Macro Morning

By Chris Becker 

Risk sentiment in overnight markets remained cautious, with interest rates falling again, pulling the USD down while lifting gold to another new record high. With no new economic events to go on or news catalysts, it was a relatively dull session!

Looking at yesterday’s action in Asia first, with Chinese share markets almost unchanged as the Shanghai Composite closing 6 points higher to 3008, just above the 3000 point barrier. The Hang Seng Index advanced 0.15% to 28513 points in a very mild move higher as the daily chart shows how price is trying to building last weeks breakout with a lot of upside potential if the recent session highs nearer 28600 are broken:

Japanese share markets had a similar staid move higher with the Nikkei 225 closing up 0.13% to 21285 points. Futures are suggesting another weak session today with the potential to push back down below the 21000 point barrier, as Yen remains strong, so watch the low moving average here:

The ASX200 was the best in the region, closing nearly a quarter of a percent higher at 6665 points, barreling in on new record highs again.  SPI futures are down about 14 points or so on the poor lead from Wall Street, but this could just be a stumbling block with very strong support at the 6500 point level likely to be filled as no one wants to miss out on this rally:

European stocks remained cautious coming out of the weekend gap with the FTSE lifting slightly while the German DAX was unable to breach firm resistance overhead again, falling 0.5% to 12274 points. The daily chart shows how price has been unable to beat the April highs near the 12500 level with now three bearish candles in a row suggesting the next price pattern will be a big retracement back below former trailing resistance at 12200 points:

Wall Street was mixed with the DOW holding on to green while the NASDAQ fell 0.3% and the S&P500 finished a 5 points lower to 2945 even. This keeps is below the former 2018 highs as internal momentum is weakening and rolling over here as the overbought price requires a small retracement to remain on track:

The USD remained weak against most of the majors, with the Euro still advancing from its Friday night blowout, almost hitting the 1.14 handle. The four hourly chart is suggesting a potential bearish rising wedge pattern as the overbought price pattern is getting crowded:

The USDJPY pair remains depressed with a similar melt lower as Yen buyers continue to step in. Price is heading back down to the 107 handle, looking to get to the Thursday/Friday extreme lows so watch/use the high moving average as the uncle point from here:

The Australian dollar continued its bounce following Governor Lowe’s interest rate comments as this rally turns more and more into a sustainable trend up towards the 70 handle where very strong resistance lies. Momentum is overbought here but not extremely yet:

Oil prices are pulling back from their recent volatility with the WTI contract remaining well above the $57USD per barrel level, just below key ATR trailing resistance. Is this a pause before a breakout above this level or is the rebound already out of puff as daily momentum is not yet positive:

Finally to gold, which continues to leap higher and advancing to a new record high up to the $1419USD per ounce level overnight. This remains a big potential move on the way back to the 2008 levels, but is way overbought in the short term:

Glossary of Acronyms and Technical Analysis Terms:

ATR: Average True Range – measures the degree of price volatility averaged over a time period

ATR Support/Resistance: a ratcheting mechanism that follows price below/above a trend, that if breached shows above average volatility

CCI:  Commodity Channel Index: a momentum reading that calculates current price away from the statistical mean or “typical” price to indicate overbought (far above the mean) or oversold (far below the mean)

Low/High Moving Average: rolling mean of prices in this case, the low and high for the day/hour which creates a band around the actual price movement

FOMC: Federal Open Market Committee, monthly meeting of Federal Reserve regarding monetary policy (setting interest rates)

BOJ/Abenomics: Bank of Japan, economic policy/direction enacted by PM Shinzo Abe

DOE: US Department of Energy 

Uncle Point: or stop loss point, a level at which you’ve clearly been wrong on your position, so cry uncle and get out!

Latest posts by Chris Becker (see all)

Comments are hidden for Membership Subscribers only.