Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

Wall Street stumbled on Friday night with yet another reversal in sentiment as the US failed response to the coronavirus with yet another record high number of cases has seen many States begin to again restrict economic activity. US stocks were off by more than 2% and futures are suggesting similar falls on the open here in Asia while currencies are likely to be unchanged as USD was relatively firm on Friday night, although gold has the potential to move higher after making yet another weekly/monthly high.

Looking at share markets in Asia from Friday where the Shanghai Composite remained closed, while in occupied Hong Kong the Hang Seng Index gapped lower with a selloff below the previous daily lows, finishing 0.8% lower at 24549 points. Price action is decidedly volatile here, even on the daily chart with another session low that threatens the nascent uptrend from the May lows. Support must hold here below the low moving average at the 23500 point level with we could see a return to below 23000 proper:

Japanese stocks rallied with the Nikkei 225 finishing 1.1% higher to take back its previous losses, finishing at 22512 points and staving off a new weekly low. Futures are indicating a pullback as the daily price chart looks weaker as each session moves on, with low volatility suggesting a breakout or breakdown very soon. Watch daily ATR support at the 21500 point level and the high moving average for those signs:

The ASX200 was the best in the region this time, closing 1.5% higher to 5904 points but still looking weak on the longer term charts. SPI futures are down nearly 1.6% or so suggesting a big pullback to both ATR daily support and the recent lows at the 5750 level which must hold here as we go into the usual month/quarter/year window dressing:

European markets had modest pullbacks although the FTSE lifted on a weak Pound, with the German DAX falling 0.7% to 12089 points. Momentum is flatlining here and like other equity markets, price is poised on daily support ready to crack at any further bad leads from Wall Street. I’m watching for a sharp retracement below 12000 points:

Wall Street could not stave off the bad virus news any longer with all three major bourses down 2% or more, the S&P500 eventually closing 2.4% lower to 3009 points. The daily chart shows a rollover is underway as momentum goes into negative mode and price is threatening to break the previous lows below 3000 points proper. This requires a big fill from the plunge protection team and fast or all those Robinhood amateurs are going to panic:

Onto currency markets where Euro remained relatively flat with some mild intrasession volatility before finishing the week roughly where it started at just above the 1.12 handle. The former weekly lows are the next target here this week as momentum is not terribly oversold yet but support is firming here in the short term:

The USDJPY pair tried to push higher above the 107 handle again but failed once more to finish the week in the mid point of a wide trend channel that has a slightly bearish bias.  I had been watching for a move back towards the previous weekly highs at the 107.50 level, but the overbought condition wasn’t enough for a follow through, this could eventuate on the open here this morning:

The Australian dollar however decided to sink in line with other risk assets, falling well below the 69 handle to the mid 68 level, essentially finishing the week where it started. This is not a good sign for Aussie bulls as the lower edge of weekly support just above the 68 level is coming under threat once more:

Oil prices came back slightly again with Brent futures slipping back to the weekly low just above the $40USD per barrel level. Note how daily momentum has now inverted as the lack of internal buying support is weighing on this trend, ready to flip over. If risk assets like stocks continue to fall, we could see a sharp move down to previous resistance at the $35 level:

Gold came back to yet another daily high, finshing at the the $1770USD per ounce level on Friday night, continuing its breakout at the start of the week. Price is well above the previous nominal highs and sets up for further upside, as momentum remains in a solid overbought mood here as it begins to reign in the next target at the 2010 highs above $1800:

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!

Comments

  1. Goldstandard1MEMBER

    Another Dow wobble Friday, will the Fed buy something else?
    It’s like watching a smackie have a hit and everything is back to fake normal, until the withdrawals kick in again…… We all say “take the pain, it’s better for you in the future” but the dealer on the corner keeps on waving the skag bags in front of the market’s face saying “come on man, just a taste man…you know you need it man, just a taste man………..”

Leave a reply

You must be logged in to post a comment. Log in now