Wall Street continued its bounce again on Friday night but with more modest returns as risk markets finally settled down after a week of epic volatility. Currency markets were also sanguine due to the lack of economic releases while bond markets too pulled back from the brink. USD was largely unchanged but some selling pressure is evident as Euro remains relatively strong while the Australian dollar again struggled to push through the 66 cent level.
10 year Treasury yields pulled back slightly, down 5 points but up more than 15 for the week as they settled below the key 4% level yet again. Oil prices remain volatile but Brent crude tried to push higher again, almost lifting up through the $79USD per barrel level. After previously being unable to get back above the $2400USD per ounce level, gold prices have continued to lift again, closing the week out at the $2430 level.
Looking at markets from Friday’s session in Asia, where mainland Chinese share markets absorbed the latest inflation print but the Shanghai Composite still finishing some 0.3% lower while the Hang Seng Index was up more than 1.1% to 17090 points.
The Hang Seng Index daily chart was starting to look more optimistic a few months back but price action has slid down from the 19000 point level and continues to deflate in a series of steps as the Chinese economy slows. A few false breakouts have all reversed course and another downside move is looming here as the 17000 point level is broken:
Meanwhile Japanese stock markets are reducing in volatility but still putting in modest returns with the Nikkei 225 up more than 0.5% to 35025 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 support subsequently broke on that retracement, and then the front fell off. Futures are indicating a somewhat flat session to start the trading week but Yen volatility is still dragging this around:
Australian stocks are pushing higher with the ASX200 putting in a solid 1.2% gain to close at 7777 points.
SPI futures are also looking solid to start the new trading week, up more than 0.7% due to the continued optimism on Wall Street. Former medium term support at the 7700 point level will remain under pressure here as trader’s absorb the RBA’s signalling of no punchbowl for the rest of 2024, but short term momentum looks more positive:
European markets stabilised further and finally moved higher across the continent, but the Eurostoxx 50 Index almost managed to finish 0.1% higher at 4675 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 just unable to breach the 5000 point barrier. Instead, former ATR support at the 4900 point level was only a temporary anchor point as we remain deep down into correction territory. Price must clear the 4700 local resistance level smartly to get out of trouble:
Wall Street however continued its bounce back but with more modest returns this time, with the NASDAQ lifting some 0.5% higher while the S&P500 also closed half a percent higher to finish at 5344 points.
The four hourly chart illustrates this bounceback is only a smidgen under short term resistance at the mid 5300 point level with momentum retracing from being oversold and now broadly positive. The potential for a positive breakout is building here:
Currency markets were able to provide further stability on Friday night with the USD largely unchanged against most of the majors but some selling pressure is starting to build. Euro held fire just above the 1.09 level as a result.
The union currency had previously bottomed out at the 1.07 level before gapping higher earlier in the week with more momentum building to the upside with the 1.0750 mid level as support but there was still too much pressure from King Dollar. This recovery about ATR support could still be unsustainable however so watch for this minor retracement to possibly gain momentum if support doesn’t hold at the 1.09 level:
The USDJPY remains on a downwards medium term pattern as the carry trade unwinds as the bounceback is starting to waver at the 147 level with the potential to extend further dissipating as short term momentum slows.
The overall volatility speaks volumes as it pushed aside the 158 level as longer term resistance in the weeks leading up to the BOJ rate hike. Momentum is suggesting a possible bottom is brewing but this maybe just catching knives at this point:
The Australian dollar is no longer just holding in the wake of the RBA signalling no rate cuts for the rest of 2024 as it lifts above the 65 cent level with another push up towards the 66 cent level on Friday night thwarted.
During June the Pacific Peso hadn’t been able to take advantage of any USD weakness with momentum barely in the positive zone but that has changed in recent weeks with price action finally getting out of the mid 66 cent level that acted as a point of control. My view of a weak resurgence is morphing slowly into a stronger move higher here if it can clear the 66 cent level:
Oil markets remain in a weak position despite the looming Iran/Israel war but still managed to bounce back a little more on Friday night with Brent crude pushing towards but not above the $80USD per barrel level in what could be a bottoming action.
After breaking out above the $83 level last month, price action had stalled above the $90 level awaiting new breakouts as daily momentum waned and then retraced back to neutral settings. Daily ATR support had been broken with short term momentum still in oversold mode but watch for a potential follow through on this reversal as this swings into higher volatility:
Gold was finding it tough to get back above the $2400USD per ounce level after last week’s volatility but managed to clear short term resistance mid-week and has kept above that level on Friday night as the classic falling bullish wedge pattern performed as expected.
While it was the biggest casualty of the reaction to the recent US jobs report, the shiny metal was able to clock up some gains before this reversal, almost hitting the $2500USD per ounce level with the subsequent retracement still higher than the previous lows. The longer term support at the $2300 level remained firm and while short term ATR resistance hasn’t been cleared yet its probably going to start off quickly this week:
