The US Federal Reserve held rates overnight which gave risk markets the impetus to rise further as the latest ISM manufacturing data disappointed to the downside. Wall Street rallied strong with European markets following which should lead to strong gains here in Asia on the open.
US bond markets saw a pullback across the curve with 10 year Treasuries finally breaking below the 4.8% level. Meanwhile oil prices continued to selloff, with Brent crude falling below the $85USD per barrel level as gold remained relatively strong but is struggling to get back above the $2000USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets lifted higher initially but the Shanghai Composite only managed to tread water, up just 0.1% at 3023 points while in Hong Kong the Hang Seng Index is dead flat at 17101 points.
The daily chart is still showing a significant downtrend that has gone below the May/June lows with the 19000 point support level a distant memory as medium term price action stays well below the dominant downtrend (sloping higher black line) following the previous month long consolidation. Daily momentum readings are trying to get out of oversold mode and price is now well below recent support levels, so watch out below:
Japanese stock markets had the best run with the Nikkei 225 closing 2.4% higher due to the weaker Yen at 31601 points.
Trailing ATR daily resistance was coming under threat in a very fast bounceback and while daily momentum retraced back from oversold settings as price action is following Chinese markets with a typical dead cat bounce pattern forming here. Futures are indicating a solid move higher again, but I’m still watching for a return to the previous monthly low at 30000 points proper:
Australian stocks were finally able to put in a solid session with the ASX200 up more than 0.8% at 6838 points, still well below former support at 7000 points.
With extended relief across the risk complex, SPI futures are up nearly 0.8% so we should see the 6800 point support level firm on the open this morning with the 7000 point level still remaining as strong short and medium term resistance. The daily chart is not looking optimistic here with medium term price action continuing to move sideways at best, down the hill at worst:
European markets are doing better to get out of their funk with the Eurostoxx 50 Index eventually gaining some 0.8% to finish at 4091 points.
The daily chart shows an overall decline with weekly support at 4100 points no longer defended, as weekly resistance firms at the 4300 point resistance level. There were signs the previous little bounce was running out of steam as daily momentum remained neutral at best, with a rebound out of oversold settings possibly setting up a small bounce higher:
Wall Street built on its previous positive momentum with lifts across all three bourses as the NASDAQ gained 1.6% while the S&P500 lifted exactly 1% to finish at 4237 points.
The daily chart is still showing a clear downtrend with a series of lower weekly lows with yet another one created on Friday. Short term momentum is now getting out of oversold territory as price action bounces strongly off of this new low, with the potential swing trade here breaking through trailing ATR support at the 4200 point level:
Currency markets remain highly volatile with bounces and turbulence following the ISM manufacturing print plus the Fed meeting which resulted in the USD pushed lower against most of the major currency pairs. Euro was caught amid this with a return to the mid 1.05 area after bouncing off the 1.05 handle proper.
Support at the recent weekly lows around the 1.05 level was tested before the Fed meeting with only a small bounce thereafter with short term momentum looking weak at best:
The USDJPY pair continued its minor selloff after racing up way too fast in the previous session – the one with a stunning 200 pip move straight up to the 151 handle – and is still looking over-stretched but with most of the heat taken out.
Four hourly momentum has retraced from extreme overbought settings so watch for a potential consolidation here:
The Australian dollar did better than expected with calculations around the RBA’s move next week now in focus after the Fed hold with almost a return to the 64 cent level that matched but did not surpass last week’s high.
The Pacific Peso remains under medium and long term pressure with price action now starting to firm better on the short term charts with a potential Kardashian big bottom forming here as traders await next week’s RBA meeting:
Oil markets remain volatile in the wake of growing conflict in the Middle East with a follow through of the recent reversal, with Brent crude falling further, now below the $85USD per barrel level as it remains able to shake off a series of lower daily highs since the mid September levels.
After almost reaching $100 in mid September, price was looking to return to the August levels around the $85 area where a point of control had been established before the recent breakout. Daily momentum is still at negative settings with a retest of support at the August level likely again:
Despite the reversal in USD, gold remains the best undollar by holding on to its strong position after finally breaking through the $2000USD per ounce level, listing downwards this morning to just below $1983.
The daily chart showed quite a steep uptrend since the previous weekend gap higher as momentum remained very positive in the short term, trying to get back up to the $2000 level. This new breakout puts in a new monthly high with daily momentum again looking overbought and ripe for a pullback back to retest the $1900 level, but the bugs are fully in charge here for another attempt at the all time record high. Watch ATR support on the four hourly chart though:
