Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

 

By Chris Becker 

Last night saw a small return to risk taking late in the session following another dire initial jobless claims print in the US, as Wall Street continues to ignore the stark risks given by multitudes of viral scientists and the equally stark data coming out of “open for business” states like Texas where the second wave of COVID-19 gathers apace. USD was mixed against the majors following the print, with Yen selling off while Euro lifted off the deck, as gold broke out and matched its previous monthly high.

Looking at share markets from yesterday where in mainland China, the Shanghai Composite closed down nearly 1% to 2870 points, while the Hang Seng Index was off by around 1.4% to 23829 points, holding just above the recent daily lows as resistance proves too strong overhead. This very considerable resistance at 24800 points is pushing the market back down to its recent lows with the potential to break below daily support at 23200, but note that daily momentum remains positive and the long tail of intrasession buying:

Japanese share markets were again the worst performers with the Nikkei 225 closing 1.7% lower to 19910 points, finally cracking below key support at 20,000. Futures are looking a bit better however, but with continued rejection of overhead resistance at the 20300 point level there’s only a small potential for a follow through above as support at the 19400 level continues to firm here:

The ASX200 fell over 1% at the open and this time stayed there, with a late session selloff seeing it close 1.7% lower at 5328 points. SPI futures however are up over 0.4% on the Wall Street rally, but we’re likely to see a modest close to the week. Overhead resistance at the 5550 level still remains far too strong to beat so I’m still positioning for a return below the recent lows at 5300:

European markets were again the weakest overnight, the FTSE down nearly 3% while the German DAX slumped nearly 2% to close at 10337 points. The daily chart shows price rolling over and heading back to the previous weekly lows with the 10,000 key psychological support level the one still to watch although daily momentum remains positive:

Wall Street had a late surge that just escaped a breakdown below key support with the S&P500 finishing 1.1% higher at 2852 points, with the daily chart showing continued pressure to breakdown below the recent daily lows. Overhead resistance at the 3000 point level is far too strong, but don’t discount the stupidity to push this market higher:

Onto currency markets where the volatility abated somewhat with a reversal in USD strength with the initial jobless claims blowout the catalyst. Euro had the weakest response however with only a little lift back above the 1.08 handle, a small bounce of the daily session lows that looks ready to snapback at any moment:

The USDJPY pair however launched higher, bouncing off the four hourly ATR support level to be just above the 107 this morning as the Asian session begins.   Momentum had been positive on the four hourly chart even as price looked weak here as Yen buyers repositioned going into the weekend, but like Euro this looks like a potential rollover, so watch price fallback below the high moving average:

The Australian dollar had yet another whipsaw overnight, bouncing off the 64 handle after almost hitting a new weekly low following yesterday’s headline unemployment rate response.  Stripping away the whipsaws, the short term trend remains down, so I expect another inversion here as momentum remains negative:

Oil prices bounced back a little overnight on EIA data with Brent crude pushed back above the $31USD per barrel level for the first time in nearly two weeks. This bullish move highlights the key area to watch at the downtrend line from the March gap down event. Watch (and use as an uncle point?) the low moving average which must remain intact:

Finally to gold, which after absorbing the US CPI print and Powell’s recent testimony has finally broken out of its consolidation with a nice strong session pushing it back to its recently monthly high at the $1730USD per ounce level. The daily chart looks promising with that needed breakout above the high moving average with the bulls ready to hit the buy button:

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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