Macro Morning

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Overnight markets were relatively bullish overnight, although Brexit troubles gave Pound Sterling traders fits, while mixed economic data from the US and the lack of COVID-19 stimulus didn’t hurt Wall Street bouncing back. Commodities diverged with gold shooting back above $1900USD per ounce while copper prices fell nearly 6% dragging oil futures down with it.

Looking at share markets in Asia from yesterday’s session where the Chinese markets were closed for a holiday while Japanese stock markets were dead in the water after a technical malfunction saw all trades cancelled. The Nikkei 225 still shows strong resistance at 23300 points which needs to be cleared for any further upside, so continue to watch – if it opens properly – the low moving average to act as short term support:

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The ASX200 played catchup with a 1% rally to cover the previous selloff, closing at 5872 points. SPI futures are down nearly 30 points on the commodities rout so we’re likely to see another shakeout today that could see it remain below the 5800 point barrier. The 6000 point resistance level remains extremely firm in the medium term:

European markets were generally positive through the EZ unemployment print, with only the German DAX stumbling to finish 0.3% lower, closing at 12730 points. Daily price action is still completely contained within a falling moving average band to the downside, although ATR daily support at the 12400 level remains firm. I’m watching for a further selloff that retests that level tonight as momentum remains negative:

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Wall Street doubled down on the hopium of another stimulus package helped along by a surge in tech stocks that saw the NASDAQ leap over 1.4% while the S&P500 finished 0.5% higher to close at 3380 points to extend gains above the key psychological 3300 point level. The four hourly chart shows a growing confidence and momentum to continue back up to the former weekly highs (solid upper black horizontal line) at the 3400 point level:

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Currency markets had more volatility overnight with Pound Sterling moving around considerably on more Brexit ructions while Euro was relatively stable and stalled again to lift slightly further above the 1.17 level. The question is can the union currency survive through tonight’s NFP print or is this just a short term swing up:

The USDJPY pair stopped its roll over here by maintaining itself just above 105 zone as resistance overhead remains very firm. Momentum is still reverting down to the zero level so watch for a further break below the low moving average for a potential swing back down to trailing ATR support:

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The Australian dollar is on its own and would have crossed above the 72 handle but was thwarted by the inversion of commodity prices overnight, still looking strong if a little overbought here this morning. Watch the low moving average at the 71.60 level for signs of a selloff if retail sales today underperform:

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Oil futures were flummoxed on sentiment overnight with Brent falling more than 4% to close below the $41USD level again. Again, the trailing ATR resistance level on the four hourly and daily charts showed no breakout – flip the chart upside down and you’d be a buyer:

Gold however got a second wind with a nice breakout that pushed it back up above the $1900USD per ounce level although it ran out of steam late in the session. The four hourly chart looks almost like Euro and other undollar assets and I continue to note that the longer term price pattern still exhibits a classic breakdown pattern:

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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

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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)

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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!