Technicals | 10:30 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
First Up, Nasdaq100
From its late-March low of 22,841, the Nasdaq 100 launched a 35% rally in just over nine weeks to reach a record high of 30,762 in early June.
The rally was in line with our bullish calls, although it did hit the 30,000 target some six months earlier than we were expecting.
In that context, the current pullback is hardly surprising, and the correction continues to evolve.
A decisive break and close above the 30,642–30,762 resistance zone would signal the correction is complete and open the way for a push towards 31,500/31,200.
Conversely, a break back below the recent 28,890 low would open the door to a deeper pullback towards the June low 28,200/28,000 area.
ASX200
The rejection from the mid-June high of 8983.8 has resulted in the ASX200 remaining confined to the broad 9000–8500 trading range it has occupied over the past 14 weeks.
Looking ahead, we see scope for this ASX200 to continue to trade sideways within this range for a few more weeks yet – while remaining opening minded as to what direction the break of the range will eventually come.
Crude Oil
WTI Crude Oil finished higher overnight at US$72.20 (5.25%) on renewed tensions in the Strait of Hormuz as Iran attacked three ships passing through the waterway.
The incidents have prompted the UK Maritime Trade Operations to raise the threat level in the Strait to “severe.”
The US Treasury has since revoked the waiver that had allowed Iran to sell its oil, describing Iran’s actions as “wholly unacceptable.”
Iran has pushed back strongly, telling the International Maritime Organization that parts of the Strait of Hormuz fall within its territorial waters and that it exercises sovereignty over them.
Looking at past flare-ups for guidance, the US is likely to respond with strikes on selected IRGC positions along the coast in the coming days.
Whether that brings a swift end to the latest escalation or Iran elects to continue flexing its leverage over the Strait with actions that fall short of triggering a broader conflict while keeping oil prices supported remains to be seen.
At the very least it will keep markets on edge and does suggest crude oil prices have based for now at the recent US$67.04 low.
Gold
Gold finished lower overnight at US$4106 (-1.42%), weighed down by equity market weakness and as the US dollar and crude oil prices rebound on renewed tensions in the Strait of Hormuz.
Technically, we see initial evidence of basing at last week’s US$3942 low.
A sustained break above downtrend resistance around US$4275 and the 200-day moving average near $4485 would increase confidence that the correction from the US$5602 high is complete at last week’s US$3942 low, opening the way for a rebound toward the US$5000 region.
In summary — cautiously bullish on gold, leaning against last week’s recent US$3942 low.
All material has been re-published with permission and does not by association represents FNArena’s views.
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