As the April 2 deadline looms for the Fanta Fuhrer’s Tariff Tirade, Wall Street had to react to the weekend newsflow and did so with volatility plus, falling sharply before a late rebound while currency markets were more sanguine, waiting for actual results. The USD held against Euro and Pound Sterling while the Australian dollar flailed despite rebounds in commodity prices as it hit a new monthly low at the 62 cent level.
10 year Treasury yields are pulling back again with a 4 point drop back down to the 4.2% level while oil prices finally broke out substantially after making small gains all last week with Brent crude shooting above the $74USD per barrel level. Gold remains the standout as it made another new record high as it builds well above the magical $3000USD per ounce level, breaching the $3100 level overnight.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets fell in afternoon trade with the Shanghai Composite down 0.5% while the Hang Seng Index was off by over 1%, closing at 23119 points.
The Hang Seng Index daily chart shows how this recent move looked unsustainable to the upside after recently setting up for another potential breakdown around the 20000 point level. Momentum has retraced from being well overbought after beating the previous monthly highs at the 21500 level and is moving into the negative zone with support firming at the 22000 point level:
Japanese stock markets are doing the worst however as Yen appreciates with the Nikkei 225 slumping 4% lower at 35661 points.
Price action had been indicating a rounding top on the daily chart for sometime now with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level now in full remission. Yen volatility remains a problem here, with a sustained return above the 38000 point level still unlikely with futures indicating further losses on the open this week as the dead cat bounce rolls over:
Australian stocks were the best performing relatively speaking with the ASX200 closing 1.7% lower to close at 7843 points.
SPI futures are up nearly 0.9% despite the mixed efforts on Wall Street overnight. The daily chart pattern suggests entrenched resistance overhead at the 8500 point level is far too heavy for the market to overcome with short term momentum oversold with price action setting up a nice dead cat bounce here. Watch for a potential return to the 7700 point level this week:
European markets continue to give up their previous gains with steep falls across the continent with the Eurostoxx 50 Index finishing 1.6% lower at 5248 points.
This was setting up for a breakdown with short term support taken out and the ATR support from the recent uptrend now under threat as momentum went into oversold mode with this overshoot now coming to pass. Watch however for support to firm at the previous monthly support levels (black line) at 5100 points and a rebound to follow:
Wall Street had a tumultous first session overnight with an initial breakdown eventually filled in at the end of the session with the NASDAQ only slipping slightly to be down 0.2% while the S&P500 actually put on 0.5% to close at 5611 points.
The Trump pump and dump scheme is back in business as the April 2 tariffs come on line soon, with another potential bounce at the previous lows a distinct possibility here so watch for a recovery – or a big breakdown below the 5500 point level:
Currency markets are trying to hit back back against King Dollar amid the growing trade wars with most undollars pushing back against USD on Friday night and trying to hold this position going into tomorrow’s tariff announcements from King Trump. Euro is trying to get back on trend as it manages a small bounce to get back above the 1.08 level after recently breaking weekly support but its not looking strong here.
The union currency is barely holding on despite the tariff trade war with short and medium term support building at higher levels. Momentum was overextended earlier in the week and has now flipped to oversold setting with the 1.08 handle possibly turning into resistance here:
The USDJPY pair came out of the weekend gap in a fright before rebounding early in the session overnight, breaching the 149 level before almost covering back to the 150 level this morning, but this does not look sustainable in the short term.
Short term momentum was extremely oversold before the start of week bounce but USD is finally weakening as expected here so we could see a more sustained run lower as Yen firms dues to internal inflation troubles:
The Australian dollar is failing to get back into the swing of things with another breakdown overnight as it broke daily and weekly support and failed to hold alongside other undollars, hitting the low 62 cent level.
The recent follow through to the high 62’s and low 63’s was always high risk going into the live February RBA rate meeting and after the Trumpian tariff crusade with price action having breached the 200 day MA (moving black line) which has now turned into resistance. Short term momentum is oversold but this is looking depressing for the Pacific Peso:
Oil markets are now finally breaking out as they make headway all last week as Brent crude shot up through the $74USD per barrel level overnight to make a new monthly high.
The daily chart pattern shows the post New Year rally that got a little out of hand and now reverting back to the sideways lower action for the latter half of 2024. The potential for a return to the 2024 lows was building here, but buying support is winning out here after the tariff shocks, but how long can that last:
Gold just keep on making new record highs as it builds further on its breakout above the $3000USD per ounce level from last week, now exceeding the $3100 level overnight.
Price action has always found a lot of resistance just under the $2960 zone so that was the likely target in any upside potential but that has been deftly pushed aside without any substantial pullback thereafter, finding a very solid bid up here at new historic highs. Watch for support to hold at the $3000 level in the inevitable pullback as this goes too high too fast:
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!