Volatility was relatively low on risk markets overnight as traders await the real April Fool’s Day as the Trump Regime’s “Worldwide Shoot Ourselves in the Feet” tariff deadline draws near. Wall Street filled some short positions and rebounded alongside European stocks but it was relatively modest while the USD held against Euro, Yen and Pound Sterling. Meanwhile the Australian dollar played catchup after some rebounds in commodity prices but is still below the 63 cent level.
10 year Treasury yields are pulling back again with a 7 point drop back down to the 4.1% level while oil prices held out to their recent breakout with Brent crude pushing further above the $74USD per barrel level. Gold remains the standout after making new record high above the magical $3000USD per ounce level, but pulled back slightly to the $3100 level overnight.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets lifted slightly in afternoon trade with the Shanghai Composite up 0.4% while the Hang Seng Index also finished up the same amount, closing at 23206 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 trying to stabilise after slumping in the previous session with the Nikkei 225 down 0.1% to 35616 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 again the best performing with the ASX200 closing more than 1% higher to close at 7925 points
SPI futures are up nearly 0.4%, somewhat in line with 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 halted their selling streak with some positive moves higher across the continent with the Eurostoxx 50 Index finishing up 1.4% to 5320 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 somewhat smoother session overnight with the NASDAQ up nearly 0.9% while the S&P500 eventually closed 0.4% higher at 5633 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 but most undollars were unchanged against USD overnight with Euro trying to get back on trend as it failed to get back above the 1.08 level after recently breaking weekly support.
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 rolling over early in the session overnight, almost breaching the 149 level before sitting back at the mid 149 handle in anticipation.
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 bouncing off the recent lows just above the 62 cent level versus USD but only managed to get back below the support that held all last week at just below the 63 handle in what looks like a failed bounceback in the short term.
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 pushed further above the $74USD per barrel level overnight to extend its 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 has been making new record highs but it was inevitable that a small pullback would play out here with a slight reversal overnight taking it back to the $3100USD per ounce level.
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!