Risk sentiment is flat lining again as stock market volatility moves lower but all eyes still remain on US Treasuries and the USD itself with Swiss Franc now taking the lead while Euro took a slight back seat on poor sentiment readings in Germany. The impact on global trade continues to be felt with leading indicators suggesting slowdowns are underway everywhere. The Australian dollar is remaining above the 63 handle after yesterday’s release of the RBA minutes.
Treasuries remain the key market to watch with 10 year yields slipping again while oil prices are trying to recover but Brent crude is struggling to get back above the $65USD per barrel level. Gold is slowly down after making new highs after its recent surge above the $3200USD per ounce level, but has not slipped further overnight.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were slightly lower in afternoon trade before the Shanghai Composite spiked at the close to finish slightly higher and remain above the 3200 point level while the Hang Seng Index did the same to finish 0.2% higher at 21466 points.
The Hang Seng Index daily chart shows how this recent move looked unsustainable to the upside after recently setting up for another potential breakdown around the 20000 point level. Momentum has reversed completely to panic selling with support at the 22000 point level completely wiped out. More to come or is everything awesome:
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Japanese inventory markets had been the very best performers within the area for a change with the Nikkei 225 up practically 0.9% to 34267 factors.
Value motion had been indicating a rounding prime on the day by day chart for someday now with day by day momentum retracing away from overbought readings with the breakout final month above the 40000 level degree now in full remission. Yen volatility alongside correlation with different danger markets are the principle drawback right here, though futures are indicating one other small bounce on the open this morning:
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Australian shares have managed a really staid session with the ASX200 barely shifting at 7761 factors.
SPI futures are useless flat given the shortage of motion on Wall Road from in a single day as warning reigns. The day by day chart sample suggests additional draw back is inevitable because the Chinese language counter-counter tariffs take impact however look ahead to a possible quick masking rally again to 8000 factors or so first:
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European markets had been in a position to carry once more in a single day with strong strikes throughout the continent with the Eurostoxx 50 Index ending greater than 1% larger at 4970 factors.
Assist on the earlier month-to-month assist ranges (black line) at 5100 factors failed to carry so 2024 lows on the 4400 level degree are actually in sight, baring a useless cat bounce which appears to be forming right here. Nonetheless a superb time for extra European defence inventory purchases (nearly):
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Wall Road once more decreased in volatility with solely gentle losses with the NASDAQ slipping a handful of factors whereas the S&P500 was pushed practically 0.2% decrease to ultimately shut on the 5396 level degree.
The Trump pump and dump scheme moved out of its first useless cat bounce part and into the “pump that cat stuffed with steroids and see if it revives” stage, and proper now that cat is laying down for a nap. I nonetheless contend we’re going decrease however 90 days is a LONG time – look ahead to ATR assist right here on the 4 hourly chart to return beneath stress as momentum wanes:
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Forex markets are nonetheless eager to push the US Greenback down however Euro failed in a single day to carry above the 1.13 deal with because the German ZEW survey and UK unemployment gave some pause, though Pound Sterling made one other new excessive.
The union forex spiked up via the 1.11 deal with mid week earlier than retracing within the earlier session however is discovering straight assist at that degree now to springboard larger though it’s significantly overbought and has to navigate fairly a number of releases arising this week:
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The USDJPY pair is holding at its latest lows, settling on the 143 degree with out a lot upside potential constructing right here.
Quick time period momentum was extraordinarily oversold and confirmed a possible swing play right here however that has disappeared as Yen can solely go larger because the USD is dumped amid a brand new commerce bloc forming within the Asia-Pacific with the US. Look ahead to any break beneath the 142 degree:
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The Australian greenback continues to increase its beneficial properties with an additional transfer above the 63 cent degree to now get again to the pre-tariff announcement ranges, though quick time period momentum is slowing down right here.
Stepping again for an extended viewpoint (and searching on the trusty AUDNZD weekly cross) value motion continues to be solidly beneath the 200 day MA (shifting black line) and close to new 5 yr low. This isn’t but over however look ahead to an try to carry right here on the 63 cent degree within the quick time period first:
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Oil markets are attempting onerous to carry onto its publish tariff pause bounce with Brent crude remaining beneath the $65USD per barrel degree after the weekend hole.
The day by day chart sample reveals the publish New 12 months rally that obtained a bit of out of hand and now reverting again to the sideways decrease motion for the latter half of 2024. The potential for a return to the 2024 lows was constructing right here earlier than this quick time period bounce and is now baked in after which some as demand will collapse regardless of the very quick time period change in sentiment:
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Gold zoomed up above the $3200USD per ounce degree final week however noticed a gentle pullback after the weekend hole however has now managed to carry at $3220 as of this morning as inner assist stays very sturdy.
Quick time period assist has firmed immensely in latest periods exhibiting some actual power right here and whereas momentum is significantly overbought we may see much more upside right here with the $3200 space prone to maintain right here with a small dip on revenue taking:
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Glossary of Acronyms and Technical Evaluation Phrases:
ATR: Common True Vary – measures the diploma of value volatility averaged over a time interval
ATR Assist/Resistance: a ratcheting mechanism that follows value beneath/above a development, that if breached reveals above common volatility
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CCI: Commodity Channel Index: a momentum studying that calculates present value away from the statistical imply or “typical” value to point overbought (far above the imply) or oversold (far beneath the imply)
Low/Excessive Transferring Common: rolling imply of costs on this case, the high and low for the day/hour which creates a band across the precise value motion
FOMC: Federal Open Market Committee, month-to-month assembly of Federal Reserve relating to financial coverage (setting rates of interest)
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DOE: US Division of Power
Uncle Level: or cease loss level, a degree at which you’ve clearly been improper in your place, so cry uncle and get out/improper in your place, so cry uncle and get out!
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