Macro Morning

See the latest Australian dollar analysis here:

RBA won’t get angry at Australian dollar 80 cents, it will get even

While the ECB delivered more easing in its latest meeting overnight, equities were not that impressed with Wall Street slipping again and stocks mixed throughout the continent, not helped by a “no-deal” Brexit now firming. The latest CPI print in the US firmed while stimulus talks continued, putting pressure on bond yields and the USD. Oil prices moved higher again while gold and Bitcoin were largely unchanged following their recent large drops.

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite was starting to build some positive momentum going into the close, but eventually finished with a scratch session at 3373 points while in Hong Kong the Hang Seng Index has again gone the other way, down nearly 0.4% to 264105 points.  The daily chart shows this market ready to breakdown as momentum slows down, but not yet threatening daily support at the 26000 point level, which will be the uncle point going forward:

Japanese stock markets were also on track to put in scratch sessions but slipped at the close with the Nikkei 225 finishing 0.3% lower at 26756 points. Futures are suggesting a tepid open this morning but the daily chart is potentially rolling over here if resistance at 27000 points still proves too tough to beat:

The ASX200 was the worst in the region, down 0.6% to take back all of the previous session’s gain to finish back below the 6700 point level.  SPI futures are also indicating a minor pullback to remain below the 6700 point level even though the Christmas rally really wants to continue, I’d watch that low moving average very closely for signs of a confidence breakdown:

European markets were all over the place post-ECB meeting and Brexit ructions with the FTSE the only one to really gain while peripheral markets fell back and the German DAX middle of the road, falling 0.3% to close at 13295 points. Yet another market remaining in stall mode, as support remains firm at the low moving average in the short term, I still remain cautious about the inability to push above 13300 points:

While tech stocks came back a little, overall confidence is fading on Wall Street as the punchbowl remains empty with the S&P500 closing 0.2% lower at 3662 points. As I said previously, the key area to watch is support at the 3660 level which must hold as the four hourly chart shows very clearly:

Currency markets are seeing volatility lift again with Pound Sterling falling back sharply after its midweek surge while Euro lifted overnight in the wake of the ECB meeting, getting back above the 1.21 handle after deflating all week. This move has not yet arrested the possibility of a major reversion:

The USDJPY pair had attempted to break above considerable resistance at the 104.40 area but was snapped back sharply overnight, heading straight back to the 104 handle late in the session. Momentum is heading back to the negative on the four hourly chart with the low moving average broken and ready to go further below:

The Australian dollar followed its previous big move higher with yet another surge overnight on the weaker USD and stronger commodity prices (aka iron ore!), popping to yet another new monthly high and well above the 75 cent level. This is a big blowoff trade with momentum extremely overbought but there’s nothing stopping the Pacific Peso!

Oil prices are still trying to find strength with Brent crude lifting strongly through the $50USD per barrel level last night on good demand figures. No top here yet! Momentum remains nicely overbought but not overly so and I’m sure OPEC+ is happy with this trend higher which has respected the low moving average since the breakout in early November – thats the signal for profit taking and reversals:

Gold however is still struggling to fightback, unable to get back above the pre-breakdown lows at $1860USD per ounce, still hovering at the weekly low at the $1840 level instead. Momentum remains negative and short term price action is not encouraging, with the potential to fall back below the $1825USD per ounce level soon:


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. UQ vaccine debacle…what else would they have expected if they engaged a CCP diploma mill that masquerades as a high quality research institute.

  2. Gold has to turn around sooner or later. All this stimulus will have to devalue all fiats. US, EU, Japan, S Korea and China are all going to go electric vehicles and they need to print to build relevant infrastructure. And Australia will be dragged along screaming – but we want COAAAALLL.

    • Narapoia451MEMBER

      Hey Niko – I know you get asked about this a lot. With a loose thesis that monetary debasement will increase gold value in the medium and long term, electric + green new deal investment will increase copper, rare earth and lithium prices, what miners / etfs / other vehicles would you look at to take advantage of this as a thesis?

      From your other posts I know you hold a few stocks that are gold + copper – but you clearly have a lot of domain expertise when it comes to this area so would be awesome to hear your thoughts (I have asked you about gold in the past and really appreciated the feedback)

      • I only trade stocks – right now I have exposure to NCM, ALK, SFR, PXX, CEL, AMI.
        I find lithium too risky as battery designs will change in near future. Too many are experimenting with other metals etc..
        All EVs will need copper and super magnets no matter what batteries will be used.

  3. Well they might be tired, but DXY fall ain’t over. EUR & AUD Rise ain’t over. Other undollars are less clear but “should” benefit off DXY, be that topping of ranges or extra. The occasional bonanza’s like yesterdays daily GBP/AUD candle would’ve been nice, but not my current focus & trying to rise above the hourlies to get more time to myself……