Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Even a closed Wall Street couldn’t keep the bulls away overnight with European markets surging as the prospect of more economies opening up post-COVID19 overshadowed any concerns over the Chinese/US tensions. Currency and bonds were relatively stable, although gold lost further ground while industrial commodities lifted with oil prices hitting another new daily high.

Looking at share markets from yesterday’s start to the week where in mainland China the Shanghai Composite was down a handful of points, but managed to eke out a small gain to finish just above the 2800 level, while the Hang Seng Index eventually put in a scratch session in a relatively smooth follow through from its rout on Friday, closing 0.1% higher at 22952 points. This still keeps it below key support at the 23300 point level, with momentum clearly oversold:

Japanese share markets shot out the gate, with the Nikkei 225 closing 1.8% higher to 20741 points. The daily price pattern has been the most promising of all risk markets for sometime now, having cleared resistance and ready to get back to the pre-virus highs, but watch the lower trendline which must hold at 20000 points:

The ASX200 was the big performer as traders returned to their desks in full alongside the economy, pushing the market up 2% to close over the 5600 point level, breaking out with gusto. SPI futures are up nearly 50 points as this breakout becomes as obvious as a $60 billion black hole with recent resistance at the 5500 point level completely cleared, the next target is 6000:

European markets were able to turn this positive mood into further gains across the continent as the German DAX finishing nearly 3% higher at 11392 points. Sentiment has obviously cleared its throat after a few hiccups and is now ready to re-engage this rally as momentum becomes nicely overbought:

Wall Street was closed for the Memorial Day holiday while Trump golfed, but futures are indicating similar gains on the re-open tonight of at least 1.5% or more. A return to the 3000 point level seems inevitable with a likely close above resistance at the 2970 point level:

Onto currency markets where the recent USD strength has held but its all about stability here with not as many traders on deck due to the US and UK holidays. The Euro kept steady just below the 1.09 handle, but only just with no further declines although four hourly momentum is pointing to a breakdown soon:

The USDJPY pair was also relatively steady, but looks positive going into today’s session, still below the 108 handle but wanting to return to its previous early week highs as it continues its consolidation above daily and four hourly ATR support.  Momentum remains positive on the four hourly chart so watch the high moving average for a breakout:

The Australian dollar was barely played with overnight with a staid session remaining below the mid 65s against USD. Support should be strong here but having broken through the previous weekly resistance levels at the 65.70 area, there is still potential for a reversal:

Oil prices are still pushing a bullish bent, but only just with Brent crude up 1% to be in the mid $35USD per barrel level as it again comes up to its post-breakdown resistance level.  I still contend we are near the end of this move but wouldn’t be surprised at another blowout that could even hit the $40 level before all the longs are exhausted:

And, finally to gold, which continues to be flat here following the previous breakout above $1700, finishing where it started the day at the $1726USD per ounce level.  The shiny metal looks firm here on most timescales, but in the short term the lack of buying support could see a short term inversion below $1700 before another leg higher in the medium term:

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!

Latest posts by Chris Becker (see all)

Comments are hidden for Membership Subscribers only.