A reversal in fortune for equities overnight with volatility in bond markets and a falling USD giving some relief as Wall Street rallied a little more than 1%, as oil prices eased despite the broadening conflict in the Middle East. European markets lifted slightly while the USD fell back especially against the Euro as the Australian dollar lifted further above the 63 cent level.
US bond markets saw big ranges in yields across the curve with 10 year Treasuries eventually settling at the 4.8% level. Meanwhile oil prices reversed again, with Brent crude falling back 3% to the $86USD per barrel level. Gold remained relatively strong to hold at the $2000USD per ounce level.
Looking at share markets in Asia from yesterday’s session where Chinese share markets have lifted higher with the Shanghai Composite gaining nearly 0.3% to close at 3027 points while in Hong Kong the Hang Seng Index eventually finished with a scratch session at 17406 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 worst run with the Nikkei 225 closing some 1% lower at 30696 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.
With some relief across the risk complex, SPI futures are up nearly 0.5% already with another test of the 6800 point support 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 are trying hard to get out of their funk with the Eurostoxx 50 Index eventually gaining some 0.3% to finish at 4028 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 finally able to gain positive momentum as all eyes were on the bond markets as the NASDAQ and S&P500 both gained 1.2% with the latter finishing at 4166 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 continues to firm near this new low, with the potential swing trade here about to testing trailing ATR support at the 4200 point level:
Currency markets are lifting in volatility alongside bonds as weakness grows for USD again across the undollar complex. Euro initially range traded but eventually lifted through 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 again to remain in its previous holding pattern with another broad selloff overnight sending the pair straight through trailing ATR support and towards the 149 level as a result.
Four hourly momentum had become stretched to extreme overbought settings before this move and has now switched to extremely oversold so watch for a potential bounceback here:
The Australian dollar was able to bounce back yet again to almost match last week’s intrasession high as it wants to get back to the 64 cent level versus USD.
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 overnight, with Brent crude slumping down to the $86USD per barrel level, still unable 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:
Gold remains the best undollar by holding on to its strong position after finally breaking through the $2000USD per ounce level, listing sideways this morning to just over $1997.
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:
