Stocks slide as traders react to mixed data and EU response to Brexit

March came in like a Lion for stocks and appears to be going out like a lamb with most major markets around the world in decline Friday. US index futures are down 0.2%, the Dax is down 0.1%, the FTSE is down 0.5% while the Nikkei and Hang Seng fell 0.8%. Copper is down 0.5% while crude oil is down 0.7%. In currency markets, the US Dollar is up slightly against pretty much everything except gold.

There has been a flood of economic data overnight and results have been mixed. China manufacturing and service PMI was better than expected. ‎Japanese household spending fell dramatically while industrial production was better than expected. In Europe, declines in German and Spanish retail sales were offset by a stronger than expected German employment report.

Brexit remains in the spotlight with the EU’s response to Article 50 in focus. Reports indicate the EU wants to settle the bill on divorce terms first before negotiating a new trade arrangement, the UK has been pushing to do both at the same time. The EU is expected to hold a summit in late April to decide on its negotiating stance with talks expected to start in the second half of May. Expect to see more overtures, threats, speculation and trial balloons disguised as leaks in the coming weeks.

‎It’s the last day of the week, month, quarter and fiscal year for many financial companies so we could see position adjustments and trading swings in both directions through the day. There are more Fed speakers due and traders may digest President Trump’s initial draft outline of what the US wants to get out of renegotiating NAFTA along with additional Executive Orders on trade expected today.

There is more economic news on the way which could move markets including Canada monthly GDP for January, US monthly core PCE inflation (an indicator the Fed uses) and Chicago PMI, another prelude to the manufacturing PMI due from around the world Sunday night and Monday morning.

Chart Signals: Markets confirm and digest Thursday’s big gains in GBP and WTI

There were a number of big moves Thursday which traders have been digesting Friday including rallies for GBP and crude oil, and selloffs in EUR, gold and JPY. So far, trading action today has confirmed these moves with limited counterattacks and no big rejections.  

North American and European Indices

US 30 continues to pause in the 20,660 to 20,750 range holding above its 50-day average while digesting an earlier drop back from 21,000. RSI struggling with 50 suggests a downtrend emerging with next potential support near 20,420 its recent low.

US SPX 500 appears to be coming under distribution with the index and the RSI peaking at lower highs and starting to turn downward again. For the index, resistance drops toward 2,370 from 2,390 with next potential support near 2,352 then 2,340 the 50-day average. 

US NDAQ 100 has run into resistance near 5,445 and has started to roll over, falling back into the 5,420 to 5,435 zone with next potential support near 5,400 then 5,345. Lower highs in the RSI indicate upward momentum weakening and a downturn pending.

UK 100 continues to form the right shoulder of a head and shoulders top, falling away from 7,400 toward 7,330 with resistance dropping toward 7,370. RSI slipping under 50 indicates momentum turning downward with next potential support between 7,265 a Fibonacci level and 7,285 the 50-day average.

Germany 30 looks like it’s pausing in the 12,220 to 12,280 range to digest recent gains. A negative RSI divergence suggests upward momentum is slowing but it continues to attract support above 12,200 and its 12,090 recent breakout point. Next measured resistance possible near 12,300.

Commodities

Gold is consolidating Thursday’s losses at a lower level, pausing near $1,242 after getting slammed down from $1,254. Initial bounce resistance appears near $1,250 with next support possible near $1.230 both Fibonacci levels.

Crude Oil WTI is pausing near $50.00 and 50 on the RSI to digest the big gains of recent days, trading in the $49.50 to $49.90 area as support moves up from $48.70. Breakouts from here would confirm a new upswing with next resistance near $50.70 then the 50-day average near $51.30.

FX

US Dollar Index is holding above 100.00 trading near 100.35 while digesting Thursday’s breakout rally. RSI holding above 50 confirms momentum turning upward. Next potential resistance near 100.50 then 101.00.

USDJPY has broken out of a saucer bottom that had formed between 110.00 and 111.60 and is holding above its breakout point trading between 111.60 and 112.20 with next resistance at a Fibonacci level near 112.35. RSI gaining on 50 indicates downward pressure easing and an upturn pending.

EURUSD has stopped to digest Thursday’s big selloff near $1.0670 and its 50-day average after a big plunge down from $1.0770. RSI levelling off near 50 suggests we’re at a tipping point which could decide if recent selling was a correction within an uptrend or the start of a deeper downturn. Next potential support near $1.06550 then $1.0640 with initial rebound resistance near $1.0700 then $1.0720.

EURGBP continues its downturn, breaking under its 50 and 200-day averages near 0.8585 where a Death Cross is still pending, falling toward 0.8550 with next potential support near the 0.85500 round number. RSI levelling off near 40 suggests a pause within a downtrend.

GBPUSD continues to form a big head and shoulders base with support moving up toward the 50-day average near $1.2415 and the pair bouncing back up toward $1.2500 with next potential resistance near $1.2600 then $1.2685. RSI holding 50 confirms continued underlying accumulation.

USDCAD has paused near $1.3340 with the RSI sitting on 50 but still appears to be rolling over with resistance dropping toward $1.3370 from $1.3400. Next potential support near $1.3325 then $1.3280.

CADUSD is still sitting steady just below $0.7500 with support rising toward $0.7480 from $0.7455 and $0.7410. Next potential resistance near $0.7535 then $0.7550 where a Fibonacci level and the 50-day average converge.

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