Wall Street put in another record high overnight but not all risk markets are aligned with that particular bullish mood, with European and Asian stocks still in hesitation mode. The lack of economic catalysts and a lot of Fedspeak, mixed in with more Middle East volatility didn’t help either. The USD is coming back a little against the major currencies with Euro almost at a weekly low while the Australian dollar can’t seem to get back above the 67 cent level.
10 year Treasury yields were able to rebound slightly further above the 4.4% level while oil prices are losing momentum with Brent crude almost down to the $82USD per barrel level. Gold tried to continue its rocket move higher above the $2400USD per ounce level but lost some momentum later in the session.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets started lower and stayed there as they go into the close with the Shanghai Composite off by more than 0.5% while the Hang Seng Index has slumped more than 2% lower to 19197 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 looks way overextended without any retracement to take heat out of the market, but this looks very optimistic indeed:
Meanwhile Japanese stock markets are also slipping with the Nikkei 225 closing some 0.3% lower to 38946 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 now indicating a breakout:
Australian stocks did the best out of all, with the ASX200 falling about 0.1% to 7851 points.
SPI futures however are up 0.3% due to the slightly positive lead on Wall Street overnight. 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. Momentum is finally getting out of its oversold condition with this breakout setting up for potential upside:
European markets were unable to get out of their poor start to the week with slipping sessions across the continent, as the Eurostoxx 50 Index closed 0.5% lower at 5046 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 is still looking to turn into a larger breakout with support at the 4900 point level quite firm but that bearish engulfing one day candle is holding back the gains:
Wall Street found more confidence however, with the NASDAQ and the S&P500 both pushing some 0.2% higher, the latter finishing at 5321 points.
The four hourly chart is now showing a large move higher as all Fed roadblocks seem cleared with price action getting well out of its previous slightly stalled position above the 5200 point area with momentum retracing out of its overbought status but looking somewhat flat here:
Currency markets remain in an anti USD mood following last week’s softer than expected US CPI print but there is some strength developing in King Dollar with the majors pushed a little lower overnight with Euro retracing down to the mid 1.08 handle as a result.
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. Short to medium term support at the 1.0630 level has been respected but momentum settings are now deeply into negative territory, indicating a breakdown is imminent:
The USDJPY pair took a small pause overnight after its slow move higher at the start of the week rounding off again and finishing just above the 156 handle overnight.
This price action post the epic BOJ meeting volatility was much more welcome but this reversal is not that surprising given the weakness of the USD. ATR resistance at the mid 155 handle will play a role this trading week as an anchor point:
The Australian dollar is still in a holding pattern following its kick upwards on the weaker than expected US CPI move, but can’t seem to return above the 67 cent level with a brief touch of the 66 handle itself in yesterday’s session.
The Aussie has been under medium and long term pressure for sometime before the recent RBA and Fed meetings and while the previous temporary surge looked strong, it wasn’t overbought on the four hourly chart and had not surpassed support from last week’s consolidation phase. This tentatively looks good for the Pacific Peso but momentum is now in negative territory again:
Oil markets are barely holding on as intrasession volatility increases again on the Iranian question as Brent crude couldn’t hold on, falling well below the $83USD per barrel level to almost a new weekly low.
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:
Gold shot out of the gates over the weekend well above the $2400USD per ounce level but is shaking out this too excessive volatility with a very quiet session overnight, settling at the $2420 level.
Short term momentum was in extreme overbought mode so I was always wary that this move will stick , so watch if price action will be supported here at trailing short term ATR support at the obvious $2400 level:
