantly lower which helped European stocks but Wall Street fell back on the nomination.
Oil prices remain high but not yet breaking out due to the upcoming Iranian/US war while the Australian dollar fell below the 70 cent level even though tomorrow’s RBA meeting is near certain to produce a rate rise.
Looking at stock markets from Asia from Friday’s session, where mainland Chinese share markets finished down smartly with the Shanghai Composite losing nearly 1% to almost retreat below the 4100 point level while the Hang Seng Index lost 2% as it reversed course sharply.
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 as it broke out above the 27000 point level. However momentum got extremely overbought with a reversal in play:
Japanese stock markets were able to slide in with a scratch session with the Nikkei 225 losing just 0.1% to finish just above 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. This was looking like a launch point through longer term overhead resistance but the selloff in Japanese bonds and the election snap call is causing a stall here:
Australian stocks stumbled again with the ASX200 closing 0.6% lower to 8869 points as SPI futures indicate further falls in line with Wall Street on Friday night.
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 looked like a solid breakout, but has since reversed. I’m watching ATR trailing support to come under pressure next in a wider risk off move:
European markets actually outperformed on the back of a falling Euro but will lose ground on the open on Monday due a fall in futures with the Eurostoxx 50 Index closing nearly 1% higher in the physical markets on Friday night.
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 that are coming under pressure here:
Wall Street wanted to stay in a positive mood but earnings remain disappointing as the NASDAQ falling nearly 1% while the S&P500 lost nearly 0.5% to close at 6939 points.
The four hourly and daily price pattern indicates a failure to push through the recent highs which could be setting up for a rollover ahead as this market looks as exhausted as a Trump diaper:
Currency markets have been in a firm anti-USD mode since the Davos Diatribes but were in a holding pattern going into the Friday session and fell back alongside precious metals with the extremely oversold DXY Index making a four year low. Euro was leading the way with a surge above the 1.20 handle but flopped below the 1.19 level on Friday night.
The union currency’s four hourly candle and technicals suggested an extremely overbought condition beforehand as I mentioned so some profit taking here but I would suggest trailing support should be supported here – maybe:
The USDJPY pair had been through a massive rout lately and into an unbearably oversold condition so no surprise a small bounce back by USD sent the pair above the 153 level before zooming up through the 154 level in the Friday session.
However the start of year position at the 158 handle is way out of bounds for now with this rebound being relatively inconsequential as we await the Japanese elections and other missives from the BOJ. The potential for a bounce back to the gap level around the mid 154 handle has occurred but not yet through overhead resistance:
The Australian dollar had soared higher alongside gold due to USD weakness, extending its push above the 70 handle on overall “Sell America” volatility despite other undollars giving up ground but resilience waned on Friday night with a fall below that key level.
Short term support was shoring up here as Tuesday’s RBA meeting comes into the picture but overhead resistance is having trouble been 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 before settling into a sideways pattern. Brent crude has tried to surge back up to the $70USD per barrel level but remains extremely overbought:
Gold had been accelerating into a blowoff pattern having blasted through the $5500USD per ounce level in recent sessions but there has been a retreat back to the $5300 level on Thursday night before a huge retracement on Friday night in a wild session.
The shiny metal had been lifting ever since the Dementia Don Davos drivel with trend lines becoming more and more parabolic – I did indicate a probable top but a one way trade that led to this volatility as no one wanted to go short until it was too late:
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!