Technicals | 11:15 AM
Earlier today, Tony Sycamore, Market Analyst, IG shared his technical views on the Nasdaq, ASX200, gold and crude oil.
All material has been re-published with permission and does not by association represent FNArena’s views (we have none, we simply report).
First Up, Nasdaq100
The rally from the September 22,977 low to last week’s 24,781 high is viewed as part of a Wave V from the April 16,542 low.
Within our preferred Elliott Wave framework, once a five-wave advance is complete, the expectation is for a correction to commence.
A solid indication that a Wave V advance is complete from the April lows, would be if the Nasdaq100 were to see a sustained break/close below support at 24,000/23,950.
If that was then followed by a break of support at 23,500ish, it would greatly increase the likelihood that a medium term high has been struck at this week’s 24,781 high and that a deeper retracement back towards support at 23,000/700ish is underway.
Until then allow for the rally to extend towards 25,000ish, possibly to 26,000 if another round of FOMO/AI exuberance grips markets.
ASX200
The heavy fall in the ASX200 at the start of this month followed by the past three weeks of consolidation has helped the ASX200 work off overbought readings after its run of new highs in August.
Providing the ASX200 remains below the September 8888/8892 highs, we expect another leg lower to complete its recent correction from the 9054 high, towards the 8600/8580 target area.
If this correction plays out as anticipated, it will account for a neat -5% pullback from the 9054.5 record high, at which point fresh longs should be considered.
NB – After the heavy sell off that occurred at the beginning of September, our research showed a historical pattern of one day of very heavy selling early in a new month, in 26 of the past 47 months. As such, we will be watching for a return of this seller in early October.
Crude Oil
WTI Crude Oil finished lower last night at US$62.43 down -1.19%, weighed down by reports OPEC-Plus is considering a super-sized 500,000bpd increase in production for November at its meeting this weekend. The rising risk of a US government shutdown also weighed on the crude oil price.
After emphatically rejecting last weeks US$66.42 high, crude oil is now eying the bottom of its six-week range at US$61.50/US61.40ish.
If OPEC-Plus does go ahead and announce a 500,000bpd increase this weekend, it’s likely a big enough increase in production a finely balanced market, to push crude oil through support at US$61.50/40, lower initially to US$58.00, before US$55.00/bbl.
Gold
Gold closed higher overnight at US$3858 up 0.64%, easing from a fresh record high of US$3871. Over the past thirty trading sessions, starting from the August 20 US$3311 low, gold has rallied over US$550 or 16%.
During that run higher it has enjoyed 22 up days and 8 down days.
Its gains continue to be driven by a powerful combination of macro and geopolitical factors including expectations of further Federal Reserve rate cuts, increased safe-haven demand driven by rising geopolitical tensions in Europe, concerns over the Fed’s independence, and robust buying from central banks and private investors.
While gold appears overbought and there does appear to be some FOMO emerging, the supportive back drop is likely to limit any correction.
Technical limitations
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