Risk markets bounced back overnight despite the Chinese tariffs coming into effect as Wall Street rebounded alongside European bourses as the overbought USD was pushed back by all the undollars. The latest economic news from the US and solid earnings reports overshadowed the Trump Trade War with the Federal Reserve still expected to cut once more. The Australian dollar came back sharply again to bounce back well above the 62 cent level after almost crossing below the key 60 handle from this weekend.
10 year Treasury yields pulled back again slightly, off by 3 points to the 4.5% level while trading in oil was volatile with wide ranging sessions as Brent crude finished at the $75USD per barrel level. Gold however has succeeded once more in pushing above its recent new all time historical high to finish at the $2840USD per ounce level.
Looking at stock markets from Asia in yesterday’s session, where mainland Chinese share markets remain closed for the Chinese New Year while the Hang Seng Index reopened and soared nearly 3% higher to close at 20789 points.
The Hang Seng Index daily chart shows how resistance formed around the 21000 point level with only one false breakout in late November squashed back to the 20000 point level where price action has stayed since. This was setting up for another potential breakdown here as price oscillated downward but has turned into an impressive bounce and looks like continuing as markets reopen:
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Japanese inventory markets bounced again essentially the most within the area, with the Nikkei 225 ending almost 0.8% greater at 38802 factors.
Value motion had been indicating a rounding prime on the each day chart with each day momentum retracing away from overbought readings with the breakout final month above the 40000 level stage nearly in full remission. Yen volatility stays an issue right here, with a sustained return above the 38000 level stage from Might/June presumably on the playing cards however resistance is firming:
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Australian shares nevertheless ultimately put in a scratch session with the ASX200 closing 0.1% decrease at 8374 factors.
SPI futures are up 0.6% as a result of rebound on Wall Road in a single day so anticipate extra volatility in immediately’s session. The each day chart sample and quick worth motion suggests resistance overhead on the 8300 level stage is beginning to weigh in the marketplace with an enormous push via required quickly to get again to the 2024 highs with momentum as soon as overbought however now regular:
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European markets had been in a position to play catchup and rebound throughout many of the continent because the Eurostoxx 50 Index completed almost 0.9% greater at 5264 factors.
This was trying to flip into a bigger breakout with assist on the 4900 level stage fairly agency with resistance unable to breach the 5000 level barrier in current months. Value had beforehand cleared the 4700 native resistance stage because it seeks to return to the earlier highs as momentum tries to select up strongly right here with the 5000 level stage turning into very robust assist:
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Wall Road rebounded with the NASDAQ placing on greater than 1.3% whereas the S&P500 bounces again over 0.7%, ending again above the 6000 level stage at 6032 factors.
Value motion had all of the logos of a continuation under the 6000 level assist stage because the potential to overshoot and overreact to the FOMC assembly going into the NFP print this week is constructing. This could have arrange a rally into the 6200 level space however may the primary stage of a pump and dump scheme though overhead resistance is weakening:
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Forex markets have now accomplished their reversals as a result of “keep” on tariffs for Canada and Mexico and have absorbed the anticipated Chinese language tariffs with the violent hole downs towards many of the undollars now principally recovered as of this morning. Euro gapped right down to the 1.02 stage earlier than heading again to the 1.03 deal with and is now poised to climb above its Friday evening end.
The union forex not too long ago discovered overhead resistance on the 1.05 deal with however has deflated all week earlier than the Friday evening slam dunk into the mid 1.03 space as momentum accelerates to the draw back. Brief and medium time period assist continues to be beneath menace right here and requires a big transfer greater earlier than calling this over:
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The USDJPY pair had an identical trajectory to the opposite pairs with Yen firming in a single day with a break under the 155 stage this morning earlier than the Tokyo open.
Brief time period momentum was extraordinarily oversold earlier than the beginning of week bounce however requires worth motion to at the very least recover from the 156 stage to name this a correct pattern greater for USD and this hasn’t come to cross as USD weakens structurally total:
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The Australian greenback was one of many greatest casualties of the commerce warfare because the Pacific Peso gapped right down to the 60 deal with however has now shot greater than its Friday evening end to be on the mid 62 stage this morning.
The current observe via to the excessive 62’s and low 63’s was at all times excessive danger going into the reside February RBA charge assembly and after the Trumpian tariff campaign so look ahead to a rejection of medium time period assist on the mid 61 cent stage though this bounceback may shot over the 200 day MA (transferring black line):
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Oil markets are actually in flux as a result of vitality warfare with China as each WTI and Brent crude had vast ranging periods, the latter ending barely under the $76USD per barrel stage with some assist constructing right here in a weak trend.
The each day chart sample reveals the put up New Yr rally that acquired just a little out of hand and now reverting again to the sideways motion for the latter half of 2024. I’m expecting a possible new rally to type above the $77USD per barrel stage from right here:
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Gold nevertheless stays on observe after not too long ago operating out of steam making an attempt to breach the $2800USD per ounce stage final week with an prolonged run above that stage to nearly cross the $2850 stage this morning.
Value motion had been accelerating in confidence in early December as new ranges of assist had been being created no matter USD energy however this pullback and rebound each had been combating an excessive amount of beneath the $2700 zone so I’ve been skeptical of any upside potential. Nevertheless that is wanting extra attention-grabbing because the earlier weekly excessive is now surpassed though momentum is sort of overbought:
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Glossary of Acronyms and Technical Evaluation Phrases:
ATR: Common True Vary – measures the diploma of worth volatility averaged over a time interval
ATR Help/Resistance: a ratcheting mechanism that follows worth under/above a pattern, that if breached reveals above common volatility
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CCI: Commodity Channel Index: a momentum studying that calculates present worth away from the statistical imply or “typical” worth to point overbought (far above the imply) or oversold (far under 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 worth motion
FOMC: Federal Open Market Committee, month-to-month assembly of Federal Reserve concerning financial coverage (setting rates of interest)
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DOE: US Division of Vitality
Uncle Level: or cease loss level, a stage at which you’ve clearly been flawed in your place, so cry uncle and get out/flawed in your place, so cry uncle and get out!
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