Markets steady as Brexit talks and Paris Air Show kick off

Monday finds currency markets holding steady and stocks on the rise. US index futures are up 0.3% while the FTSE, Dax and Nikkei are all up 0.50% to 0.75%. Over the weekend, French President Macron’s EN Marche! Party won a big majority followed by the centre right Republicans with the Socialists getting totally crushed. Easing political risk concerns have Gold slipping slightly.

Brexit talks are set to get underway today. For the last year, both sides have been staking out hard line positions, but with talks starting the street may look for areas of compromise. Apparently the UK has agreed to discuss exit terms before a new trade deal, having previously promoted pursuing both tracks at once. UK PM May is looking for a 2 year session of Parliament to deal with Brexit related legislation. There continue to be rumblings of potential challenges to her leadership, particularly if she goes soft on Brexit.

The Paris Air Show is underway. It’s not expected to be a blockbuster for aircraft orders but they have been steadily rolling in all morning, mainly from leasing companies. Orders have mainly been for Boeing 737 and 787 plus Airbus A320 models, nothing yet for the Airbus A380 or Bombardier CSeries. The show could keep aerospace companies in focus through this week. We also could see the grocery sector in focus again as traders digest the fallout and implications of Amazon.com’s deal to purchase Whole Foods.

Traders should be aware the President is thinking about taking action to support and protect the US steel sector. The third downleg of the 2000-2002 big bear market started when then-President Bust slapped a steel tariff on China. Trade risks to the market could emerge this summer with NAFTA renegotiations set to ‎start in August

Chart Signals: New high for the Dow awaits confirmation

The Dow has rallied to another new all-time high this morning and is now looking for confirmation from other indices with the Dax and the S&P the closest contenders. In other action, gold and JPY continue to backslide as capital moves out of defensive havens.

North American and European Indices

US 30 is breaking out to a new all-time high today, clearing 21,400 and advancing on 21,455. Next potential resistance appears near 21,500 then 21,720 based on a Fibonacci projection from a previous advance.

US SPX 500 is sitting just below the top of a 2,425 to 2,450 consolidation range with the RSI indicating a pause within an uptrend. Next potential resistance on a breakout appears near a measured 2,475.

US NDAQ 100 has stabilized near 5,700 while the RSI has stabilized near 40 suggesting the recent downswing may be ending. Support has come in above the 50-day average and a higher low near 5,650 but the index needs to retake 5,755 to signal the longer term uptrend resuming.

UK 100 is sitting on 7,500 having dropped back from a lower high near 7,530. A head and shoulders top continues to form above 7,400 neckline support with shoulder resistance in place near 7,555. RSI near 50 suggests a 7,400 to 7,600 sideways trend could be emerging. 

Germany 30 remains under accumulation, forming an ascending triangle below 12,900. Support has moved up toward 12,840 from 12,775 with the index trading near 12,860. Next potential resistance on a breakout possible near the 13,000 round number. RSI holding 50 indicates continuing underlying accumulation.

Commodities

Gold continues to fall away from a double top, breaking $1,254 a Fibonacci level and falling to test $1,250. Next potential support appears at the 200-day average near $1,240 then $1,230 a 38% retracement of the previous uptrend. RSI under 50 and falling confirms momentum turning increasingly downward.

WTI crude oil is starting to rebound, having established support at a higher low near $44.30, but it needs to retake $45.00 to signal an upturn with next resistance near $45.90. RSI bouncing off 30 suggests downward pressure starting to ease.

FX

US Dollar Index is sitting on 97.00 still trending sideways in a range between 96.30 and 97.50. RSI sitting on 50 confirms sideways momentum.

USDJPY is holding above 110.60 where it recent broke out of a downtrend and over its 200-day average. RSI climbing above 50 today confirms momentum turning back upward. Next potential resistance near 111.00, 111.55 and 112.10.

EURUSD is still sitting on $1.1200 near the middle of a $1.1120 to $1.1290 trading range. It’s still hard to tell if this is a top forming or a pause within a bigger uptrend. RSI trending toward 50 indicates upward momentum fading, but not clear if this is tipping into a sideways trend or a downtrend.

EURGBP has settled into a 0.8700 to 0.8800 range, recently trading near 0.8750. RSI falling away from 70 but holding 50 indicates momentum downshifting from upward to sideways. The pair remains in an uptrend above 0.8720. 

GBPUSD continues to recover, retaking $1.2790, the neckline of a head and shoulders top that had formed recently. It needs to retake the 50-day average near $1.2835 and 50 on the RSI to confirm an upturn. Shoulder resistance remains in place near $1.2960.

USDCAD is hanging around between $1.3200 and $1.3300 recently trading near $1.3235 while consolidating recent declines and working off an oversold RSI. This appears to be normal pause within an ongoing downtrend below the 200-day average near $1.3340. Next potential downside support near a measured $1.3100. 

CADUSD continues to bounce around between $0.78520 and $0.7570 consolidating recent gains and working off on overbought RSI above $0.7500 and near $0.7540 a Fibonacci level. Next resistance in place near $0.7600. 

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