This article was last updated on April 16, 2022
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Stock markets have been holding steady overnight, consolidating this week’s gains. US index futures and the Dax are flat while the FTSE is up 0.25%.
In currency action, the USD is down slightly enabling other currencies like gold, JPY and CAD to build on recent gains. NZD regained $0.7000 overnight on a stronger manufacturing PMI report. GBP continues to attract renewed interest following hawkish dissent at yesterday’s Bank of England meeting.
Crude oil’s rebound continues, with WTI and Brent rising another 0.3%. Comments out of Saudi Arabia about potentially extending supply cuts past June are attracting attention with US drilling activity data due later in the day.
Today’s focus for traders is on politics with a number of big meeting scheduled. German Chancellor Merkel meets with US President Trump this afternoon looking to improve relations following criticism from the US about Germany’s big trade surplus and how it’s membership in the Euro depresses its currency relative to a standalone Deutschemark. Comments out of yesterday’s meeting between finance ministers Schaeuble and Mnuchin appeared less strained.
G-20 finance ministers are meeting today in Germany with ministers likely trying to find common ground on trade somewhere between fully open markets and protectionism. Currencies and competitive devaluation are likely to top the agenda too as they often do at these events.
Meanwhile, US Secretary of State Tillerson continues his trip to Asia, with meetings in South Korea today after Japan yesterday and preparing to meet with China on the weekend. What to do about North Korea is at the top of his agenda having indicated the US is losing strategic patience with the rogue nation and looking at alternatives with everything apparently on the table.
In the UK, the Conservative party and the SNP are both holding internal meetings today. Brexit is likely to be top of mind with the Brexit bill having received Royal Assent clearing the way for PM May to trigger Article 50. Yesterday, the Prime Minister rejected calls for a second Scottish Referendum saying “now is not the time”. The government is planning to trigger Article 50 to launch Brexit negotiations, perhaps around next week’s Eurogroup finance ministers meeting Monday, or more likely, the EU Summit on Saturday the 25th.
Chart Signals: Significant tops and bottoms appear to be forming
For the most part, today’s trading action has centred around the consolidation of recent moves, with several markets digesting recent gains and losses. Indices struggling to make further headway, pauses for currencies and GBP continuing to rebound indicate that larger pattern reversals are continuing to unfold.
North American and European Indices
US 30 is still unable to retake 21,000 and remains below the former uptrend line it broke recently. RSI confirms that the trend has shifted from upward to sideways with a correction still possible. Currently bouncing around between 20,910 and 20,950 next potential support appears near 20,860 then 20,795.
US SPX 500 remains stuck below 2,400 and may have formed a double top already. The index is trading near 2,380 with initial resistance near 2,384 and 2,392 and next support possible near 2,376 then 2,356. RSI indicates upward momentum has peaked and a consolidation phase underway.
US NDAQ 100 is still holding above its 5,395 recent breakout point but it may be starting to roll over with resistance slipping toward 5,418 from 5,432. RSI overbought and a negative divergence indicates upward momentum peaking and a pause or correction possible.
UK 100 is consolidating between 7,410 and 7,450 just above its recent 7,400 breakout point. RSI near overbought so a pause possible but it has also broken out of a downtrend to confirm recent advances so signals are mixed. Next upside resistance possible near 7,500 where a round number and measured move converge. Next support possible near 7,350.
Germany 30 may be forming a significant top. The index is trading between 12,010 and 12,110 near and under the bottom of Thursday’s Shooting Star spike up toward 12,180. A negative RSI divergence indicates upward momentum slowing. Initial support near 12,000 then 11,930.
Commodities
Gold is hanging around $1,230 a Fibonacci level, consolidating its recent rally up from $1,200 and Thursday’s breakout over $1,218 and its 50-day average. RSI back above 50 confirms momentum turning upward. Next resistance possible near $1,242 then $1,250.
Crude Oil WTI continues to rebound, holding back above its 200-day average near $48.30 and trading near $49.00. It still needs to retake $50.00 to call off its recent downtrend. It appears to be moving into a $47.00 to $49.50 range for now. RSI back above 30 indicates downward pressure easing.
FX
US Dollar Index is testing support at the 100.00 round number which appears to be holding so far. RSI has levelled off just below 50 suggesting a sideways trend could be emerging after a plunge down from 102.00, perhaps in the 99.00 to 101.00 area.
USDJPY has paused near 113.20 near the middle of a 111.00 to 115.50 sideways channel. RSI bouncing around between 40 and 60 confirms a downswing underway within a sideways trend. Next support possible near 112.35.
EURUSD has encountered resistance near $1.0780 falling back toward $1.0730, but it remains in an uptrend holding above $1.0720 Fibonacci support. Next potential resistance at a Fibonacci cluster near $1.0830 with next downside support near $1.0640 then $1.0585.
EURGBP is bouncing around between 0.8660 Fibonacci support and 0.8700 with resistance emerging at a lower high. RSI falling back toward 50 signals upward momentum fading and a downturn possible. Next potential support in the 0.8550 to 0.8600 area between the 50 and 200-day averages.
GBPUSD has climbed up into the $1.2350 to $1.2400 zone trading near $1.2360 as it continues to form the right shoulder of a head and shoulders base. RSI regaining 50 confirms momentum turning upward.
USDCAD has paused near $1.3340 and is sending mixed signals. RSI holding 50 suggests its underlying uptrend remains intact but a symmetrical triangle forming between $1.3275 and $1.3355 suggests this could be a pause within a bigger downswing.
CADUSD is hanging around the $0.7500 round number. The pair has popped up from $0.7410 but now appears to be pausing with resistance coming in near $0.7530. RSI running into resistance at 50 suggests this could be a bounce within a bigger downtrend.
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