Another discerning change in confidence and sentiment overnight with Wall Street sharply reversing in the last hours after being up throughout most of the session. The cascade effect has seen Asian stock market futures rise in volatility with a probable 1% falls across the board on the open this morning. The USD also slumped, sending the Euro to a new monthly high on the back of a very poor US housing starts figure while commodities were mixed as well, with oil prices falling 1% or more, although iron ore continues to surge to the moon and beyond.
The crypto world is still reeling with Bitcoin continuing its post Musk dump, returning back to the $43K level after failing to make any new session high and get above key resistance at the $46K level on the four hourly chart:
Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite closed 0.3% higher at 3522 points as it wants to extend past the 3500 point barrier, while the Hang Seng Index pushed much further, up 1.4% to 28593 points. A solid break above the high moving average at the 28400 point level following this bounce off the March lows confirms this as a solid swing trade but needs to clear the 29000 point level to turn into a proper new trend:
Japanese stocks were acting unsure again, this time jumping on a spruious bid, pushing the Nikkei 225 up a wild 2% to close above 28448 points. Daily futures are looking troublesome again however given the volatility on Wall Street overnight, with this market still in a deep hole. I’m watching for another capitulation here below the 27400 point level:
The ASX200 was much firmer in conviction overall even with a relatively lower gain, up 0.6%, closing at 7068 points and it all looks rosey at first glance. However, SPI futures are pointing to a crushing open, down at least 1% in the wake of the US selloff. I have been noting that the daily chart and price action are suggesting a possible topping action here if the 7100 point barrier is not breached soon – markets require momentum and this one is waning:
European markets were looking good going into the open but ended up quite mixed across the continent, with the German DAX eventually putting in a scratch session to settle at the 15386 point level. Sentiment is still oscillating too wildly here before putting on larger market positions, so while I’m still looking for a proper breakout above the early April high, the overall price action is setting up a topping action:
Wall Street was doing great at first with the NASDAQ up over 0.7% at one stage before a very late selloff saw some large reversals, with the Dow off 0.8%, the NASDAQ finishing 0.5% lower and the broader S&P500 falling back the most, down nearly 0.9% to finish at 4127 points. The four hourly chart showed a lot of hesitation at the mid point of last weeks trend channel, despite getting out of the danger zone as price action was leading the way above the mid April support and daily ATR support levels. But price action slammed through the low moving average at the 4140 point level so we could be looking at a return to last week’s lows at just above the 4000 point level:
Currency markets are re-engaging into a weaker USD with the Euro leading the way with a significant breakout above the previous weekly high resistance level, bursting through the 1.22 handle overnight. I said yesterday that resistance at the 1.2160 to 1.2180 could be too tough to beat, but its done it quite easily on the very dovish US housing figures print. Price is now considerably overbought and I’m expecting a minor retracement first:
The USDJPY pair continued its selloff in line with other majors as it now flips below the 109 handle. Four hourly momentum has shifted to a decidedly negative picture, moving from a mean reversion to a proper selloff that could accelerate if ATR support at the 108.70 level is taken out next:
The Australian dollar is still trying to get out of its once depressed state and despite some mixed news in commodity world, managed to lift up towards but not through the 78 handle overnight. The four hourly chart clearly shows resistance above that needs to be cleared to return to last week’s breakout high nearer the 79 cent level with momentum slightly overbought now, but dependent on more USD weakness:
Oil prices were properly stabilizing but intrasession volatility is picking up again with a wide trading range overnight seeing Brent crude taking back all of its previous session gains to finish 1% lower and back below the $69USD per barrel level. Daily resistance is building here at the $70 level that corresponds to the March highs so caution is warranted – watch the low moving average at the $67 level that must be supported:
Gold continues to lift higher, no longer restrained by a strong USD, putting on another $10 to finish just below the $1870USD per ounce level overnight. This advance above the psychologically important $1800USD per ounce level now has a lot of legs to continue up to the November 2020 highs at the $1960 level:
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!