This article was last updated on April 16, 2022
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Stock markets around the world are off to a mixed start this week. Asia Pacific started lower with the Nikkei falling 0.9%. The FTSE, DAX and US index futures are all pretty much flat. Crude oil is up 0.6%.
The biggest trading action so far has been in currency markets with Sterling in the spotlight. Over the weekend reports indicated that Scotland could be heading for another independence referendum with the SNP wanting a vote in 2018 before Brexit and the UK government looking to a date after Brexit in 2019. There also have been reports the House of Lords could demand changes to the Brexit bill.
Interestingly GBP is down against USD, but steady against EUR amid polls showing the two main parties in Germany running neck and neck. Gold and other major currencies are holding steady relative to USD but this could change as the week progresses.
In the US today, durable goods orders are due but the focus remains on President Trump’s speech to Congress Tuesday night. Traders are counting on details on the President’s tax reform plans to support the recent rally in stocks. This week, manufacturing and Service PMI reports and other economic indicators are due plus Fed Chair Yellen speaks later in the week, keeping speculation on a March rate hike bubbling away.
It’s also a big week for news in Canada with the remaining big bank earnings Tuesday, the Bank of Canada on Wednesday and GDP on Thursday. The bank is not expected to take action on interest rates but indications of whether or not Governor Poloz is still worried about US actions on trade sideswiping Canada could attract attention.
Last night’s Oscar awards saw Moonlight, produced by independent studio A24, take home the big Best Picture win. Shares of Lion’s Gate, which had four of the nine nominees including pre-event favourite La La Land could be impacted. Although the studio took home Best Actor, Best Actress and a number of other categories, close still only counts in horseshoes.
Chart Signals: Big test for Sterling, US indices look vulnerable
GBP is falling today against both USD and EUR with a key moving average test underway for Cable. Meanwhile, gold continues to consolidate recent gains, WTI is still forming an ascending triangle. US indices still look like they may be forming tops with the US Small Cap 2000 leading the way back downward.
North American and European Indices
US 30 continues to level off in the 20,700 to 20,850 area. An evening star was called off but upward momentum still appears to be slowing and with the index falling back toward 20,790 from 20,840 and RSI really overbought a correction remains possible. Next downside support possible near 20,590 on a breakdown.
US SPX 500 tried to break out over 2,366 today rallying toward 2,372 before slumping back toward 2,364. RSI remains really overbought keeping the index vulnerable to a correction toward 2,350 or 2,335 initially. Next measured upside resistance near 3,382.
US NDAQ 100 remains stuck below 5,355 resistance drifting back toward 5,332 but it also continues to attract support above 5,300. RSI overbought and rolling over suggests potential for a correction with next support possible near 5,265.
US Small Cap 2000 is still rolling over, back under 1,400 which has become resistance again and sliding toward 1,393 with next potential support near 1,380 then the 50-day average near 1,372. A huge negative RSI divergence and slowing upward momentum indicates potential for a downturn.
UK 100 is holding near 7,250 following last week’s bounce up off of 7,200 support but it remains in a downtrend of lower highs with resistance falling toward 7,290. RSI approaching a test of 50 where a breakdown would signal a downturn in momentum.
Germany 30 continues to drift back down from 12,000. RSI falling toward 50 following a negative divergence indicates upward momentum weakening and a downturn pending. Recent trading near 11,815 with next potential support near 11,700 and initial resistance falling toward 11,830.
Commodities
Gold is consolidating recent gains near $1,255 the top of a Fibonacci cluster between there and $1,250. Some resistance has emerged near $1,260 and the 200-day average with more possible near $1.278. Additional support in place near $1,238.
Crude Oil WTI is hanging around $54.00 still under accumulation and forming an ascending triangle below $54.60 and above $53.50 with next resistance after that at the $55.00 round number. RSI trending upward indicates continuing underlying accumulation .
FX
US Dollar Index has levelled off near 101.00 with RSI sitting on 50 indicating sideways momentum. From here it could go either way within a 100.40 to 101.80 range with initial resistance at the 50-day average near 101.35 and initial support near 100.65.
USDJPY remains in a downtrend with a retest of 112.35 confirming lower Fibonacci resistance following a breakdown. RSI under 50 confirms distribution. Next potential support near 111.60 then 111.25 on trend.
EURUSD has levelled off near $1.0585 a Fibonacci level up off of $1.0500 round number support but below its 50-day average near $1.0600. RSI between 40 and 50 suggests a pause underway within an ongoing downtrend.
EURGBP is on the rebound, popping up off $0.8460 Fibonacci support up through 0.8500 and on toward 0.8530 with next potential resistance at the 50-day average near 0.8550 then 0.8600. RSI testing 50 which could confirm a downtrend or signal an upturn.
GBPUSD has a big support test underway today at its 50-day average near $1.2410. So far traders have been taking a stand there taking all the bears could throw at them with an additional line of defence and channel support near $1.2355. RSI bouncing around 50 indicates a sideways trend. Initial resistance on a rebound possible in the $1.2480 to $1.2520 area.
USDCAD is sitting on $1.3100 near the middle of a $1.3000 to $1.3200 trading range. RSI on 50 indicates a sideways trend. Initial support near $1.3055 with initial resistance near $1.3165.
CADUSD is holding steady near $0.76235 within a $0.7600 to $0.7660 narrow range and a wider $0.7550 to $0.7700 range. RSI bouncing around 50 indicates sideways momentum.
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