Technicals | 11:20 AM
Earlier today, Tony Sycamore, Market Analyst, IG updated his views and thoughts on financial markets, including the technical analysis updates below.
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 commenced a corrective phase after hitting its late-October peak of 26,182. The correction has been defined by a clear double top that formed in late January and a strong band of support at 24,350/23,850ish that we’ve been watching like a hawk.
This crucial support zone included the 200-day moving average currently at 24,371 and the November 21 low of 23,854.
At the end of last week, the Nasdaq100 broke below the support band which has caused preliminary technical damage.
If the break is sustained (jury remains out) it would warn that a significantly deeper correction is underway towards 23,000.
Aware that a rebound back above the 200-day moving average at 24,383 and then above horizontal resistance at 24,550/650 is needed to put the Nasdaq100 back on firmer ground.
ASX200
At Monday’s 8262 low, the ASX200 has fallen -940 points or a neat -10.20% from the 9202.9 record high it struck in late February.
The rebound into Monday’s close left signs of capitulation.
While this is a positive development, the ASX200 must reclaim the 200-day moving average currently at 8776 on a sustained basis to increase confidence that a medium-term low is in place at the 8262 low and that the uptrend has resumed.
Until then, a retest and break of the 8262 low is possible.
Crude Oil
WTI Crude Oil is trading marginally lower at US$89.39/bbl (-0.54%). This comes after a volatile 24 hours, where it traded in a wide US$7.00 (7.8%) range.
The volatility was driven by a flurry of headlines from the Middle East. While these reports certainly suggest that peace talks are underway and progress is being made toward a ceasefire, the market remains firmly on edge, still needing concrete evidence that marine traffic is resuming unhindered through the Strait of Hormuz.
Headlines have included President Trump declaring that “the war in Iran has been won” and that the only ones who want to keep it going are the “fake news media.”
He also cryptically revealed that Iran had given the US what he called a “very big present” —a significant prize worth a tremendous amount of money that arrived today— though he stopped short of offering any further details.
At the same time, Iran has notified the International Maritime Organization that “non-hostile vessels” may now transit the Strait of Hormuz, but only if they first coordinate directly with Iranian authorities.
Reports are also circulating that a one-month ceasefire is being discussed, with Trump’s envoy Steve Witkoff and Jared Kushner reportedly working on a 15-point framework.
This ambitious plan covers everything from dismantling Iran’s nuclear capabilities and preventing any enrichment on Iranian soil, to Iran abandoning its proxy approach in the region, stopping funding of militias, and crucially keeping the Strait of Hormuz open — all in exchange for the lifting of sanctions and support for a civilian nuclear program.
While the rhetoric around de-escalation and dialogue is clearly welcome, the market is treating it more with cautious optimism rather than unbridled joy.
Gold
Gold is trading higher at US$4474/bbl (1.54%), extending its rebound from the capitulation US$4099 low it struck on Monday. Its rebound came on signs of de-escalation in the Middle East which would lead to a reopening of the Strait, lower energy prices, ease inflation fears and tempered central bank hawkishness.
While this would be good news for gold, it is worth mentioning that further gains would likely to be more of a grind higher, given a peace deal would also lead to the removal of the geopolitical risk premium currently built into gold.
Yesterday we shifted to a bullish bias in gold after it tested and bounce from our critical US$4200/$4100 support zone.
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