Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Risk markets traded thinly overnight due to the closure of Wall Street for a holiday, although stocks on both sides of the Atlantic did inch up slightly. While the USD Index was unchanged, mainly due to a flat lining Euro, commodity currencies like the Aussie and Loonie slipped despite a small lift in oil prices and iron ore. Not much to watch on Asia markets today although the RBA will release their latest minutes and tea leaf reading.

Looking at Asian share markets yesterday where the Shanghai Composite had a very solid bounceback with a 2.2% gain, accelerating through the afternoon session to close just below the 3000 point level at 2983. Meanwhile the Hang Seng Index was up 0.5% to 27959 points. The recent break out above the high moving average on the daily chart continues its follow through here, but requires a break through firm resistance at the 28000 point level above, as momentum is still not yet positive::

Japanese share markets continued their falls with the Nikkei 225 losing another 0.5% to 23534 points, on the back of the poor GDP print. Price continues to reject resistance overhead at the 24000 points with daily momentum rolling over again as futures indicate another retracement although a blip higher in the USDJPY may help stave off wider selling:

The ASX200 put in a scratch session to start the week, barely moving to finish at 7125 points, remaining well above the 7100 barrier. SPI futures are down 4 points or so given the lack of lead from Wall Street but note how price is still very well supported, despite the daily chart giving off bearish double top patterns:

European markets finally had a positive session and moved slightly higher without a late lead from a closed Wall Street. The FTSE and German DAX both closed around 0.3% higher, the latter at 13783 points, with a tight session that kept price above the high moving average and momentum still high after the recent breakout:

Wall Street was closed but S&P500 futures ticked 0.2% higher, indicating another new record high on the reopen tonight. The four hourly chart has all the hallmarks of a bearish rising wedge pattern and perhaps Apple’s guidance cut in aftermarket could spell trouble ahead:

In currency world, macro matters again with Euro not moving lower for a change, having a very tight range over the Monday session, finishing where it started basically. The terminus for this move is very hard to discern but in the medium term it could get to the 2016/17 lows at the 1.04 level:

The USDJPY pair is still wavering here as the risk proxy of choice, but continues to be unable to advance after previous false breakout and remains stuck just above trailing ATR support.   Resistance at the 110.20 high reached in January is the real level to beat here in the medium term, so I’m watching for a move higher tonight as momentum picks up on the return of US traders:

The Australian dollar is folding again after hitting resistance with another move back down to the 67 handle. Note the series of lower lows on the four hourly chart as price hits tentative support just above 67.10 that if broken could turn into a wider selloff. The Pacific Peso’s future remains down, but still watch for a potential blip on the RBA minutes later today:

Oil prices continues to find some stability with a little rally overnight despite thin volumes, with WTI steadying above the $52USD per barrel level for another daily high. The daily chart shows how price action was hovering around key monthly support, and is suggesting a swing move higher, possibly up to trailing ATR resistance at the $55 level:

Finally to gold, which after being stuck in a sideways trend for over a month, is trying to double down on its little breakout on Friday night but failed to advance much due to the lack of US traders at the end of the session, stuck at the $1580USD per ounce level. Price has kept well above ATR trailing support at the $1550USD per ounce level throughout this move, so combined with positive daily momentum not only keeps away the bears but sets up for new rally:

 

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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