Technicals | 10:30 AM
Earlier today, Tony Sycamore, Market Analyst, IG updated his views and thoughts on financial markets, including the technical analysis.
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
From its late-March low of 22,841, the Nasdaq 100 has staged an incredible rally, surging 33% in just nine weeks to hit a high of 30,670 overnight.
Following the latest leg higher from the May 19 low of 28,567, clear bearish RSI divergence has now emerged. While this signals that upward momentum is fading, it doesn’t necessarily mean a sharp reversal is imminent.
More importantly, the divergence serves as a warning that chasing the rally or giving in to FOMO at current levels is becoming increasingly risky.
Furthermore, history shows that when these kinds of explosive, parabolic moves eventually turn, buying the dip can be just as dangerous as chasing the rally at extended levels.
ASX200
From its mid-April high of 9021.5, the ASX200 shed 536 points (-5.9%) into the May 8485.2 low.
The subsequent bounce has thus far failed to overcome the resistance coming from the 200-day moving average at 8792.
Until the ASX200 can reclaim that resistance zone, downside risks remain.
Crude Oil
WTI Crude Oil finished higher overnight at US$93.39 (up 0.99%), bolstered by persistent Middle East tensions and yet another large draw in US crude inventories.
The ongoing stalemate in the Middle East remains a tangled web of conflicting narratives. Reports suggest Tehran is reviewing a US proposal to end the war, despite not being in direct contact with Washington for several days.
This stands in contrast to President Trump’s recent optimism that negotiations are progressing and a deal to extend the ceasefire and reopen the Strait of Hormuz could be reached within the week.
Adding to the uncertainty, US Secretary of State Marco Rubio informed lawmakers on Tuesday that while Iran has agreed to discuss previously “off-limits” aspects of its nuclear program, this was by no means a guarantee of a final resolution.
On the supply side, regional players continue to move to bypass the Strait of Hormuz.
Following the UAE’s decision to double its overland pipeline, Iraq announced plans overnight to more than triple its pipeline exports to 770,000 barrels per day within the next ten weeks.
By ramping up flows through the Turkish port of Ceyhan, Baghdad is looking to aggressively reduce its reliance on Gulf shipping lanes.
Back in the US, the API reported a substantial -6.75-million-barrel crude draw for the week ended May 29, marking a seventh consecutive weekly decline. With the summer driving season just around the corner, US stockpiles are tightening at a worrying rate.
From a technical perspective, as long as crude oil remains above trendline support in the low US$80s, the risks remain skewed to the upside. We are also open to the idea that crude may have based at last weeks US$86.35 low.
Gold
Gold finished flattish overnight at US$4487 (0.03%), holding ground despite another night of stronger US economic data which supported the US dollar.
Technically, as long as gold remains above support near US$4400 coming from the 200-day moving average and above last week’s US$4366 low, we remain constructive on the outlook for gold, looking for a rebound back to the US$4900/US$5000 area.
Conviction in this view would increase on a sustained break above trend line resistance at US$4600.
Technical limitations
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