Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Another swing back to risk sentiment overnight with stocks on both sides of the Atlantic surging while the USD fell back against the majors as gold also lifted back above $1800USD per ounce. This was mainly on the back of some possible good news around US fiscal stimulus and some progress in the EU/Brexit divorce talks.

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite rallied again before its long lunchbreak, up over 1.6% to be well above 3400 points, closing at 3477. The Hang Seng Index took back its previous losses to gain 0.8% to 26567 points. The daily chart showed price breaking down from the rising bearish wedge pattern as it falsely broke through resistance at the 26800 point level but yesterday’s bounceback has firmed support again at the 2600 point level:

Japanese stock markets also bounced back quickly, with the Nikkei 225 lifting over 1.2% to 26787 points. Futures are suggesting more upside at the open this morning in line with risk appetites on Wall Street. The daily chart is in a stonking rally, with momentum still not abating and ready to get to more new nominal highs as the long overdue retracement becomes a fleeting memory:

The ASX200 absorbed the RBA meeting no-news with a 1% gain to almost take back the previous session loss, but still shy of the 6600 point level. This will be broken today as SPI futures suggest a lot more upside on the open this morning with and echoing of other risk markets here, ready to get back above the 6700 point level on exuberance:

European markets went back into buying mode with 1% plus gains across the continent although the German DAX again was the odd one out, only lifting 0.7% to close at 13382 points. This market is still somewhat stalled at the September highs as traders await for someone else to push for a breakout above 13300 points – almost there!

Wall Street was solid green across the board with the NASDAQ up 1.3% while the S&P500 lifted more than 1% to finish at a new record high at 3662 points, building again well above the key psychological 3600 point level. The four hourly chart is showing momentum now nicely overbought, but only just with price action still not quite all above the high moving average as trailing ATR support remains a long distance away:

Before we get to currencies, another quick look at the Bitcoin bubble which has suffered (sic) yet another $2000 round trip in the last 24 hours, as it tries to make a new nominal high.  This looks like a shake out with momentum flat lining, but with intrasession volatility so high, the markers for a swing trade are way too open to enact anything as yet:

Currency markets have inverted sharply yet again, this time knocking King Dollar right off his throne, well at least in Europe where the union currency has ascending new heights with a near three year high. Euro took on a very small smack down but immediately breached the 1.20 handle and is making its way up to the 1.21 level in the wake of more US fiscal stimulus potentially in the pipeline. This breakout is way overdone of course and should come under pressure again in the short term:

The USDJPY pair however it stuck between a tight band of support and resistance at just above the 104 handle, unable to benefit from the vacillations in USD. The next upside target from the start of week bounce was last week’s high at the 104.70 level in the short term, but this run might be over before it started:

Similarly, the Australian dollar has not been able to make any new highs on the USD weakness wave, still licking its wounds post RBA meeting just below the 74 handle.  Four hourly ATR support remains firm at the 73.40 level but resistance is building here with a potential, if low probability drop below to weekly support at the 72.60 level:

Oil prices are slowly deflating from their blowoff stage after recently pushing aside resistance at the September/October levels with Brent again receding to finishing just above the $47USD per barrel level. If price action can continue this mild deflation it has the potential to stabilise here instead of flopping over into a shorting opportunity with the chance of a violent reversal still possible:

Gold is trying to fight back and fiscal profligacy is its only hope so far with a bounceback above the $1800USD per ounce level overnight that takes it back to last week’s second breakdown point. The previous large breakout level at $1750 from mid-year is still the next target below if this swing move higher can’t be sustained:

 

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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