Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Risk markets remain extremely mixed in sentiment going into the end of the year with further economic restrictions in Europe and COVID vaccine distribution pulling and pushing confidence, not to mention the volatility from the US presidential election outcome. European stocks advanced slightly despite further breakdown in Brexit talks and more lockdowns while Wall Street wavered and sold off at the close as the electoral college vote came to pass. Commodities were mixed with oil gaining slightly, iron ore dropping while Bitcoin maintained itself above $19000 while gold continued to deflate.

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite accelerated into the close, finishing 0.6% higher to 3369 points while in Hong Kong the Hang Seng Index went the other way, down nearly 0.5% to 26389 points.  The daily chart is still tracking sideways as momentum flat lines, with the lack of new daily highs still weighing on sentiment. I’m continuing to watch ATR daily support at the 26000 point level, which will be the uncle point going forward:

Japanese stock markets re-engaged to the upside with the Nikkei 225 closing up 0.3% to 26732 points. Futures are suggesting a flat start again today 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 had a solid start to the week, up 0.3% to 6660 points but still unable to make a move above the 6700 point level stick.  SPI futures have pulled back from this start however, even though traders really want to get the Christmas rally back on track above the 6700 point level, but watch daily momentum which is inverting and broadcasting potential falls ahead:

European markets swung the other way again despite the lift in economic restrictions and potential lockdowns with the German DAX up 0.8% to close at 13223 points, trying to recover its previous losses. 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:

Only the NASDAQ advanced overnight on Wall Street with the S&P500 lifting at first but selling off at the close to finish 0.4% lower to 3473 point with the four hourly chart showing a spike and big rollover that almost matched last week’s intrasession low. As I said previously, the key area to watch is support at the 3660 level which must hold:

Currency markets are seeing volatility spike again with Euro lifting on the industrial production print but through a big range, able to match the previous weekly high, but no higher, deflating into the 1.2140 zone this morning. Momentum is positive and slightly overbought on the four hourly chart, where I’m watching for the low moving average and Friday’s session lows at the 1.2120 to hold in the short term:

A big round trip for the USDJPY pair overnight, getting the week started in a volatile fashion, by breaking below weekly support at the 103.60 level (solid black horizontal line below) and then surging back to the 104 handle proper this morning. Momentum remains negative and this price action spells more downside volatility ahead:

The Australian dollar was able to make another session high, hitting the 75.80 level briefly, but deflated 50 pips later on as the risk-on mood soured. As I’ve been saying for awhile, this remains 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 lifting slightly to finish just above 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 – will we see a proper new session high above $51 next:

Gold is still struggling to fightback, unable to move back above the pre-breakdown lows at $1860USD per ounce and finishing with a new session low below the $1830 level. Daily and four hourly momentum remains negative with short term price action not encouraging at all, as the potential to fall back below the $1825USD per ounce level is rising:

 

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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