Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

The Tesla bid sent Wall Street up higher on Friday night following the return on traders from the Thanksgiving holiday with European markets putting in a good show despite a big spike in Euro, as the USD went down across the board. Gold stumbled again, falling to a new monthly low while Bitcoin held off the short sellers as it managed to stay just above the $17000 level. followed the trend and did almost nothing, with all eyes on Bitcoin which dropped over 10% in a single session, as bond markets also escaped any action with a lack of economic events.

Looking at share markets in Asia from Friday’s session where the Shanghai Composite floated along not doing much before ramping up sharply at the close, finishing over 1% higher at 3408 points while in Hong Kong the Hang Seng Index had a minor lift of 0.3% to close at 26894 points. The daily chart shows price still pushing ever so slightly higher as it slowly wins the battle against resistance at the 26800 point level:

Japanese stock markets continued to surge higher with the Nikkei 225 up 0.4% to 26644 points. Futures are suggesting another very strong open this morning on the weekend gap, despite an obviously very well overextended market that doesn’t want to take a breather anytime soon. Watch daily momentum readings and price action around the high moving average for signs of an inversion, however unlikely:

The ASX200 was the odd one out again, falling over 0.5% to close out the week only one point above the 6600 point level. SPI futures are suggesting a better start to the week this morning with daily price action looking a bit more sustainable with the mid week pause/deceleration pattern. Watch price to continue to have firm support at the low moving average:

European markets were relatively quiet with minor moves higher across the continent although the German DAX gained 0.4% to 13335 points after a very quiet week. This market was stalled at the September highs nearer 13300 points but it poised to breakout here as it makes a new daily and weekly high with no hesistation shown through price action so far. I’m still concerned about the headwind created by the continued rise in Euro but so far, so good:

Wall Street reopened following the viral holiday with the S&P500 bouncing 0.2% to finish at 3638 points, remaining firm above the 3600 point level. The daily chart is showing momentum that is not yet confirmed due to the broken up sessions as it resists going above the previous weekly highs, but this is looking more and more bullish:

Before we get to currencies, a quick look at the Bitcoin bubble which was popped on Thursday and managed to just finish above the $17000 level on Friday night, having almost retraced completely down to daily trailing ATR support.The $16000 handle is the next level to come under threat although daily momentum is not yet in the negative zone with a strong potential swing trade brewing here:

Currency markets are no longer pausing in their firming against USD with Euro bursting out on Friday night to a new high, almost hitting the 1.20 level and finishing off a steady rise all week. The medium term pattern has now moved to a firmer bullish stance, with price now matching the August highs, but this move is slightly overdone and a retracement is getting more likely back towards the 1.19 handle in the short term:

The USDJPY pair continued into its deflation on Friday night with its pullback almost taking back all of the week’s gains to the 104 handle proper. The weaker USD is beating the risk-on mood across Japanese markets so far but there has to be a reckoning here with a stronger Yen not matching with a way out of control higher Nikkei 225:

The Australian dollar is also riding the USD weakness wave, not just holding above the 73 handle but pushing through and almost hitting 74 cents as it makes a clear new weekly high.  Four hourly ATR support and price action is now suggesting very firm support at the mid 73 level as the uncle point going into this week’s continuation:

Oil prices were in a blowoff stage after pushing aside resistance at the September/October levels and remained slightly pulled back on Friday night with Brent finishing the week just above the $48USD per barrel level. The continues to be a very unsustainable move on technicals alone (let alone the macro settings) and I still think there is a high chance of a violent reversal here soon:

Gold is no longer in a precarious state its now in a dire strait, as Friday night saw a big selloff down below already broken daily and weekly support levels as it broke straight through the $1800USD per ounce level to $1786 or so. The previous large breakout level at $1750 from mid-year is still the next target below, although momentum is way oversold:

 

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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Comments

  1. Chris, I know you are not big fan of Zerohedge but I think this article is genuine. I do know Zerohedge is supporting Trump but just have a read and tell me what your position is on this please.
    Looks fairly legit to me.

    https://www.zerohedge.com/political/smartest-man-room-just-joined-sidney-powells-team

    Markets will move if it turns out that Sydney Powel is mounting a serious challenge in the courts. This will go to the Supreme Court one way or another.

      • Has it occurred to you that a disinformation and censorship war is being waged and that a bloody snopes article is yet another media piece portrayed as an unbiased fact checking exercise?

        Who checks the fact checkers?

        Take ALL information with a grain of salt.

    • First of all, no its not serious, its all grift from the Trump campaign and the last hanger’s on as they try to build a new Trump Party going into 2022/2024. Aka optics for the great unwashed.
      Secondly, I don’t think markets will have much of a reaction to any challenges, since they’ve all been farcical so far.
      I’d be more concerned about late January when Biden is inaugurated, with the Georgian special elections also far greater catalysts.
      The fact that ZH is supporting Trump tells you all anyone needs to know about the quality of that site.

    • Trump has sacked more people from the Pentagon and seems to be trying to strangle the FED…..maybe he wants to get shot so history remembers him.

    • Doesn’t matter how smart the guy is, as he has no access to the voting machines it’ll be impossible to prove anything.

      That being said, the guy may not be that smart when he says the vote in Michigan is manipulated, because Michigan use optical scanning of a paper ballot. In fact, all the states that Biden won narrowly have a paper trail.

      https://www.ncsl.org/research/elections-and-campaigns/voting-system-paper-trail-requirements.aspx

      Can the machine alter the ballot as well when it does the scanning?

  2. Stewie GriffinMEMBER

    I don’t mean to be picky, but there have been two more days of trading with BTC since the one included above. It has actually rallied all the way back to the 18000 mark, which you will note just touches the underside of one of the previous support trends in the recent rally, now resistance. A swing down to at least 16000 would normally be a fair assessment.

    Generally I see such patterns as good 2nd chance points to jump off when I’ve been greedy and held on too long missing the top of the previous rally. However with BTC in rally mode anything can happen, and I’ve often found that the best thing to do with BTC in rally mode is simply to shut your eyes and hold on tight, as it takes you far higher and through far greater volatility than anyone would expect.

    The Weekly Chart at the moment looks like a spinning top, which although I generally take as being bearish, it mainly reflects indecision, with buyers and sellers being evenly weighted. On the plus side the wicks are longer to the downside, suggesting that there is still a lot of support. On the downside, that support was given over the weekend when trading is meant to be thinner, and also while it resembles a spinning top it is still throwing the first red weekly bar in eight weeks… still it is only 10am now, another 1hr to go before 11am and it ticking over to a new weekly chart. If it manages a further rally beyond 18450, a mere $250 away which BTC can manage without blinking, then the spinning top will likely finish green and imho could be on again.

    Regardless, up or down, the one thing I am sure of it that a week from now it will be a fair distance away from 18000.