Macro Morning

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Risk sentiment remains tenuous across the North Atlantic overnight with Wall Street stumbling and European stocks almost in full retreat as the triple whammy of COVID, Brexit and the upcoming US elections weigh on markets. USD is falling sharply against the majors, with both gold and Bitcoin taking advantage, while commodity prices are completely messed up – oil falling sharply, while industrial metals lifted. The bond market is looking shaky too with 10 year US Treasury yields up to a new weekly high.

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite was back on struggle street, down over 0.5% going into the close, but just finished with a scratch session at 3320 points while in Hong Kong the Hang Seng Index is up firmly, closing 0.7% higher at 24754 points. The daily chart shows the market in a growing uptrend with former support at the 24200 point level building again as momentum starts to pick up. I’m watching for a proper breakout above the 24800 point level next:

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Japanese stock markets were also sturdy with the Nikkei 225 closing almost 0.5% higher at 23664 points. Resistance remains stubborn around the 23500 point level however with no real movement in nearly two weeks as futures suggest a mild pullback in today’s session. I’m still watching the low moving average to possibly come under pressure at the 23400 level:

The ASX200 barely inched along, closing only 0.1% higher at 6191 points. Futures are indicating a major pullback in line with Wall Street on the open, possibly as low as 6100 points as daily momentum rolls over and price breaks below the low moving average as this market gets way ahead of itself alongside the Aussie dollar:

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European markets ran to safety with broad selloffs with the German DAX finishing nearly 1.5% lower to 12557 points, extending losses in post close futures. The daily chart is now in full rollover phase here with momentum oversold and looking to break below daily ATR support at the 12500 point level:

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Wall Street remains transfixed on hopes of economic stimulus with minor losses the order of the day. The S&P500 closed 0.2% lower at 3435 points with the four hourly chart clearly showing how tight current price action really is and how close the market is to breaking down.  I’m watching for a further fall down to 3400 points:

The daily chart of the NASDAQ – which took its previous 0.3% in gains – is pointing to the possible future here with a possible retracement down to the earl September lows around 10700 points:

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Bitcoin’s breakout was a great one, now surging well above the $12000 level and the August highs proper – could it breach $13000 today or is it way overextended?

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Volatility in currency markets remains high with USD continuing its broad selloff, the DXY index losing over 0.6% overnight mainly due to the Euro pushing even higher. I did say this was looking overextended with another repeat of rollover signs as price pauses at the mid 1.18 level:

The false breakout in USDJPY has set up for a big reversal instead with USD selling off sharply – losing over 100 pips overnight before settling somewhat at the 104.50 level. Always follow price action and cut your losses on false breakouts!

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The Australian dollar was able to make headway and this time its swing play up to the 70.60 level and trailing ATR resistance has stuck, breaking through the 71 handle proper. I had though there wasn’t much life left here and while price action is decent, note that momentum is not that strong with a potential rollover here back below the 71 level:

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Oil volatility is rising again with another breakdown overnight as private stocks of gas in the US point to a possible demand collapse. Brent futures finished well below the $41USD level having rebuffed the recent daily highs as it remains unable to breakout above the previous $44 weekly resistance level. My idea of a release higher here maybe breaking down, so watch that lower moving average line to come under stress:

Gold was able to make good on its large break above the $1900USD per ounce level overnight, heading almost to a monthly high before settling at the $1924 level. The four hourly chart shows this breakout nicely but looks very overextended as momentum is nearly off the charts, which should point to a short term retracement. Watch the $1900 level to firm as medium term support:

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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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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!