Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Overnight risk markets took a step back as the USD cooled on its strengthening trend against the major undollar assets, with gold moving higher alongside Euro and Yen. Wall Street advanced only slightly while European markets slipped and it looks like a cool day of risk taking here in Asia.

Looking at the action on Asian markets yesterday, Chinese stocks were the odd ones out with the Shanghai Composite barely hanging on to a positive result to close just above the former 2900 points resistance level. The Hang Seng Index fell back below its own resistance zone at 27000 points, falling 0.3% to 26913 points. An initial gap higher retreated throughout the session and puts some doubt towards any sustainable trend:

Japanese share markets had a solid push, initially helped by a weaker Yen which then reversed later on in the session with the Nikkei 225 closing 0.3% higher to 23373 points, as it continues to build above daily support at the 23000 level. The medium term trend is firming now as trailing ATR support has been respected, but futures are indicating a mild setback here on the open as the previous daily high remains unchallenged:

The ASX200 was the best in the region, closing 0.8% higher and almost cracking the 6800 points barrier, helped along by a big surge in Caltex. SPI futures are down nearly 10 points despite the positive result n Wall Street overnight, so we again again for a potential breakout here to a new monthly high:

European markets are still struggling to gain traction, this time not helped by domestic currencies which firmed along bond markets as the German DAX finished 0.1% lower to 13236 points. The daily chart is still forming a rectangle breakout pattern after maintaining itself above multi-month resistance at 12700 points and not yet threatening trailing ATR support. I’m watching for a new daily high but note momentum is reverting:

Wall Street advanced across the board, with a late rally in the S&P500 pushing it 0.2% higher to again surpass its mid November daily high at 3133 points.  Price has respected the 3100 point support area and with momentum readings now reverted to overbought status the potential for a follow through new trend is rising, but can it do so on its own:

On currency markets, the USD finally began to back off against the majors, with Euro bouncing back slightly to regain some strength above the 1.10 handle. Notably, price did not match the previous weekly low at the 1.0980 level so this swing play may have legs in the short term here:

The USDJPY pair was able break out yesterday but tellingly failed to advance last night and stalled just above the 109 handle. The pattern on the four hourly chart is a technical double top with a series of lower session highs, but I’m looking at a failure to maintain low moving average support at the 108.80 level before getting excited on a reversion:

The Australian dollar is finally finding some sort of a bottom with some good buying candles evident on the four hourly chart, sitting just below the 68 handle as we go into this morning’s trade. This keeps it just above the previous weekly low at the 67.60 level so watch the high moving average today for signs of a swing play higher even though momentum remains oversold:

Oil prices are again slowing building after getting some good momentum last week, as the WTI contract ticked slightly over the $58USD per barrel level. The daily chart is still looking bullish with momentum in overbought readings and suggesting a trend back up to the $60 level:

Finally to gold, which finally attempted a real bounceback overnight as USD weakened marginally, pushing up off the floor to finish at the $1462USD per ounce level and staving off a new daily low. There is hope here of price bottoming out but don’t get too excited unless that high moving average is breached very soon – at least $1470 or so is required or its yet another retest of the lows below $1450:

 

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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