Macro Morning

Global risk sentiment is bouncing back with an unfettered Wall Street ready to accept any President post-November – as long as they have nice juicy corporate stimulus ready to go – and the return of mainland Chinese traders after a week long holiday. Despite the stalemate on current household stimulus, US stocks surged nearly 2% overnight with the USD largely unchanged while oil futures dropped sharply alongside copper and iron ore markets.

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite returned from its holiday and surged over 2.5%, up through the 3350 point level while in Hong Kong the Hang Seng Index is following along, up over 2.2% in a solid breakout above 24600 points. The daily chart is showing how the previous swing play is decisively pushing aside resistance at the former 24000 point support level as daily momentum flips positive:

Meanwhile Japanese stock markets were in retreat mode due to Yen buying with the Nikkei 225 closing 0.25% lower at 23560 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 with futures indicating a return above 23600 this morning:

The ASX200 had a solid session, gaining a further 0.5% to close at 6121 points, extending its gains above the 6000 point barrier.  SPI futures are up over 70 points or more than 1% with the daily chart really wanting to get back to the former highs at the 6150 point level:

European markets are being dragged up alongside the risk-on mood with the German DAX finishing more than 0.6% higher at 13138 points. This looks like a very solid fill and should bring abotu a return to the previous high and a probable retest at the 13300 resistance zone soon:

Wall Street remains unchallenged by any concerns about the election or COVID with tech stocks again leading the way, while the S&P500 was goosed to close nearly 1.7% higher to 3534 points. The daily chart is really accelerating now with momentum at near extreme levels to the upside as price wants to get back to the August highs just below 3600 points:

The daily chart of the NASDAQ shows how far Wall Street is all-in on the election and presumption of stimulus, although it could get very disappointed if there’s turmoil and stalemate throughout November. Resistance at the 11560 point level has been tossed aside and its now full on for a return to the previous highs:

Volatility in currency markets was very benign overnight with Euro remaining just above the 1.18 handle in a very tight session and start to the week. 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 down further again as it headed towards a two week low to just above the 105 handle again. Trailing ATR support has been taken out on the four hourly chart as momentum is now in the negative zone, but we could see a repeat of the buying support previously here:

The Australian dollar was flat and retraced ever so slightly overnight to still remain above the 72 handle, after looking extremely overbought from Friday night’s surge. This minor pullback in the short term was expected but watch for the former weekly highs at the 71.80 level to become very firm support levels going forward:

Oil volatility is still present with more falls overnight with Brent futures retracing to finish just below the $42USD level, pulling back from last week’s surge up to the previous $43 weekly resistance level. Obvious strong resistance at the $44 level is still the area to beat going ahead with intermediate support at the $42 level:

Gold acted like Euro and Aussie and stalled overnight with no real movement to report, heading back down to the $1922USD per ounce level after getting a little too excited on Friday. I’m watching for another breakout above the four hourly high moving average with daily 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!

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