Technicals | 10:30 AM
Earlier today, Tony Sycamore, Market Analyst, IG updated his views and thoughts on financial markets, including the technical analysis updates.
First Up, Nasdaq100
From its late-March low of 22,841, the Nasdaq100 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/correction now nearing a sixth week is hardly surprising.
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 31,500/32,000.
Conversely, a sustained break back below last week’s 28,814 low would open the door to a deeper pullback towards support 28,200/28,000 are.
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$79.83 (up 2.35%), as the US resumed the blockade of vessels heading to and from Iranian ports in response to the sharp rise in Iranian aggression following the public funeral procession and mourning ceremonies for the late Supreme Leader Ayatollah Ali Khamenei earlier this month.
Those events featured strong chants of “Death to America” and “Death to Israel,” along with public calls for revenge.
Taking some of the heat out of the rise in oil prices, President Trump has walked back his earlier proposal to impose a 20% fee on shipping through the strait, instead signalling a preference for investment deals with Gulf states.
As things stand, the Strait of Hormuz has returned to the dynamics seen during the previous US blockade Version 1 (April to mid-June), when WTI traded in a range mostly above US$85 and below US$105.
Whether crude oil returns to that range will likely depend on the factors including how the US will juggle keeping commercial ship flow moving through the Omani side of the crossing while enforcing the blockade.
Technically, crude oil has rallied more than 21% from the early June low of US$67.04 to yesterday’s high of US$81.27, edging closer to the price zone where it traded during the first US blockade.
As long as WTI holds above support in the mid-US$70s including last week’s high of US$76.08 and the 200-day moving average near US$74.29 — the risks appear skewed toward a move back into the range seen during Blockade Part 1, initially into the mid-US$80s.
Gold
Gold finished higher overnight at US$4052 (up 1.29%), bolstered by last night’s cooler-than-expected US inflation report.
The report supported risk sentiment, eased fears of an imminent Fed rate hike, and weighed on the US dollar.
Technically, there is initial evidence of basing in gold at the late June US$3942 low.
A sustained break above downtrend resistance at US$4200ish would open the way for the rebound to extend initially to the 200-day moving average at US$4493, before the US$5000 region.
In summary — we remain cautiously bullish on gold, leaning against the late June US$3942 low.
All material has been re-published with permission and does not by association represent FNArena’s views.
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