Stocks rebound as markets weigh recent events

This article was last updated on April 16, 2022

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Stock markets around the world have shrugged off Monday’s jitters and are on the rebound this morning. ‎ The Hang Seng rallied for a 1.2% gain while in Europe, the FTSE, CAC, and DAX are all up about 0.5%.US index futures are up marginally.

News flow has been light this morning. The Conservatives continue to post a big lead over Labour in UK election polling. Germany posted a stronger than expected trade balance but this was offset by weaker industrial production. The last big week for earnings continues with the focus on smal and mid cap companies.

In commodities crude oil continues to hold on to its big bounce gains with traders hoping OPEC and non-OPEC countries will extend production cuts for more than another six months. Copper also appears to be stabilizing this morning.

In currency action, EUR is still backsliding as traders take profits against the Macron French election win. There appears to be a growing recognition that just because an immediate crisis has been averted doesn’t mean it’s all sunshine ahead either.

Chart Signals: Big test for SPX, US Dollar rallies as Euro and Yen keep crumbling

A big technical test is underway for the US SPX 500 at 2,400 which could signal a breakout or a double top. The Germany 30 and UK 100 have also been climbing today on renewed interest in indices. In currency markets, the Euro remains under pressure against USD and GBP. The Yen remains under pressure as well, particularly relative to the surging US Dollar.

North American and European Indices

US 30 is holding steady around 21,000 trading near 21,030. Support has moved up toward 20,950 from 20,900 with resistance in place near 21,075 then 21,130. RSI indicates a pause underway within an ongoing uptrend.

US SPX 500 is staging a big technical test today at 2,400. It has yet to confirm Monday’s peek up toward 2,407, which it needs to clear to call off an Evening Star candle pattern that appears to be forming. Support possible near 2,393 then 2,382. RSI indicates momentum shifting from upward to sideways.

US NDAQ 100 has paused near Monday’s 5,663 breakout high. RSI remains extremely overbought so a pause remains possible and it wouldn’t take much to spark a correction. Initial support possible near 5,635 then 5,600 with next measured resistance near 5,730 on trend.

UK 100 has called off a head and shoulders top, rallying up off of 7,300 toward 7,350 with next potential resistance near 7,400 then 7,445 the former shoulder and head resistance levels. RSI rising up off 50 confirms upward momentum increasing. 

Germany 30 remains in an uptrend having found support at a higher low near 12,690 and rallying up toward 12,780 but it remains short of its recent peak near 12,900. RSI remains overbought so a correction still possible.

Commodities

Gold continues to stabilize above $1,220 a Fibonacci level, trading between $1,224 and $1,228. RSI confirms downward pressure levelling off. Next support on a breakdown near the $1,200 round number with initial resistance in the $1,236 to $1,240 area.

Crude Oil WTI is bouncing around between $46.00 and $46.60 in the upper half of an emerging $45.00 to $47.00 trading range. RSI climbing up off 30 suggests the worst of the recent selloff may be behind it with downward pressure starting to ease.

FX

US Dollar Index is breaking out of a base today, clearing 99.00 and 99.25 to signal the start of an upswing with next potential resistance near 99.55 then 100.00. The index has started to fill in a recent gap. RSI testing 50 where a breakout would confirm the upturn in momentum.

USDJPY is breaking out again today, clearing 113.35 a Fibonacci level and advancing on 113.90 with next potentials support near 114.00 then 114.60 a Fibonacci test and the 115.00 round number. RSI confirms increasing upward momentum but is starting to get overbought. 

EURUSD remains under pressure, still falling away from a failed attempt to break through $1.1000. The pair has dropped from $1.0930 toward $1.0880 with next potential support near $1.0825 then 200-day average. Falling RSI signals a deepening correction and a downturn pending.

EURGBP remains in a downtrend still falling away from 0.8500 toward 0.8425 a Fibonacci level with next potential support near 0.8385 then 0.8350. RSI unable to retake 50 confirms distribution.

GBPUSD is sending mixed signals. The pair continues to struggle with $1.3000 round number resistance, sliding back toward $1.2910 from $1.2960 while an RSI rollover indicates slowing upward momentum. Meanwhile, however, it remains in an uptrend of higher lows above $1.2900 with more support in place near $1.2865.

USDCAD is still rolling over and falling away from a recent peak near $1.3800. The pair has dropped into the $1.3670 to $1.3710 area while the RSI has slipped back under 70 from overbought territory signalling a correction starting. Next support possible near $1.3635 then $1.3570.

CADUSD is sitting on $0.7300 still holding above $0.7270 Fibonacci support and working off an oversold RSI. Initial bounce resistance possible near $0.7330 then $0.7380 a Fibonacci level.