Macro Morning

Risk sentiment remains subdued with hopium around more US fiscal stimulus fading, sending Wall Street lower while the USD retreated slightly, mainly against a resurgent Pound Sterling as Euro and Aussie dollar remain depressed. Commodity prices were mixed with iron ore dropping, crude oil bouncing back over 2% while gold and silver saw modest bouncebacks that retraced later in the session.

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite fell sharply going into the close, down 0.6% to 3340 points while in Hong Kong the Hang Seng Index returned from its holiday with a shaky start but eventually closed flat at 24667 points.   The daily chart is showing how the previous swing play is poised to push aside resistance at the former 24000 point support level as daily momentum flips positive – but only just. Watch former support at the 24200 point level to hold here:

Japanese stock markets were mixed, with Nikkei 225 putting in a scratch session while the TOPIX fell back over 0.3% as Yen buying kept risk appetites dampened. Recent price action has created a new monthly high amid a solid uptrend since the July lows but futures are indicating a stall again as resistance remains stubborn around the 23500 point level:

The ASX200 followed suit with other Asian markets, eventually closing 0.3% lower at 6179 points, unable to extend on its start of week gains as it fails to breach the previous June highs.  SPI futures are flat lining this morning just as price gets back to the former highs at the 6150 point level. The four hourly chart is illustrative – is this just a consolidation before the next leg up or a sign of a rollover back below the 6100 point level at short term support:

European markets were quite mixed with the FTSE dropping nearly 0.6% while the German DAX finished with a scratch session at 13028 points. The previous outbreak had looked solid here and was supposed to bring about a return to the previous high at the 13300 resistance zone but this has been rejected at the 13200 point level instead. Watch daily momentum which is rolling over:

Wall Street continues to wobble, but this time tech stocks fell over first, despite large falls in bank stock prices, with the NASDAQ down 0.8% and the S&P500 closing nearly 0.7% lower to 3488 points. The four hourly chart is poised here at short term support at the 3475 level with no new highs since the Monday evening squirt higher. The daily NASDAQ chart has already started to rollover – is this the last push before the November election:

Volatility in currency markets lifted slightly overnight on a relatively clear economic calendar with Euro oscillating above the 1.17 level for a wide ranging session that ended with a shakeout nearer the 1.1750 mid level.  The retracement of last week’s rally may not yet be over – watch for any break below recent support at the 1.1730 session lows from last week:

The USDJPY pair was pushed down further again as it broke below the two week low to barely cling on above the 105 handle again. Momentum remains oversold and there is some internal buying support that could translate into a temporary bottom here but Yen buying may accelerate if stocks continue to fallover:

The Australian dollar tried to get out of its funk but was pushed down alongside Euro with a retracement back to the temporary bottom nearer the 71.50 level this morning. The short term trend is down while the medium term is up – hard to discern where to from here, particularly as today’s numberwang figures could push the Pacific Peso two ways to Friday. I’m watching the wide moving average band for entry points on long/short positions at the 71.90 and 71.40 levels:

Oil volatility is still present with another surge overnight with Brent futures finishing well above the $43USD level, matching last week’s surge and poised to breakout above the previous $44 weekly resistance level. Momentum is coiling up for a release higher here:

Gold had a more violent bounceback overnight that was eventually thwarted as it broke through and then stayed just above the $1900USD per ounce level. 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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