Macro Morning

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Macro Afternoon

By Chris Becker 

A public holiday on Wall Street was enough to take the wind out of the bubble blowers overnight with European markets putting in mild scratch session, while bond markets drifted around. The IMF lowered their growth forecasts in the recent release at Davos while oil prices came back after reaching a new weekly high.

Looking at Asian share markets from the start of the trading week where Chinese stocks have diverted in fortune again with the goosed Shanghai Composite lifting nearly 0.5% to almost start the week back above the 3100 points level, while the Hang Seng Index sold off sharply after almost making a new session high, closing some 0.7% lower to 28848 points. The daily chart was showing continued support as price remained elevated with solid momentum, but this bearish engulfing candle is troubling – watch the low moving average for signs of pressure:

Japanese share markets made a little headway with the TOPIX up 0.5% while the Nikkei 225 only managed a meagre 0.1% lift, closing at 24083 points. The daily chart is looking better but the USD is not firming against Yen and providing a solid tailwind, required for the market to really get moving above 24000 points:

The ASX200 put in another record high for a solid start to the trading week, closing 0.2% higher at 7079 points. A lower Aussie dollar continued to help but a lack of direction from Wall Street overnight is telling as SPI futures are only up 5 points or so. The daily chart is setting up for a top here with momentum extremely overbought and the previous session candle looking like a hammer ready to fall:

European markets fell back after finding traction on Friday night, with only the German DAX advancing, up 0.2% to 13548 points. Another new daily high is technically a good start to a breakout here as the daily chart was showing an inability to gain traction above the previous upside resistance level at 13450 points. The lack of breadth with other European bourses may cause some hesitation:

Wall Street was closed for MLK Day but S&P futures are indicating a hold on Friday nights advance on their return tonight. The four hourly chart shows how price wants to get back to the upper, unsustainable trendline and has no intention of threatening ATR support at 3300 points below:

Currency markets were a little subdued with Pound Sterling slightly down while Euro blipped a little higher on some temporary USD weakness.  Price still remains near the previous weekly low below the 1.11 handle and while there is a potential setup for a swing higher this could be erased on the return of US traders tonight:

The USDJPY pair was flat as a tack again overnight, failing to make any new session highs, but still at multi-week highs that should nominally help Japanese stocks again. Not much to report here as Tokyo awaits the US market to re-engage:

The Australian dollar struggled to find any momentum after a fairly good performance in Asia, again rebuffed at the 69 handle overnight. Price seems anchored closer to the previous week lows at the 68.50 level which is where to watch for a decent inversion this week:

Oil prices were slowly building buying support coming into yesterday’s session, and indeed a big gap higher in London trading saw the WTI contract almost hit the $60 level on supply concerns before sharply finishing lower to below the $59 per barrel level again, albeit without a new intrasession low. Loose trading volume aside this is still looking supportive at a nascent level but too early to tell as medium term momentum is behind further price falls:

Finally to gold, which after holding on after its little deflation from its recent bubble has blipped a little higher despite closed US markets, finishing at the $1560USD per ounce level and just above its own high moving average. The daily chart is showing a nice consolidation following the bubble like move above $1600 with ATR support at the $1540 level holding firm for now – watch for more upside above the high moving average:

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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