Wall Street rose the strongest in several days overnight, while the USD and bond yields also lifted slightly, with not much market sensitive economic or otherwise news around to upset proceedings. The bond market continued to see a lift in yields with the 10 year Treasury almost reaching 2% even as March’s Fed meeting comes into focus. The USD was still a bit mixed against the majors with Euro dropping slightly while the Australian dollar almost lifted to a new weekly high as gold advanced past the $1820USD per ounce level. Commodity markets were a bit more choppy with profit taking in oil futures seeing both Brent and WTI crude fall 2%, while iron ore pulled back slightly.
Bitcoin was unable to continue its recent surge, having passed through the $45K level but too fast as momentum inverted and we see a minor consolidation above trailing ATR support on the four hourly chart at the $42K level. Daily momentum however remains positive and its likely this recovery rally will continue:
Looking at share markets in Asia from yesterday’s session, where mainland Chinese shares were in hesitation mode but surged towards the close with the Shanghai Composite up 0.6% to 3457 points while the Hang Seng Index went the other way and finished 1% lower to close at 24329 points. While price is still above the decline of the previous two weeks, the daily chart is looking very choppy but we should see it get back on track to the 25000 point level reached in mid January:
Japanese stock markets are putting in scratch sessions with the Nikkei 225 up just 0.2% to 27285 points. Futures are suggesting a better session today as Yen was pushed lower as volatility becomes more positive across risk markets and they take their queue from Wall Street. Watch for a probably close above the high moving average for a low probability breakout here as a swing play is almost confirmed:
Australian stocks had a much better session with the ASX200 finishing 1% higher at 7186 points. SPI futures are up 0.3% or so due to the steady lift across Wall Street overnight with the potential to get back to the previous weekly/monthly support levels as short term resistance is pushed aside. Daily momentum is not yet positive but all the signs of a swing trade are in place:
European shares continued their modest rebound across the continent, with the FTSE the only loser as the Eurostoxx 50 index gaining just 0.2%, finishing at 4129 points while futures were effectively steady despite the solid finish on Wall Street. The slightly weaker Euro should provide additional support here in the short term but price action is still hovering near the previous lows at 4070 points or so as momentum remains steadfastly negative:
Wall Street however finally found some solid buying support with the NASDAQ up nearly 1.3% while the S&P500 also had a very solid session to finish 0.8% higher at 4521 points. The four hourly chart shows price had deflated from last week’s brief breakout above the previous bottoming pattern but support at the 4450 level is definitely firming here with tonight’s session crucial in setting up for more upside above the 4500 point level:
Currency markets are still somewhat in a USD negative funk but mixed signals continue to be broadcast here as we head into tonight’s US CPI print. Euro continues to consolidate following its gains from Friday night with a retracement back to the 1.14 handle as the 1.15 resistance level firms in the short term until we get through the inflation print and before we get to the Fed’s meeting in March. Watch for any break below and above those levels for meaningful trends to eventuate:
The USDJPY pair managed to continue its fightback overnight and matched the previous weekly high as it extended above the 115 handle as the holding pattern evaporates. Momentum is steadily overbought on the four hourly chart now as the risk on mood extends to this pair, so watch for a potential break above the previous weekly high post the CPI print (or a lot of downside volatility if the print comes in unexpectedly low):
The Australian dollar is doing well getting back to its previous weekly high with a straight line surge since the start of the trading week, continuing its surge through the 71 handle overnight as it starts to push overhead resistance aside. This is a classic swing play that is firming into an outright new trend, with the 71.50 level needing to be cleared next:
Oil markets had been trying to move higher again after making another yearly high but after some containment, both WTI and Brent fell back nearly 2% overnight, the latter pushed just below the $91USD per barrel level in a welcome minor retracment. The next target at $100USD per barrel remains a step to far, as this recent breakout maybe too overextended in the short term with momentum extremely overbought. This could extend lower to the $90USD per barrel level as I thought previously, or even down to $85-87 proper soon:
Gold continues its melt up move, making another new daily high to build well above the former $1800USD per ounce support level, closing at the $1826 level. Price action has now more than filled the pullback below the daily trendline from the December lows (far left on chart) having pushed well above the high moving average on the four hourly chart. Its still a long road to get back and this maybe just temporary bullishness and repositioning before the Fed’s next move, so risk management is key here:
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!