Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Friday night saw Wall Street lose further ground as the Brexit delay deal took over volatility on currency markets, sending the USD down against all the majors, except gold. Oil prices failed to reinforce the previous breakout with a big lift in inventories while renewed focus on the US/China trade war saw Treasuries rally. It looks like a poor start to the week here in Asia with stronger domestic currencies weighing on equities.

Looking at the action on Asian markets on Friday, where the  Shanghai Composite failed to make good on the trifecta of releases, closing over 1% lower to 2938 points while the Hang Seng Index failed to stabilise its recent rally, closing 0.5% lower at 26719 points. Resistance at 27000 is now firming despite growing momentum, with price levels to key to playing this market beyond the short term:

Japanese share markets were mixed as the stronger move on Yen plus the poor lead from Wall Street pushed the Nikkei 225 up only 0.2% or so while the TOPIX was down about the same. The daily chart is pausing here after the blowout pattern with futures mixed so I’m watching the high moving average around around 22300 to come under pressure soon:

The ASX200 sold off again, falling another 0.6% in the wake of the big move higher in the Aussie dollar following the better than expected unemployment print. SPI futures are down at least 20 points or so in line with the poor session on Wall Street, so the market will continue to reject the September highs and could break down here into a new short term downtrend:

European stocks couldn’t get any traction given the overwhelming volatility that is Brexit, with minor losses across the continent.  The German DAX was the best achiever, losing only 0.2% or so, consolidating here after breaking out to new highs. I’m still watching that multi-month resistance area here at 12700 points to come under pressure, despite a very strong Euro:

Wall Street can’t get out of its “temporary” funk with the S&P500 clearly rejecting very firm resistance at the 3000 point mark. The daily chart had been building into a stable price pattern for a return to the September highs, but momentum is not strong enough with no new weekly high since July really starting to weigh here:

Volatility on currency markets is accelerating with the USD falling against almost everything, with Pound Sterling spiking through the 1.30 handle and looking to gain even further, while a similar ramp up on Euro saw it accelerate past the 1.11 handle in a continued blowout move. Momentum is coming back from its extreme overbought stage and is still ripe for a pullback but the overall trend for the union currency remains up:

The USDJPY pair is stalling from its recent rally, falling back to the low 108’s as USD sellers stepped in. Local support at the trailing ATR level at the 108 handle should hold here in the medium term but a short term dip below is not out of the question. Momentum is now turning negative for the first time in two weeks:

The Australian dollar continued its advance again, pushing to an official new weekly high well above the 68 handle. This is a substantive breakout but only in the short term, with consolidation likely back down to the high moving average at the 68.40 or so area possible to start the week:

Oil was looking better here towards the end of the week but the latest DOE inventory report put the bulls in there place with the WTI contract retracing back below the $54USD per barrel level, keeping the market in a depressed mood. I still contend there’s no longer term pattern to work on here – but watch support at the $52 barrel level to come under stress:

Finally to gold, which remains under pressure and is still below the downtrend line and hovering around previous daily ATR support at the $1490USD per ounce level. I would still contend we’re moving to the previous resistance level at $1425 as part of a bull market dip, with $1470 or so the uncle point:

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.