Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

By Chris Becker 

A big lift in risk sentiment across the board overnight with many equity markets breaking out to new bullish patterns on the back of comments that central bank stimulus will continue for quite sometime yet. Of course Wall Street pushed to new record highs, but it was moves on European and other bourses including futures here in Asia suggesting that the next stage of the post-COVID recovery is at hand.

Looking at share markets in Asia from yesterday where in mainland China the Shanghai Composite put in a scratch session to be down about 0.2% to 3404 points while in Hong Kong the Hang Seng Index was also off a little, down 0.3% to 25120 points. The previous bearish engulfing candle is still warning of a potential breakdown here so watch for any price action below the low moving average as daily momentum continues to flatline:

Japanese stock markets did much better than previously, with the Nikkei 225 closing 0.5% higher to 23247 points as the USDJPY pair also pushed higher in a close risk correlation. Futures are indicating a larger movement higher on the open today, in line with the combined risk sentiment overnight and a breakthrough above the May highs again at the 23300 point level confirms a new stage is underway:

The ASX200 continues to be the odd one out, but this time to the upside! Can’t let a once in a generation recession get it down, with a 1.8% surge higher to be back above the 6000 point level. SPI futures are up around 40 points, so it looks like the 6000 point barrier may become the new support level moving forward as the previous week of sour trading converts back to bullish mayhem:

European markets have shown themselves with a big surge across the board in response to BoE and Fed comments overnight as the punchbowel continues to overflow. The FTSE came back 1.3% higher while the German DAX soared over 2% higher, leaving the 13000 point level behind to close at 13243 points. The daily chart has been in a bullish pattern for quite sometime here after pushing aside the potential triple top pattern with a new series of monthly highs setting the stage for more upside:

Wall Street can’t be put down with the NASDAQ and S&P500 pushing to another new record high due, the latter actually higher, up 1.5% to 3580 points. The four hourly chart continues to show any and all minor blips or pullbacks used to buy again as this market remains in exuberant mode, ready to pop even higher:

Currency markets saw a continuation of a stronger USD as most majors saw more selloffs with Euro pushed down well into the mid 1.18’s but holding fast later in the session. Trailing ATR support at the 1.19 handle proper was broken as I expected but there is building support here so watch the intersession timelines for a potential swing higher:

The USDJPY pair was relatively calm remaining just above the 106 level with some interesting candle patterns on the four hourly chart that are suggestive that a short term top may already be in. I’m still watching for any breakout above the high moving average but the bearish rising wedge pattern and the lack of buyers above the 106.30 level is telling:

The Australian dollar has deflated somewhat to be just above the 73 handle and just below its Friday finishing highs in a classic rollover pattern, but is finding some support the trailing ATR level here. I’m still watching for a potential selloff here but risk correlation should see the Pacific Peso move up again with my terminal target still intact at 80 cents:

Brent futures finally had an interesting night with a big swing back below the $45USD level, falling 2.5% overnight. The daily chart shows a clear bearish engulfing candle here that could spell trouble as its been struggling to get moving for quite sometime now. Watch ATR support below at the $43 level to come under stress next:

Gold also rolled over last night with another big selloff, falling more than $20USD per ounce to finish at the $1940USD per ounce level with not much intrasession buying support. Although price continues to be supported at the several week long $1930USD per ounce level, this lack of momentum and could see it fall back to the monthly support level at $1910 or 1900 very quickly.

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. Goldstandard1MEMBER

    I need to correct you, isn’t this a once in a century recession coming, not just a generation?

      • $300: you could do worse; that’s OK for a day (OK, you might be used to getting more).

        Pity me: I bought some BBOZ at the open recently, to cover some inevitable and large falls – and it worked. But then I got busy with real work and real life, and forgot to sell it until today……..$&^#%$&*^#*&$^*&….so a nice cover turned into a substantial loss…twit…