Technicals | 11:49 AM
Earlier today, Tony Sycamore, Market Analyst, IG updated his views and thoughts on financial markets, including the technical analysis updates below.
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 in the Nasdaq100 stalled in recent weeks up against weekly trend channel resistance (currently near 24,000), as we anticipated. The overnight decline which took the Nasdaq through the neckline of a wonky head and shoulders topping pattern is an initial indication that the correction we have been expecting is underway.
Looking ahead, a break of support at 22,959 coming from the Aug 20 low and then below the 22,673 low from August 1, would greatly increase the likelihood that a medium term high has been struck at the 23,969 high of Mid August and that a deeper pullback towards 22,200/22,000 is underway.
ASX200
After spending the last two weeks of July consolidating its gains above 8600, the ASX200 marched higher in August, to hit a fresh record high at 9054.5, some 25% above its April 7169 low and 105% above its covid crash 4402 low.
With the RSI on the weekly chart at its most overbought level since August 2021 and the formation of a “loss of momentum” type weekly candle last week, we are becoming increasingly cautious about the ASX200’s upside prospects from here.
If the ASX200 were to close below short-term support 8850ish and then below support at 8770/50ish, it would indicate that a medium-term high is in place at 9054.5 and that a deeper pullback is underway initially towards 8620/00 with scope to 8400. Until then, allow the uptrend to extend.
Crude Oil
WTI Crude Oil finished higher overnight at US$65.62 (up 2.52%) propelled by a combination of supportive factors.
Its gains overnight fueled by new sanctions on Iranian oil, anticipation of another fall in US inventories this week and ongoing Ukrainian attacks on Russian oil infrastructure.
Technically, if the overnight close above the US$64–US$65/bbl resistance level is sustained, it opens the way for additional gains initially to the 200-day ma at US$64.32/bbl.
Gold
Gold finished higher overnight at US$3533 (up 0.84%), after hitting a fresh record high of US$3540 as its blistering run higher continued.
Golds gains have been driven by a confluence of supportive factors, including expectations of Federal Reserve rate cuts amid persistent inflation and robust economic growth, heightened global fiscal concerns, and the increasing politicisation of the Fed, all of which are feeding into a frenzy of demand for hard assets.
In recent weeks, we have emphasised the bullish macro and technical setup for gold. If Friday’s non-farm payrolls report and next week’s BLS labour market revisions are both soft, a move to US$3750 is not out of the question into year end.
Technical limitations
If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
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