Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

Risk sentiment returned in full on Friday night on Wall Street with more hopium around stimulus before the US presidential election while European bourses stumbled after a poor showing of stocks in the Asian session. The USD fell back against almost everything while Treasury yields spiked a little as commodities were very mixed. As oil fell again, copper and gold continued to surge. It could be a mixed session today given the long weekend in the US with stocks futures up only slightly.

Looking at share markets in Asia from Friday’s session where in Hong Kong, the Hang Seng Index slipped in its recent advance, closing some 0.3% lower to 24119 points after being down further earlier in the session. The daily chart continues to show a swing play that is still struggling to decisively push aside resistance at the former 24000 point support level as daily momentum remains negative:

Japanese stock markets were in a slight retreat due to Yen buying with the Nikkei 225 almost closing 0.4% before rallying at the close to only be 0.1% lower at 23619 points. Strong resistance at 23300 points was the key level to beat last week, and price action has indeed created a new monthly high that should support the medium term uptrend further this week. Short term support at the 23000 point level should hold here:

The ASX200 was looking to have a solid session, up nearly 0.5% at one stage but then eventually finished dead flat at 6102 points, still remaining well above the 6000 point barrier.  SPI futures are up about 8 points with the daily chart really wanting to get back to the former highs at the 6150 point level but looks like stalling out here as momentum gets ahead of itself :

European markets were looking to finish the week on a firmer basis but instead stalled out despite the strong lead from Wall Street as the second wave of COVID-19 across the continent weighed again. The German DAX finished dead flat at 13051 points with the previous breakout on the daily chart above the high moving average still in play with a one off pullback of price action a daily momentum remains in the positive zone with a probable retest at the 13300 resistance zone soon:

Wall Street remains unchallenged by any concerns about the election or COVID or other economic factors with another surge on Friday night across the board with tech stocks again leading the way, while the S&P500 was dragged nearly 0.9% higher to 3477 points. The daily chart was showing a possible bearish rising wedge building here but as I mentioned last week it was unlikely to result in a quick breakdown as momentum is still at nicely overbought levels as price wants to get back to the August highs just below 3600 points:

The daily chart of the NASDAQ shows a clearance of resistance at the 11560 point level and a new weekly high that will embiggen spirits to also get back to the former highs:

Volatility in currency markets was on the downside against USD with Euro pushing straight through the 1.18 handle and on to a new monthly high of Friday night. That level was proving strong resistance as momentum built as four hourly price action remains completely bullish and setting the stage for another advance – but with a probable retracement – this week:

The USDJPY pair was pushed out of its stalled phase and into a nosedive as it fell straight through former resistance at the 105.80 level and headed back to the Monday morning starting point to wipe out the week’s gains. Trailing ATR support is looming here and needs to be filled as momentum heads into the negative danger zone:

The Australian dollar went even faster than Euro and shot to a new monthly high well above the 72 handle, looking extremely overbought in the process. Momentum has really excited itself into in the short term which is likely to result in a pullback in the short term during this week’s price action so watch for the former weekly highs at the 71.80 level to become very firm support levels going forward:

Oil volatility abated somewhat on Friday night with Brent futures retracing slightly to finish just below the $43USD level, capping a strong surge during the week. Obvious strong resistance at the $44 level is the area to beat going ahead with intermediate support at the $42 level:

Gold is no longer struggling to gain traction as it joined with the other undollars and flipped well above the $1900USD per ounce level on Friday night after a brief sniff earlier in the week. Daily momentum remains negative but price action is in a definite swing play here, with a nice breakout above its own high moving average with trailing ATR resistance at the $1950 level the upside target:

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)

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)