Dow rally runs out of steam as EUR/JPY tests resistance, US natural gas finds footing
Technical analysis of the Dow as its rally runs out of steam while EUR/JPY tests a resistance line and US natural gas futures bounce off support.
Macro update
Wall Street closes mixed as Middle East tensions dominate:
US equities lost momentum as investors balanced escalating conflict between the US, Israel and Iran with hopes the war could end sooner than initially feared.
Oil swings sharply on supply uncertainty:
Crude prices fell more than 11% after a surge earlier in the week, with markets reacting to rapidly shifting headlines about the Strait of Hormuz and risks to global energy supply.
Hormuz threat revives inflation worries:
Reports that Iran could mine the Strait of Hormuz heightened fears of prolonged oil shipment disruptions, raising concerns that higher energy costs could push inflation up while growth slows.
Energy stocks weaken while tech holds firm:
The drop in oil prices dragged energy shares lower, while technology stocks helped support the broader market, buoyed by gains in semiconductor companies.
Stock-specific moves stand out:
Health insurer Centene dropped after reaffirming its outlook, while chipmakers advanced and Oracle shares rose in after-hours trading following its earnings release.
Asia edges higher as oil pressure eases:
Regional markets rebounded modestly after reports the International Energy Agency may consider a record release of emergency oil reserves, with investors also awaiting key US inflation data later in the day.
Dow Jones bounce runs out of steam
The Dow Jones Industrial Average is trying to reclaim lost ground by rising from this week's 46,616 low but seems to have temporarily run out of steam at Tuesday's 48,220 high.
A rise above Tuesday's 48,220 high is needed for a bullish reversal to gain traction, though. If this were to happen the November high and late January lows at 48,431 - 48,460 may thwart the advance, though.
Minor support is to be found around the 10 December low at 47,463. Slightly lower lies the early December trough at 47,264 which may also act as support.
Short-term outlook:
Neutral with a slight bullish stance while above the 9 March 46,616 low.
Medium-term outlook:
Neutral while above the 9 March 46,616 low, failure there would likely lead to the 46,000 - 45,452 support zone being eyed.
Dow Jones daily candlestick chart
EUR/JPY tries to break through resistance line
EUR/JPY is on track for its fourth consecutive day of gains and is currently grappling with its February to March resistance line at ¥183.85. If overcome, the ¥184.18 - ¥184.43 resistance zone will likely be back in focus.
Potential support can be spotted around the 19 February high at ¥183.15.
Short-term outlook:
Bullish while above the 3 March low at ¥182.03, targeting the 2 March high at ¥184.69.
Medium-term outlook:
Neutral with a bullish bias while above the 12 February low at ¥180.81 but below the ¥186.87 January peak.
EUR/JPY daily candlestick chart
US natural gas futures prices bounce off support
US natural gas futures have recovered from their 272.5 mid-January which offered support on Tuesday. While it and the 4 March low at 268.2 underpin, the 23 February high at 289.9 is expected to be revisited. The next higher 3 March high at 295.1 may also be reached.
Short-term outlook:
Neutral with a bullish undertone while above the 4 March low at 268.2.
Medium-term outlook:
Neutral with a bearish slant while below the 6 February high at 332.4.
US natural gas daily candlestick chart
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