Wall Street continued its rebound overnight although European stocks stumbled as tech stock earnings, particularly Apple helped steady the risk ship. The USD pulled back against most of the majors although Euro was less steady and Yen was all over the place due to some BOJ intervention following its recent meeting. Meanwhile the Australian dollar remained firm above the mid 65 cent level without any significant upside.
10 year Treasury yields continued to settle at the 4.6% level, while oil prices gapped over the weekend, with Brent crude dropped down to the $87USD per barrel level. Meanwhile gold was unable to make any great strides, still struggling from last week’s setback to remain stuck at the $2330USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland and offshore Chinese share markets are heading in the same direction with the Shanghai Composite up more than 0.7% to remain above the 3100 point level while the Hang Seng Index has lifted nearly 0.9% going into the close at 17814 points.
The Hang Seng Index daily chart was starting to look more optimistic with price action bunching up at the 16000 point level before breaking out in the previous session as it tried to make a run for the end of 2023 highs at 17000 points with the downtrend line broken. Price action looks way overextended here so I expect a small retracement back to the 17000 point level shortly:
Japanese stock markets were closed for yet another holiday with the Nikkei 225 futures looking volatile at best given the moves in Yen in the last 48 hours.
Price action had been indicating a rounding top on the daily chart with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level almost in full remission. Short term resistance has been defended with short term price action now retracing to support at the 39000 point level. Watch the 38000 level for signs of a true breakdown:
Australian stocks played catchup from their Friday session slump with the ASX200 finishing more than 0.8% higher at 7637 points.
SPI futures are up at least 0.2% as they still try to catch up to the very high optimism on Wall Street. The daily chart was looking firmer with the medium term uptrend and short term price action coming together to take out the previous December highs. ATR daily support has now been broken, which is significant, taking price action back to the February support levels, although momentum is failing to get out of its oversold condition:
European markets were unable to continue their own rebound with some dour sessions across the continent overnight as the Eurostoxx 50 Index finished 0.5% lower to retrace below the 5000 point barrier, closing at 4981 points.
The daily chart shows price action off trend after breaching the early December 4600 point highs with daily momentum retracing well into an oversold phase. This was looking to turn into a larger breakout but this retracement below short term support could turn into a larger reversal with a clear break of support at the 4900 point level that is trying to be filled here:
Wall Street had modest sessions, but they were all positive with the NASDAQ up 0.3% with the S&P500 also finishing 0.3% higher, closing at 5116 points.
The four hourly charts shows a fairly wide trend channel forming after bottoming out at support at 5000 points. Its now losing some short term momentum following Friday’s rebound so watch for a potential retracement back to the trailing ATR support at the 5100 point level:
Currency markets have been slowing turning away from King Dollar and had a mild reversal on the GDP and PCE double whammy before getting back on track with Euro holding above the 1.07 handle overnight, nearly completing a rounding bottom pattern on the four hourly chart below.
The union currency had previously bottomed out at the 1.07 level at the start of April as medium term price action with a reprieving reversal in price action back towards the 1.09 level before last week’s inflation print. Short term support at the 1.0740 has been rejected so watch that level closely:
The USDJPY pair has been piling on breakout after breakout, but this time it went to the moon following the BOJ meeting! A near 300 pip straight rocket ride through the 158 handle has now turned into a similar reversal, giving currency traders psychotic breakdowns and running to the pharmacy/their local “dealer”.
The Australian dollar remains above the 65 handle with another small breakout on Friday night as it extends its two week high without getting ahead of itself.
The Aussie has been under medium and long term pressure for sometime before the RBA and Fed meetings and while the previous temporary surge looked strong, it wasn’t overbought on the four hourly chart and had not surpassed support from last week’s consolidation phase. Watch as this rounding bottom pattern is now complete as momentum builds:
Oil markets have seen increasing intrasession volatility after topping out during the latest round of Middle East conflicts with moves to the downside thwarted as Brent crude lifted above the $88USD per barrel level last week, but a weekend gap has seen support tested at the $87 level overnight.
After breaking out above the $83 level last month, price action has stalled above the $90 level awaiting new breakouts as daily momentum waned and then retraced back to neutral settings. Watch daily ATR here carefully:
Gold is still trying to get back on trend after the minor retracement back earlier in the month with the failed breakout above the $2400USD per ounce level turning into a correction as it remained stuck at the $2330 level on Friday night.
Support at the $2200 level is still a long way off here as shorter term support at the $2330 area needs to be defended first or the early April gains will also disappear promptly:
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!