Macro Morning

See the latest Australian dollar analysis here:

Elon Musk may have just saved Bitcoin

The expected retracement in wildly overbought stocks following the Pfizer vaccine surge continued overnight on both sides of the Atlantic. Defensive currencies like Yen and Swiss France are up while volatility in Kiwi continued following the RBNZ meeting. The flat US CPI print still gave the USD some strength, with the Aussie finally falling back after being elevated all week.

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite pulled back yet again, this time closing 0.1% lower at 3338 points while in Hong Kong the Hang Seng Index was off a similar amount, down 0.2% to be at 26159 points. The daily chart is still showing a boisterous market with momentum now easing off from its recently extreme overbought mode. Daily price action is stalling here so watch for a possible retracement below the 26000 point level as a warning sign:

Japanese stock markets continue to pick up speed though with the Nikkei 225 closing 0.5% higher to 25480 points. Futures are suggesting a pullback on the open this morning in line with Wall Street fortunes as this market is obviously way overextended and ripe for a retracement. I’d watch the high moving average at the 25000 point level proper and of course, the direction of USDJPY in the short term as always:

The ASX200 fell back just under 0.5% to close at 6418 points after being overbought for so long. The daily chart is a repeat of other equity markets with the big vaccine surge now slowly turning into a topping action as retracement becomes the order of the day. Momentum remains extremely overbought so we should see a small pullback soon, but risk can’t be pushed out at the moment and the lower Aussie dollar overnight could act as a buffer here:

European markets finally caught up with the retracement meme, with nearly or slightly over 1% losses across the continent. The German DAX fell 1.2% to close at 13052 points with the daily chart again showing how strong resistance is at the August highs just over the 13000 point level. Watch the tip of the high moving average to come under pressure here as COVID cases mount on the continent quicker than expected, with more restrictions likely soon:

Wall Street’s deep breath following the Pfizer news and the ongoing stalemate over the US election sent confidence lower with the S&P500 finishing nearly 1.4% lower at 3526 points. The four hourly chart showed a market still wanting to lift higher but as I warned yesterday, the 3500-3515 support zone was going to come under pressure soon. Its now sitting right on terminal support and could form a big correction here as markets have not yet discounted the looming exponential COVID risk in the US yet:

The NASDAQ also retraced but not as much, falling by only 0.7% to 11685 points, taking back half of its recent gains. The pattern on the daily chart remains bearish as price action is still unable to clear the downtrend from the August bubble like highs (upper black sloping line). The key is daily support to hold on at the 11500 point level:

Bitcoin’s breakout is re-surging to newer highs, having made another new daily high above the $16000 level. This is classic bubble psychology, having now risen over 40% since the breakout above $11000 in early October!

Currency markets are starting to move around a little more in the wake of the latest US CPI print, but also rising COVID cases post-vaccine news. The Euro was able to stabilise overnight to just get back above the 1.18 handle after recently breaking below trailing ATR support on the four hourly chart. I still contend that the union currency is ready to break further here, so watch the 1.1750 level to come under stress later tonight:

The USDJPY pair is trying to move out of its pause mode but failed overnight, with a slight rollover taking it back down, but not below the 105 level. Momentum is no longer overbought here and price action on the four hourly chart clearly shows a big selling level above 105.40 or so as price now hugs the low moving average and rollsover:

The Australian dollar is in the next stage of rollover, having broken below support that held all week at the 72.60 level, now threatening daily support at the 72.20 level instead in the wake of the US CPI print. I’ve been asking all week if the medium term uptrend was sustainable and if it is, then former weekly high at the 71.40 should act as firm support if trailing ATR support breaks down:

Oil prices can’t find their groove with obvious selling pushing both markers back down to the September/October points of control, with Brent pushed back to the low $43USD per barrel level overnight. This is currently only a pause and price may try again to breakfree above the $44 level, but watch for a new session low as more short sellers step in:

Gold is still licking its wounds, but was able to eke out a very small gain overnight, lifting just over $10 to the $1874USD per ounce level. This doesn’t take it out of trouble as the four hourly chart still shows a series of lower session highs following the post-vaccine news slump, so for now watch terminal support at the $1860 level which must hold:

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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  1. this is why last night I asked if US and EU are heading for lockdowns. If they are then gold will fly much much higher but if not than possible beach through $1860 is on the cards.

    • The US nation wide will probably not go into lockdown because the GOP governors are too fucTing stupid to listen to the scientists to do so.
      Europe however probably will, its already started across the continent – its all too late of course, but they will do it going into winter.