Technicals | 11:00 AM
Earlier today, Tony Sycamore, Market Analyst, IG shares his technical views 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 Nasdaq100 has been in a corrective phase since hitting its late-October peak of 26,182, with that pattern reinforced by a clear double top formed in late January.
Last week, the index hit a low of 24,315, bouncing from just ahead of the critical 24,250/23,850 support band we’ve been watching like a hawk – a feat it repeated earlier this week.
This crucial support zone includes the 200-day moving average at 24,232 and the November 21 low of 23,854.
If the Nasdaq100 can continue to hold this support band and then clear short-term resistance at 25,380/90, it would provide strong confirmation the correction is complete and the uptrend has resumed, opening the door for a retest and potential break of the 26,182 high.
However, should the Nasdaq100 sustain a break below that 24,250/23,850 support zone, it would warn of a significantly deeper correction towards 23,000.
ASX200
From the ASX200’s 9202.9 high it struck a week ago, the ASX200 fell 745 points (-8.1%) into yesterday’s 8457.2 low.
To negate the technical damage done from this sell off, the ASX200 must reclaim (on a sustained basis) the 200-day moving average currently at 8771, if it has serious ambitions to retest last week’s record high.
Until then, a retest of the 8457/8383 support level is possible.
Crude Oil
WTI Crude Oil is trading higher at US$86.59 (up 1.77%), after hitting a low of US$76.73 earlier in the session.
The sell-off to that US$76.73 low came after a now-deleted post from US Energy Secretary Chris Wright claiming the US Navy had successfully escorted an oil tanker through the Strait of Hormuz, quickly clarified as false by the White House.
This was followed by a rebound on reports US intelligence has begun to see indications that Iran was preparing to lay naval mines in the Strait of Hormuz.
President Trump has since posted on social media that within the last few hours 10 mine-laying boats have been destroyed, with more to follow.
Taking these most recent events into account, we continue to expect crude oil to remain highly volatile, driven by headlines while trading within a wide range between US$75ish and US$105ish in the sessions ahead.
Gold
Gold is trading higher at US$5192/oz (1.06%), as the conflict in the Middle East extends. However, we aren’t convinced this is going to result in higher gold prices.
Firstly, if the Middle Eastern conflict extends and results in higher energy prices and higher inflation, it will result in a higher US dollar and reduces the chance of Fed rate cuts which is negative for gold.
Secondly, a rapid de-escalation in the Middle East would effectively remove one of the main geopolitical pillars that propelled gold to record highs earlier this year.
Both scenarios are bearish in the short to medium term.
Technically, the sell-off from the US$5602 high down to the US$4402 low is defined as the first wave (Wave A) of a three-wave correction.
The rally from that US$4402 low to the early March US$5419 high counts as a Wave B (the second leg of the correction).
If gold now sees a break below a band of support at US$5100/US$5000, it will signal that the third leg lower (Wave C) of a three-wave correction has begun, with a likely return towards US$4400.
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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