Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Overnight risk markets were relatively stable due to the absence of any major catalysts or economic news, although Wall Street wilted later in the session as European stocks tread water. Only Pound Sterling stood out on currency markets, dropping as the UK Parliament voted for Brexit once more while bond yields also dropped to their lower ranges but made no new session lows, keeping risk appetite dimmed.

Looking at the action on Asian markets yesterday, where the Shanghai Composite floated along and looked set to put in a scratch session but surged at the close to finish 0.5% higher, but still below 3000 points. Meanwhile the Hang Seng Index advanced in a similar way, up 0.3% to 26786 points as it continues to fight resistance overhead at the 27000 point level and not looking energetic at all on the daily chart. Again, short term possibilities have not yet outweighed the longer term depressed setup:

Japanese share markets were closed for a holiday as Yen strengthened throughout the session. The daily chart is pausing here after the blowout pattern with futures suggesting a probable small pullback as Yen moved higher overnight, taking price back to the previous May high at 22450 points:

The ASX200 put in a solid session, lifting nearly 0.3% to 6672 points and continued its stabilising pattern after the sell off late last week.  SPI futures however are flat given the poor lead from Wall Street, so we’re likely to see not much movement today, but watch the low moving average level which must hold:

The major European indices were relatively stable overnight despite a slightly lower Euro, with only the FTSE advancing substantially. The German DAX gained a handful of points to finish at 12754 points, but fell alongside Wall Street in futures. The multi-month resistance area at 12700 points remains breached, but without a solid breakout/weekly close just yet:

Wall Street still can’t get out of its “temporary” funk with the S&P500 again testing very firm resistance at the 3000 point mark, failing and falling 0.4% to finish at 2995 points instead. The daily chart is still building for a return to the September highs, but momentum is not yet strong enough to break out with a new weekly high as a short term bearish rising wedge pattern is forming:

Currency markets were relatively stable with USD firming against some of the majors, although Pound Sterling fell on its own given the volatility around the Brexit Parliament votes, wiping out this week’s gains already. The Euro is having a similar move lower, almost breaching the 1.11 handle and back down to ATR support which remains the target for a breach below:

The USDJPY pair is still trying to get out of its stall pattern with a series of lower highs on the four hourly chart. 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, particularly if risk sentiment continues to sour:

The Australian dollar was unable to continue its advance with a small pullback overnight after previously approaching and rejected the 69 handle. As I said yesterday this is not yet indicative of a reversal but I would still be on the lookout for a consolidation likely back down to ATR support in the week ahead:

Oil prices picked up a little overnight with the WTI contract building slightly to be just above the $54USD per barrel level. The daily chart is building a series of higher daily low’s, but still nothing really exciting on the upside until we see a substantial move above the $55 level but also 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 $1487USD per ounce level. Watch key support here at or about the $1480 level, which if breached means we’re moving to the previous resistance level at $1425 as part of a bull market dip:

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!

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