The risk complex bounced back overnight with European shares leading the way and Wall Street lifting as well, although most of the gains were lost later in the session in the absence of any further economic news. The USD lost ground against an oversold Euro while the Australian dollar remained near its new monthly low above the 67 cent level. The commodity complex saw oil prices pull back but only marginally with Brent crude still holding above the $82USD per barrel level while gold is still in a depressed funk, but managed to lift a handful of dollars to the $1816USD per ounce level.
Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets fell into the close with the Shanghai Composite down more than 0.2% to 3258 points while the Hang Seng finished some 0.3% lower to close at 19943 points. The daily chart is showing this rollover accelerating with price action continuing well below previous ATR support as momentum remains in oversold territory. Watch now for support at the 20000 point level to come under pressure:
Japanese stock markets were mixed with the Nikkei 225 down nearly 0.2% to 27423 points. A bounceback is still in effect after last week’s rollover with daily momentum getting back into the positive zone with support clearly evident at the 27000 point area. While futures are indicating a bounceback to start the week this could lack confidence with short term resistance at the 27400 point level needing to be cleared:
Australian stocks were the worst performers in the region with the ASX200 closing 1.1% lower to almost break below the 7200 point level at 7224 points. SPI futures however are up nearly 0.5% due to the bounce on Wall Street overnight. The daily chart is still showing a clear downtrend after being unable to take out 7500 points, with a retracement below ATR support at the 7200 point level possibly firming as daily momentum continues its reversion. However I do note the classic long tail of buying support that maybe indicating a potential bottom on the daily candle:
European markets had broad gains across the continent, starting the trading week on a much better note to recover most of Friday night’s losses as the Eurostoxx 50 Index closed more than 1.6% higher at 4248 points, trying to get back to the recent new weekly high. Futures are indicating a slight pullback of those gains as Wall Street fizzed into the close where I’ll be watching the ability to stay above the 4200 point level to see if support remains firm. Daily momentum has moderated but remains in the positive zone:
Wall Street was looking to follow European shares in kind but managed to selloff into the close, taking back half or more the intrasession gains with the NASDAQ up 0.6% while the S&P500 only managed a 0.3% gain to remains well below the key 4000 point support level, closing at 3982 points. The four hourly chart shows price action still below last week’s downtrend with former ATR and psychological support at the 4000 point area possibly turning into resistance. Daily momentum is about to switch into truly oversold so I’m looking for potential further falls ahead this week:
Currency markets have been so overbought USD it was inevitable a small bounce to start the new week was in hand with Euro rallying off the floor at the 1.05 level to clear the 1.06 level as of this morning. It may not be enough with the four hourly chart still showing a dominant downtrend with a failure to make any new highs and although short term momentum has reverted out of being very oversold this is likely to be short lived:
The USDJPY pair has gone back to its sliding sideways position, holding on to its Friday night gains above the 136 level for a new monthly high. This trend has seen it always respect trailing ATR support with internal strength obvious following the recent weekly uptrend and while resistance had been building at the 135 handle this has finally been pushed aside. Short term momentum is now seriously overbought so I expect a minor pullback to start the week before consolidating at these new levels:
The Australian dollar was unable to follow Euro in kind with only a small lift above the 67 level overnight, sitting in a very weak position as of this morning as traders await the latest retail trade figures. Overall price action remains weak following the previous week’s unemployment numbers that has not yet challenged interest rate expectations with my view of a further pullback and new weekly lows coming to pass. In fact this new monthly low puts into contention a further run below to the 60 handle:
Oil markets are again failing to bounceback with another weak session overnight keeping Brent crude around the $82USD per barrel level to at least stave off another lower daily session. Daily momentum has sharply inverted into the negative zone and is almost oversold but not quite, indicating some buying support below. Overall however, price action has still failed to beat the $88 highs from January so this sideways at best move will continue:
Gold remains depressed but managed a mild lift off the recent bottom, closing at the $1816USD per ounce level to stave off another daily low. This continued negative price action has not yet abated with overheard resistance too hard to beat and the daily chart still indicating more downside below. I’m watching for a continued rollover and a test of the start of year position below the $1800 level:
