Tech stock earnings dominated the risk flow overnight, leaving Wall Street with a flat finish while a surging German DAX was the only thing keeping European shares afloat as Euro and other major currency pairs fell back further under the weight of a stronger USD. All but Yen of course which continues to appreciate while the Australian dollar is following iron ore and Chinese growth concerns lower.
10 year Treasury yields were largely unchanged to remain above the 4.2% level while oil prices fell nearly 2% to continue their poor start to the trading week with Brent crude breaking below the $82USD per barrel level. Meanwhile gold prices finally were able to get back above the $2400USD per ounce level with a modest bounce.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets are still going down with the Shanghai Composite losing more than 1.6% while the Hang Seng Index is falling again, off by nearly 1% to close at 17469 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 looked like turning this falling wedge pattern into something more bullish but is looking like a dead cat bounce instead:
Meanwhile Japanese stock markets were stabilising somewhat despite an appreciating Yen with the Nikkei 225 finishing flat at 39594 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 is now broken however on this retracement, with futures are indicating a slight pullback this morning:
Australian stocks were able to claw back some of their recent losses with the ASX200 up 0.5% but still below the 8000 point level, closing at 7971 points.
SPI futures are somewhat flat reflecting the mood 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 in mid April. Momentum has retraced fully from being overbought so this could be a false breakout that spreads into a proper rout amid volatility on Wall Street:
European markets wanting to cling onto their newly found positive mood but returns were mixed across the continent with the Eurostoxx 50 Index closing 0.4% higher at 4897 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 still looming at the 5000 point barrier. Former ATR support at the 4900 point level remains the anchor point but has failed previously so I’m cautious of this swing:
Wall Street couldn’t translate the dip into anything substantial as tech earnings dominated with the NASDAQ dead flat while the S&P500 eventually closed 0.1% lower at 5555 points.
The four hourly chart showed resistance overhead that had been tested last Friday before an early week slump that has now been tested and broken through, helped alongside a soaring NASDAQ. Momentum was somewhat overbought but has retraced sharply and weekly support levels are being strongly tested here:
Currency markets continue to pivot lower following the latest ECB meeting, with the USD pulling ahead further overnight against everything but Yen as Euro retraced below the 1.09 handle to the mid 1.08 mid level.
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 is too much pressure here from King Dollar so watch for a further retracement down to ATR support at the mid 1.08 handle next:
The USDJPY short term chart still looks like tumbling down a series of steps here with Yen much higher overnight, sending the pair down below the 156 level as it failed to get back into positive short term momentum territory.
This volatility speaks volumes as it once pushed aside the 158 level as longer term resistance, but then was unable to breach the 162 level as it looks like the BOJ intervention finally worked on the ever weakening Yen. With this short term bounce failing to get past short term resistance, more steps down are inevitable:
The Australian dollar continued to struggle with another straight down decline overnight, this time threatening the 66 handle as the combo of a stronger USD overall and macro concerns re China and iron ore take a toll.
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. A retracement below this level is now possible as short and medium term support are now broken:
Oil markets are failing to stabilise after have a solid run in the latter half of June with Brent crude falling nearly 2% overnight, breaking below the $82USD per barrel level overnight.
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 has now been broken with short term momentum now retracing into negative mode – watch out below:
Gold failed to hold on to its recent breakout as the slow slide back under the weight of King Dollar turned into a full rout on Friday night, but was able to take a little look above the $2400USD per ounce level overnight as bottom pickers stepped in.
While it was the biggest casualty of the reaction to the US jobs report, the shiny metal was able to clock up some gains before this reversal, almost hitting the $2500USD per ounce level. The longer term support at the $2300 level remains key but the much stronger USD is very quickly turning the tide:
