Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Stock markets seem to be rising and falling in line with the pace of the coronavirus, falling again last night as the number of external fatalities rose, prompting more bond and USD buying and a reversal of the previous night’s stock gains. Gold continues to lift ever higher, although Yen is selling off and Bitcoin can’t get back above $10000. The Aussie dollar is facing another yearly low as commodity prices continue to tumble, with crude and copper prices down.

Looking at Asian share markets yesterday where the Shanghai Composite closed 1.8% higher, soaring past the 3000 point barrier as it continues its turnaround, finishing at 3030 points. Meanwhile the Hang Seng Index is down 0.2% to 27609 points as it struggles to hold on to short term support. Price is bunching up at the 28000 point level again, but this doesn’t look good in the short term as momentum rolls over:

Japanese share markets are still lifting higher but not as much as expected with the Nikkei 225 only up 0.3% to 23479 points, as it continues to claw back its recent losses. Price continues to reject resistance overhead at the 24000 points, and futures are mixed despite the big bounce in the USDJPY pair, as negative sentiment continues to weigh:

The ASX200 closed 0.25% higher at 7162 points, really gaining traction above the 7100 barrier. SPI futures are hovering only a couple points higher, given the mixed lead from Wall Street but this may all be about the Aussie dollar trade as the Pacific Peso rocks through another yearly low, making Aussie share enticing:

European markets retraced significantly from their rebound with the FTSE losing 0.3% but the German DAX down the most, almost 1% to take back the previous session gains to close at 13664 points. Price action remains stuck here at thes previous highs and still well above the high moving average, but momentum is stalling out and begining a possible swing trade lower:

Wall Street fumbled, with the NASDAQ losing the most to be down 0.7% while the broader S&P500 fell nearly 0.4% to 3373 points, taking back the recent blip higher. The four hourly chart shows the first completion of the bearish rising wedge pattern but required a full breakdown below trailing ATR support, which happened momentarily overnight as markets got a little spooked. This is the area to watch tonight, or we could get a hard landing:

In currency world, its still all about the USD with Pound Sterling following through on its recent drop to now be at its lowest post Brexit. Meanwhile the moderation in falls for Euro has stopped, with more selling, particularly later in the session as buying support at the 1.08 handle evaportated, making yet another new low. We could be looking at a repeat of the 2016/17 lows at the 1.04 level:

The USDJPY pair continues its surge, now through the 112 handle after its clear breakout above the key technical level at resistance at the 110.20 high reached in January. This is a divergent signal given the not quite risk on mood on stock markets when Yen is sold off so suddenly, so I remain cautious and still watching for a small retracement:

The Australian dollar continues to drop with no buyers evident at all, almost crossing below the 66 handle overnight for yet another record low.  The four hourly chart shows price overextended a little in the short term with momentum well oversold, but there’s nothing much in the way here:

Oil prices stalled out on both Brent crude and WTI both not moving overnight with the latter remaining just below the the $54USD per barrel level. There is still potential for a move higher up to trailing ATR resistance during this swing trade but note how momentum is not yet positive:

Finally to gold, which continues to make new daily highs following its breakout above the $1600 barrier, now up through to the $1619USD per ounce level in a very solid session. While this looks overextended and could result in a small pullback, the gates remain clear here for more upside:

 

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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