Friday was a massive night on risk markets with the US unemployment print following the mid week ECB and BOE meetings and keeping volatility sky high on bond and currency markets, thus putting stocks in a spin. The double whammy Facebook/Amazon surprise earnings resutls were definitely overshadowed by the big surprise in US jobs data, wtih over 467K created compared to best estimates of only 150K. This sent the 10 year Treasury yield above 1.9% while USD held on against most of the majors, although the Australian dollar fumbled, with interest rate futures indicating a certain rate rise when the Fed meets next month. Gold had another volatile back and forth around the key $1800USD per ounce former support level while commodity markets were better supported with Brent and WTI crude up more than 2% with the former surpassing its 2014 high.
Bitcoin finally found some life after sliding sideways to pop through the $41K level and get above trailing ATR resistance on the daily chart for the first time since the 50% wipeout started in November last year. Daily momentum is now positive and this could be the start of a recovery rally with the next resistance zone around the $44K level:
Looking at share markets in Asia from Friday’s session, where mainland Chinese shares remained closed for Chinese New Year, but the Hang Seng Index reopened and put in a stonking closing up 3.2% to 24573 points. This completely takes back the decline of the previous two weeks and gets it back on track to the 25000 point level reached in mid January but I’m wary of a one off take-off like this and am watching for a subsequent close above the high moving average here:
Japanese stock markets put in solid sessions with the Nikkei 225 closing up 0.7% to 27439 points. Futures are suggesting a small pullback on the open of the trading week here despite Yen heading lower against USD on Friday night, as volatility remains high across all risk markets. Watch for a close above the high moving average for a low probability breakout here as a swing play is almost confirmed:
Australian stocks had yet another meandering session but eventually finished higher the ASX200 closing up 0.6% to 7120 points. SPI futures are down 0.5% or so despite the lift on Wall Street with the potential to again pull back below the 7000 point level as this market continues to show an uneasy recovery. There’s a still lot of room to recover here from the previous weekly/monthly support levels which are proving too firm as resistance so far with daily momentum not even back below oversold levels and price is not yet above the high moving average so caution must continue:
European shares sold off across the continent but at different relative levels with the Eurostoxx 50 index losing 1.3% as German stocks fell the most, finishing at 4086 points while futures steadied without any uplift despite a solid session on Wall Street. The stronger Euro continues to provide additional resistance in the short term with price action now rolling over from the dead cat bounce with a return to the previous lows at 4070 points or so as momentum remains steadfastly negative:
Wall Street started in mixed fashion before finally finding some support with the NASDAQ up 1.5% while the S&P500 finished 0.5% higher at exactly 4500 points. The daily chart however shows that post close futures are pulling most of this back with the indication of a much more aggressive set of rate rises from the Fed following the latest US jobs print possibly turning this recovery into yet another dead cat bounce. Momentum is not yet positive on the daily chart, and price is still stuck within the moving average band without clearing overhead ATR resistance, so this bounceback is nowhere near confirmed just yet:
Currency markets were largely contained having switched sentiment post the double whammy BOE/ECB meetings with the latter particularly concerning for the direction of the union currency as the Euro consolidating its gains on Friday night. Post the meeting I mentioned there was likely to be some consolidation and some movement around the 1.14 handle and 1.15 resistance level before we get to the Fed’s meeting in March as they all race to pull the rate lever:
The USDJPY pair managed to push a little higher as well, finishing the week just above the 115 handle but not making a new weekly high. Momentum is now slightly overbought on the four hourly chart and supportive of more upside, but I’m a bit wary here given the mixed signals in stock markets so watch the low moving average at the 114.90 level to remain supported going into a new trading week:
The Australian dollar failed to get out of its funk, having been unchanged following the European volatility in the previous session, dropping sharply below the mid 71 level on the NFP print and almost returning to the 70 handle proper. Short term momentum has switched to negative but not yet oversold and no new weekly low was made but things are not looking up for the Pacific Peso:
Oil markets moved higher again after lacking direction in recent weeks with Brent pushing well above the $92USD per barrel level on Friday night for a new 8 year high. The next target at $100USD per barrel maybe a step to far, as this recent breakout as shown on the four hourly chart maybe too overextended in the short term with momentum extremely overbought. I’m watching for a small retracement back to the $90USD per barrel level proper soon:
Gold just made a new daily high after recent volatility maintained a high level through the NFP print, again managing to finish just above the former $1800USD per ounce support level. Price action remains contained below the daily trendline from the December lows and short term high moving average on the daily chart. While there still could be a full retracement down to $1760 or so, this small consolidation is firming here with another attempt at the highs around $1870 still a possibility:
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!