Wall Street ended the week on a very meek note after a series of record highs, with European shares also falling back as the lack of confidence across risk markets widens. A slew of flash PMI surveys across both sides of the Atlantic were better than expected, with the USD still rising against everything except the Loonie and Aussie dollar. Euro and Pound Sterling continued to fall as did Yen, now at record decade lows with the Australian dollar hovering around the 67 cent level.
US bond markets saw modest rises with 10 year Treasury yields steady at the 4.25% level while oil prices were also muted with both WTI and Brent crude largely unchanged, the latter still above the $85USD per barrel level. Gold failed to make its recent breakout stick with a $40USD reversal back down to the $2300USD per ounce level.
Looking at markets from Friday’s session in Asia, where Chinese share markets are falling again with the Shanghai Composite down some 0.3% going into the close while the Hang Seng Index has given up a lot of its recent gains, down 1.6% to 18034 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 was looking way overextended but this retracement is now taking some heat out of the market but needs to stop soon before moving into corrective mode:
Meanwhile Japanese stock markets are failing to get out of their holding pattern with the Nikkei 225 down just 0.1% at 38596 points.
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 had been defended with short term price action now rebounding off former support at the 39000 point level with short term momentum still positive although futures are indicating a small drop on the open:
Australian stocks were the only ones to make any gains on Friday in Asia, with the ASX200 closing 0.3% higher to 7796 points.
SPI futures are down 0.2%, in line with the falls on Wall Street from Friday’s session so we are likely in for a volatile session to start the trading week. The daily chart was showing a potential bearish head and shoulders pattern forming with ATR daily support tentatively broken, taking price action back to the February support levels in mid April. Momentum is finally getting out of its oversold condition but has been unable to get back into positive territory with a return to the 7900 point level not yet on the cards:
European markets remain volatile with another downside session across the continent that sent the Eurostoxx 50 Index more than 0.8% lower to close the week at 4907 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 with support at the 4900 point level quite firm with resistance still looming at the 5000 point barrier. Former ATR support at the 4900 point level looks like the anchor point here:
Wall Street was unable to return to form with a lot of hesitation and lack of momentum failing to make another record high with the NASDAQ and the S&P500 both losing around 0.2% with the latter staying well above the 5400 point level, closing at 5464 points.
The four hourly chart showed the Friday night rebound coming up against a lot of hesitation at the 5300 point level with short term momentum ready to launch higher. The consolidation phase with a small breakout still has legs but this hesitation as seen trailing ATR support taken out and momentum almost flip into the negative zone:
Currency markets are still feeling the effects of a dominant USD as Euro failed in its comeback after a week of downside volatility, pushing back below the 1.07 level to match the previous weekly lows.
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 its own inflation print. There was really no chance of getting upside pressure moving here:
The USDJPY pair was able to make a new session high – and a multi decade low for Yen, breaching the 159 handle and almost pushing through the 160 level as it tears away on strong momentum.
Short term momentum had gotten out of oversold condition but was not yet positive with price action suggesting a further pause or rollover here before the print with this move taking the pair back to last week’s finishing point. This volatility speaks volumes as it pushes aside the 158 level as longer term resistance – is the 160 level next?
The Australian dollar is failing to get back to its post US CPI one off high at the 67 cent level as price action rolls over as it hits short term resistance even below that level, setting at the mid 66 cent level as of this morning.
So far the Pacific Peso hadn’t been able to take advantage of any USD weakness with momentum barely in the positive zone in recent weeks with price action whipsawing around the mid 66 cent level as a point of control. Watch the 66 handle to come under threat again however as this remains unconvincing:
Oil markets are almost out of correction mode with a small pullback on Friday night on more Ruzzian refinery attacks as Brent crude stalls out around the $85USD per barrel level.
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 support here at the $86 level which is still broken and will likely be resistance for sometime with short term momentum now well out of negative mode:
Gold was breaking out nicely after tracking sideways for weeks with price firming around the $2360USD per ounce level before rolling over below resistance to finish at the $2330 level.
Still the biggest casualty of the US jobs report last week, the shiny metal has bounced off its weekly low with short term momentum now heavily overbought and price yet clearing short term ATR resistance to almost get back to the early June highs:
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!