Technicals | 11:00 AM
Earlier today, Tony Sycamore, Market Analyst, IG updated his views and thoughts on financial markets, including technical analysis updates on the Nasdaq, ASX200, gold and crude oil.
By Tony Sycamore
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 the recent 25,195 high is viewed as an extending 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.
An indication that a Wave V advance is complete from the April lows at the recent 25,195 high and that a correction has begun would be if the Nasdaq100 were to see a sustained break/close below support at 24,000/23,950.
This would then open the way for a deeper pullback into support at 23,000/22,500.
Aware that while the Nasdaq100 holds above support at 24,000/23,950, there is scope for a retest and break of the 25195 high, before a move towards 26,000.
ASX200
After seven weeks of consolidation during September and the first half of October, the ASX200 has exploded to life in recent weeks.
Presuming the ASX200 remains above a layer of short-term support at 8990/8970ish allow for it to extend its gains towards the next upside target at 9250, with scope to 9500 into year end.
Aware that if the ASX200 were to slip back below support at 8990/70ish, it would indicate the recent break higher has failed.
Crude Oil
WTI Crude Oil is trading higher at US$57.55, supported by reports the US is planning to buy a modest 1 million barrels of crude oil for its Strategic Petroleum Reserve and a -2.98-million-barrel fall in US inventories after a 3.524million- barrel rise the previous week.
Technically, while crude oil holds above the year-to-date lows US$55.30/00/bbl area, there is room for a bounce back into the low US$60’s.
Aware that a sustained break below the US$55.30/00, would open up a test of the next layer of support at US$50.00/bbl.
Gold
Gold is trading lower at US$4125/oz down -5.91%, on track for its sharpest daily fall since August 2020.
The unwind follows a spectacular rally (almost US$1,000 in two months) driven by FOMO that pushed gold into extreme overbought territory, leaving it vulnerable to a sharp snap back.
The backdrop for the sell off was also fuelled by signs this week of easing US-China trade tensions and regional bank earnings that alleviated earlier bad loan concerns.
For context, after the August 2020 high of US$2075, gold fell about -20% over the next six months to around US$1676.
In today’s terms, a similar decline from the recent peak would take gold back toward roughly US$3500; near the US$3400 level from where it broke out from in late August.
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.
Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.
FNArena is proud about its track record and past achievements: Ten Years On