While choppy trade on Friday night saw some minor pullbacks across Wall Street, the broadening conflict in the Middle East will likely lead to larger gap downs on the open this morning across risk markets here in Asia. European markets were also under the pump on Friday night but the focus was on US personal spending data.
The USD was down slightly with Euro still range trading following the ECB meeting while the Australian dollar continues to whipsaw around the 63 cent level.
US bond markets saw a slight pullback in yields across the curve with 10 year Treasuries hovering around the 4.8% level. Meanwhile oil prices spike again, with Brent crude lifting nearly 3% to the $89USD per barrel level. Gold finally broke through the magical $2000USD per ounce level after lifting all week.
Looking at share markets in Asia from Friday’s session where mainland Chinese share markets have lifted higher with the Shanghai Composite gaining nearly 1% to close at 2999 points while in Hong Kong the Hang Seng Index is doing twice as well, up 2% to 17398 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 stuck in oversold mode and price is now well below recent support levels, so watch out below:
Japanese stock markets also went along for the ride with the Nikkei 225 closing some 1.2% higher at 30991 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 another move lower on the open as I’m still watching for a return to the previous monthly low at 30000 points proper:
Australian stocks were the worst in the region with only a small lift as the ASX200 closed just 0.2% higher at 6826 points, confirming the break below at 7000 points from last trading week.
Without relief across the risk complex, SPI futures are down nearly 1% already with another test of the 6800 point level on the open this morning with the 7000 point level still firming strongly as short 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 again failed to re-engage to the upside despite the ECB pause with the Eurostoxx 50 Index eventually losing some 0.9% to finish at 4014 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 return to oversold settings now setting up further downside:
Wall Street was unable to gain any positive momentum although the NASDAQ actually put in a positive session, closing 0.4% higher while the S&P500 lost another 0.5% to finish at 4117 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 was getting out of oversold territory as price action firmed near this new low, but the potential swing trade evaporated as the downtrend line has been broken again:
Currency markets reduced somewhat in volatility following Thursday’s ECB meeting but weakness is starting to creep into USD again across the undollar complex. Euro range traded but remains below the 1.06 handle.
On the four hourly chart the union currency had finally broke through short/medium term resistance at the 1.06 handle at the start of the week, pushing short term momentum to extremely overbought levels. Support at the recent weekly lows around the 1.05 level was very firm before this move but is going to be tested here:
The USDJPY pair failed to lift out of its holding pattern after firming above the 150 handle with a broad selloff on Friday night sending the pair straight through trailing ATR support and the mid 149 level as a result.
Four hourly momentum had become stretched to extreme overbought settings before this move and has now switched to slightly oversold so watch for support that held last week to hold here:
The Australian dollar was able to bounce back yet again after briefing dipping below the 63 handle in the previous session with another brief bounce on Friday night that saw it return just above that level but without a new session high for the trading week.
The Pacific Peso remains under medium and long term pressure with price action just not being translated into anything sustainable as the four hourly chart shows the potential to drop lower but I think traders are awaiting next week’s RBA meeting:
Oil markets remain volatile in the wake of growing conflict in the Middle East with yet another reversal on Friday night, with Brent crude returning to just above the $89USD per barrel level, after shaking 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:
Gold remains the best undollar by not just holding on to its strong position throughout the week, but finally breaking through the $2000USD per ounce level.
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:
