Macro Morning

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Macro Afternoon

By Chris Becker 

Sentiment remains super positive as the EU stimulus and fiscal sharing package and vaccines news continue to propel equity and commodity markets higher, while at the same time sending the USD to a five month low against nearly everything else. The undollar currencies, plus gold and silver, all had sterling sessions overnight, making new highs while the bond market remains relatively benign. However, a wobbly NASDAQ and a pullback in futures does suggest a tricky start to stock markets here in Asia today.

Looking at share markets in Asia from yesterday where the Shanghai Composite slipped after a big start to the week, finishing with a scratch session to 3320 points while in Hong Kong the Hang Seng Index played catchup, lifting over 2% to 25635 points. The daily chart shows a nice bounce off support and back above the 25000 point barrier with the next layer of resistance to be cleared not far away at the 2600 point level as momentum picks up:

Japanese stocks also returned to a positive mood, with the Nikkei 225 up 0.7% at 22884 points. Futures are pulling back slightly in line with the falls in the NASDAQ, so another attempt towards the 23000 point level looks thwarted again, as buying conviction remains doubtful:

The ASX200 was the standout in the region, with a big surge that carried from the open to the close, finally finishing 2.6% higher to 6156 points. However, with SPI futures down over 60 points or more than 1%, there is a chance that the 6000 point barrier may come under threat today in a significant reversion as tech stocks wobble:

European markets gapped higher as part of a co-ordinated breakout following the EU summit with the German DAX finishing 1% higher again to 13171 points, surpassing its previous high and confirming the clear technical breakout signal on the daily chart. Futures however have pulled back most of this surge and while momentum is nicely overbought, price is getting ahead of itself above the high moving average:

Wall Street had a strange night with the Dow advancing the most while the previous clear breakouts on the S&P and NASDAQ where almost reversed, with the latter losing 0.8% and the broader S&P only edging slightly higher to 3257 points. Note how the four hourly chart shows a breakout and then a clear retracement down again, with the FOMO trade not working as expected – more like profit taking:

The daily chart of the NASDAQ doesn’t paint a clear picture anymore either with some interesting daily candles pointing to a possible topping action, although support is super firm at 10400 points:

Currency markets had all the action with USD sold off against everything, with Euro making a new yearly high by shooting through the 1.15 handle on the back of the EU fiscal sharing package. This is way overbought and should normally result in a pullback, but anything could happen here given the interventions by fiscal and monetary authorities. I’m watching the high moving average at just below the 1.15 handle for short term signs of a swing down:

The USDJPY pair this time finally moved with the weaker USD slapped down to weekly lows at the 106.70 level. Momentum has flipped to negative on the four hourly chart, as resistance overhead was firmly rejected overnight. Watch for a breakout of support here to signal a new downtrend:

The Australian dollar followed stocks and then some with another handle breakout, this time above 71 cents in the swathe of a weak USD. This looks like its finished before it started with a rollover pattern already underway on the four hourly chart, but stranger things have happened given the firmness of the RBA yesterday:

Oil is finally finding some life in line with the weaker USD with Brent futures almost breaking out above the $44USD per barrel level, finally making a decent new daily high. Daily momentum has pushed into the overbought mode and support has been very firm, so watch for a big fill once the $44 mark is breached:

Gold – and silver – shot out of the gates to make a new daily/weekly/monthly/yearly high, closing at the $1842USD per ounce level in a very strong move overnight. This takes the shiny metal well past the 2011 closing high (but not the intrasession high) and will get the gold bugs salivating for even 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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Comments

  1. migtronixMEMBER

    All the top gainers were oil firms. Lol!

    So the market decides people are leaving their screens and going driving? 🤷‍♂️