Not a good night for the risk takers with Wall Street falling off the perch again following the falls on the Friday session. Risk markets continue to be spooked by the Fed pulling away – or filling up the punch bowl with something more bitter, which spilled over into a much higher USD as Euro finally broke through the parity barrier. The Australian dollar returned to its Friday night lows but did not extend the losses below the 69 cent level as commodity prices lifted slightly. Bond markets saw more selling with 10 Year Treasuries back above the 3% level while interest rate futures firmed a little, now up to a 65bps rise predicated at the next Fed meeting. Crude oil remains tenuous, with Brent crude lifting ever so slightly to get back above the $96USD per barrel level while gold lost even more ground, again rejecting the $1800 resistance level.
Looking at share markets in Asia from yesterday’s session, where mainland Chinese share markets had a solid start to the week with the Shanghai Composite up nearly 0.6% to close at 3277 points while the Hang Seng Index again went backwards, down 0.6%, to remain below the 20,000 point level at 19656 points. The daily chart is still showing considerable overhead resistance and daily momentum readings remaining into oversold mode as the moving average channel accelerates lower without any upside pressure. The May lows are coming under pressure with another break below the low moving average likely:
Japanese stock markets remain unsteady with the Nikkei 225 losing around 0.4% to close under the 29000 point level again, finishing at 28794 points. The daily chart is showing a very abrupt reversal here as the 29000 point level is turning into staunch resistance, having stalled out last week. Momentum has crossed over so all the signs are there for a swing short play down to trailing ATR support at the 28000 point level:
Australian stocks were the biggest losers today with the ASX200 closing nearly 1% lower at 7046 points. SPI futures are down at least 0.6% due to the broader selloff on Wall Street and could shoot even lower although the steady Australian dollar may help here. The daily chart was looking firm with the short term breakout situation but overhead resistance at 7100 points is firming. Daily momentum is inverting back below overbought levels but if today’s price can hold on to the 7000 point level this maybe a short term dip only:
European stocks were down across the continent again with the FTSE putting in a scratch session, with steep falls on the German DAX to push the Eurostoxx 50 index down nearly 2% to close at 3658 points. The daily chart shows price action not just hitting a wall but sharply inverting, all on prospects of more inflation controls this week after the Jackson Hole conference. Formerly overbought daily momentum has fully reverted as stiff resistance at the 3800 point level is completely rejected. The May highs at the 3850 point level may be out of reach as this sideways market continues in 2022:
Wall Street continued to do even worse with the NASDAQ more than 2.5% lower while the S&P500 eventually finished 2% off at 4137 points. The four hourly chart shows the trendline having broken here with a steep selloff, taking away all of last week’s gains and back to previous daily support at the May highs. My prediction of a dip down to the 4170 point level is holding here so watch extremely oversold momentum to possibly turn into a swing trade back up to stabilise the falls:
Currency markets continue to see strengthening in USD, with the US Dollar Index up nearly 1%, thus breaking the parity barrier with Euro, falling overnight to the 99.40 level. Momentum on the four hourly chart has remained oversold with price action nowhere near the low moving average let alone the high, confirming the one way move in sentiment. There remains a low probability of a swing play on oversold positions back up to parity at the 1.00 level but I remain cautious that it has now turned into permanent resistance:
The USDJPY pair continued its breakout from Friday night above short term resistance, now extending past the 137 level after pushing that aside on the open yesterday. While this new monthly high on the back of a much stronger USD could solidify from here with very strong internal buying support, I’m wary of a potential sharp swing back down to the previous weekly highs so watch for any break below the low moving average at the 136 level if momentum inverts from its current overbought status:
The Australian dollar was put back into its place after a post weekend gap high saw it briefly tick over the 69 handle, last night instead returning to the previous weekly lows below that level. It looks like nothing can save the Pacific Peso now with the Fed hellbent on raising rates. Price action seems to be bottoming here in the very short term but the overall trend remains bearish, so watch for any further break below the 68.50 level:
Oil markets are still trying hard to stabilise and to defeat their deflationary trend with Brent crude finishing back above the $96USD per barrel level where the short term battle seems to lie, yet the $100 level remains out of reach. Price action is almost below the pre-Russian invasion February lows and still below the downtrend line from the June highs. There is no breakout evident yet as daily momentum has been unable to get out of its very negative funk. The real level to beat remains $100 which is turning into very strong resistance here:
Gold continues to slump on the higher move in USD with the $1730USD per ounce now under threat as the daily price inverts sharply, confirming the move below the previous weekly low at the $1763 level for another new daily low. The daily chart shows this reversal accelerating with daily momentum now neutral at best with the next level of support not that far away as this relief rally takes back half of its gains from the $1700 bottom:
