Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Markets continue to watch gyrations in US government spending and non-stimulus actions with Wall Street wavering on Friday night as European stocks went into retreat mode as COVID deaths continue to rise across the continent. While iron ore hit a nine year high, oil and copper prices fell back slightly while Bitcoin was again largely unchanged as gold and other major currencies oscillated around their weekly points of control.

Looking at share markets in Asia from Friday’s session where the Shanghai Composite fell sharply going into the close, eventually closing 0.7% lower to 3347 points while in Hong Kong the Hang Seng Index put in a mild finish to the week, up 0.3% to 26505 points. The daily chart is still tracking sideways as momentum moderates with the lack of new daily highs since the 27000 point barrier was breached really weighing on sentiment. Expect a small drop this morning on the open and watch ATR daily support at the 26000 point level, which will be the uncle point going forward:

Japanese stock markets fell back with the Nikkei 225 down 0.4% to 26646 points, also finishing a tepid week of action. Futures are suggesting a minor pullback as this trading week gets underway with the daily chart potentially rolling over here if resistance at 27000 points still proves too tough to beat, so watch the low moving average at the 26400 point area:

The ASX200 was the worst in the region, down 0.6% again to 6642 points and completely unable to make a move above the 6700 point level stick.  SPI futures are mixed as traders really want to bank this Christmas rally and get it back on track above the 6700 point level, but watch daily momentum which is inverting and broadcasting potential falls ahead:

European markets were unified this time and it was all about selling as the post-ECB meeting bliss disappeared and snared back to reality as COVID goes nuts on the continent going into the winter. The German DAX was slightly worse off than most, but still typical of the mood, falling 1.4% to close at 13114 points. This market has been in stall mode for quite sometime and could be finally seeing support come under stress this week, but the daily candle is showing some intermediate support delaying a breakdown moment just yet:

While the headline DOW advanced slightly, tech and industrial stocks both faltered with confidence continuing to fade on Wall Street as the punchbowl remains empty. The S&P500 closed 0.2% lower to 3663 point with the daily chart showing a potential rollover or breather at a minimum going into the final trading weeks of the year. As I said previously, the key area to watch is support at the 3660 level which must hold:

Currency markets are seeing volatility recoil slightly as USD comes a little more into strength with Euro unable to lift past its previous weekly high, instead deflating back to the 1.21 handle and seemingly ignoring all of the ECB action. This move has not yet arrested the possibility of a major reversion, with momentum negative again on the four hourly chart, I’m looking for a break below the 1.2070 level next:

After snapping back to the 104 handle in the previous session, the USDJPY pair finished the week in tepid fashion, ending up where it started.  Momentum is nicely oversold on the four hourly chart with to potential to go further below towards weekly support at the 103.60 level (solid black horizontal line below):

The Australian dollar wasn’t able to make another session high but definitely finished the week on a high note after breaching the 75 cent level as a weaker USD and stronger commodity prices (aka iron ore!), popped it to yet another new monthly high. This is a big blowoff trade with momentum extremely overbought so watch for a low probability but still potential reversion below the low moving average at the 75.10 level or handle itself:

Oil prices continue to find strength with Brent crude pulling back only slightly to finish just below the $50USD per barrel level. Momentum remains nicely overbought but not overly so with the trend still moving above the low moving average since the breakout in early November.

Gold however is still struggling to fightback, unable to make the move back above the pre-breakdown lows at $1860USD per ounce sustainable and finishing at the $1840 level instead with daily momentum remaining negative. 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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