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 powerful 35% rally in just over nine weeks, reaching a record high of 30,762 in early June.
The pullback over the past seven weeks fell just -30 points short of the key trend channel support we’ve been watching around 28,200–28,000. The rebound from this zone in the early part of the week suggests the correction may now be complete.
Further confirmation would come from a retest and break above the 30,762-record high, which would then open the way for a move toward the 32,000 region.
Conversely, a sustained loss of support in the 28,200–28,000 area would warn that a deeper pullback toward the 200-day moving average near 26,336 is underway.
ASX200
The ASX200 has been encapsulated within a broad 9000–8500 trading range for the past 15 weeks. Within that, the 8800/8780 level, which includes the 200-day moving average, has acted like a magnet for the past six weeks.
Looking ahead, we see scope for this ASX200 to continue to trade sideways within this range possibly into the start of the August reporting season –- 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$84.54 (up 2.57%) now up over 21% this month.
The overnight gains came as the US conducted a 10th straight night of strikes on Iran, with Tehran responding by targeting US-linked sites in Bahrain, Kuwait and Jordan.
Meanwhile, after Yemen’s Iran-aligned Houthis announced a naval blockade on Saudi vessels through the Bab al-Mandeb Strait, shipping data showed at least five vessels — including several carrying Saudi crude — making U-turns before reaching the strait.
While this presents another worry disruption it is likely some vessels may continue to traverse the route to Saudi Arabia’s Red Sea port of Yanbu with transponders turned off or alternatively elect to traverse the Suez Canal so actual flows from Yanbu are likely to continue in one shape or form.
On the diplomatic front, hopes of a 10-day ceasefire proposal floated by mediators over the weekend have so far failed to gain any real traction.
Against this backdrop, the latest API inventory data showed a surprise build in US crude stocks of around 2.6 million barrels, well above expectations of a draw.
Technically, as long as WTI holds above key support in the mid-US$70s — including the early July high near US$76 and the 200-day moving average around US$74.40 — the bias remains to the upside, with trend channel resistance now sitting near US$100.
Gold
Gold finished higher overnight at US$4077 (up 1.74%), brushing off the headwinds of a stronger US dollar and rising yields.
As we noted in Sunday’s report, cleaner retail positioning may be helping gold regain its traditional safe-haven status just as tensions in the Middle East have escalated again — even though the strong overnight gains in US equities make that dynamic a little harder to read.
Technically, there are initial signs of basing in gold around the late-June low of US$3,942.
A sustained break above downtrend resistance near US$4,120 and then the early-July high of US$4,202 would increase confidence in this view and open the way for a rebound toward the 200-day moving average near US$4,494.
In summary, we remain cautiously bullish on gold, using the late-June US$3942 low as the reassessment level.
All material has been re-published with permission and does not by association represent FNArena’s views.
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