Good news on oil prices produced a positive tone for markets last night. At the end of the day there was not much change in the technical outlook for most major international markets. They remain in pause mode before the ECB meeting. Closer to home, a surprise Kiwi rate cut has the New Zealand Dollar under pressure.
Australia 200: Demonstrating the wisdom of waiting for evidence, yesterday’s candle did not make a lower high in the end. After making a lower low yesterday, it looked like starting a short term downtrend. However, a late rally saw the candle close at the same level as the past 2 days. This has created a Japanese candlestick “Tweezer Pattern” indicating resistance that can lead to a trend reversal. Support at 5046 remains important. . A break below this could be a bearish indication. If the market keeps pressing higher, the 78.6% retracement and 200 day ma may be the next test.
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Germany 30: Not much change last night but the daily candle made a higher high and higher low. The 9570 support and the resistance of Friday’s high at 9900 are now the key short term levels. A move below support with the RSI back below 50 would set up for a deeper downward correction. A break above resistance brings the next harmonic level and the 50% retracement around 10010/10070 into play.
US SPX 500. Yesterday’s candle traded inside Tuesday’s range leaving no change to the outlook in the daily time frame. The short term trend remains down from resistance around 2000 but at this stage, momentum is low. A break of 1972 support pushing the RSI below 50 would be bearish. However, if this rally continues, the harmonic level and 78.6% Fibonacci retracement around 2030/2042 may come into play.
AUDUSD: Aussie made a higher high last night and tested the resistance of the last major low around .7534. RSI reached the overbought zone above 70%. RSI traders will now be alert to the possibility of bearish divergence set ups developing from here on up. Today the Aussie is falling away from resistance. Monday’s low around .7392 looks like key support on the 4 hour chart. A break of .7392 from here would be bearish. However, the daily trend is still up and a break through the .753 resistance still looks very possible. Next levels would be the resistance of previous lows around .7598 and then the 61.8% Fibonacci retracement and harmonic level around .7650.
NZDUSD: This morning’ rate cut sees the Kiwi testing its 200 day moving average with the RSI starting to break down below 50%. Big picture, the NZD is starting to look like a large triangle pattern. This could see a return to the triangle support line. This scenario also fits with this correction being the 4th wave of an Elliot 5 wave pattern. If that plays out there will ultimately be a break of the triangle support and another major leg down in the Kiwi although this could be some time away yet.
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EURUSD: The short term trend is down but momentum is low and it’s basically hanging around the 200 day moving average which remains as resistance. The recent low at 1.094 is short term support with the major low at 1.0825 being the next big picture level.
Crude Oil Brent. The Weekly US data produced positive news with a jump in gasoline demand. At the end of the day it wasn’t enough to change the picture for Brent with the daily candle trading inside Tuesday’s range. On the May 15 Brent chart, the recent peak is still at the 50% retracement. A decline from here followed by a break of support at $36.27 would be the big picture bearish scenario for oil. If it continues to push higher, the 61.8% retracement around $44.70 will come into play.