Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Risk sentiment was slightly mixed but still somewhat positive overnight with some minor gains across the Atlantic stock markets as traders remain on edge waiting for news on Brexit and Congress stimulus talks . Commodities did well again, with oil, copper and iron ore advancing while Bitcoin transcended reality and popped over $1000 overnight to a new historic high, beating the 2017 high, next step the moon:

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite was up slightly before putting in a scratch session to close at 3366 points while in Hong Kong the Hang Seng Index tried to take back its previous losses, up nearly 0.8% at the 26422 point level. The daily chart is still tracking sideways although momentum remains slightly positive, 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 had a quiet day due to some poor internal figures plus the stronger Yen, with the Nikkei 225 closing only 0.2% higher at 26735 points. Futures are suggesting a flat start today with the daily chart still poised here as resistance at 27000 points still proves too tough to beat, so watch the low moving average at the 26400 point area as a potential launching point:

The ASX200 is the best in the region, up a solid 0.8% to 6685 points, still just shy of the 6700 point level which maybe tossed aside soon if confidence gets another RBA QE kick.  SPI futures however are upbeat still with traders ready to advance the Christmas rally and get it back on track above the 6700 point level, but we need a solid close above the high moving average before getting excited:

European markets were broadly positive mixed with the FTSE coming back strongly while the German DAX stood out again, gaining the most to close 1.5% higher at 13565 point. This is a definitive breakout of stall mode as I suggested was on the cards yesterday, putting in a new weekly and monthly high, with a clear uncle point ready to go at the 13000 point level proper:

Wall Street wasn’t as clear with the Dow dragging while only the NASDAQ put in a proper advance, up 0.5% while the S&P500 finished only 0.2% higher but pipped above the 3700 points level, surpassing its earlier week start out the gates. The four hourly chart shows price ready to advance to the last week’s high after beating 3700 points but momentum is not yet overbought enough to convince its going higher just yet:

Currency markets are seeing volatility move higher again with Pound Sterling again spiking overnight, with Euro putting in a roundtrip to finish just below the 1.22 handle in a strong anti-USD move. Momentum is moving more into the overbought stage on the four hourly chart, but the volatility around the moving average band is telling, so keeping uncle points loose at the ATR trailing stop makes sense here:

And almost a round trip for the USDJPY pair overnight, as it spiked back to the 104 handle before getting slammed down again, almost making a new session low but still well below weekly support at the 103.60 level (solid black horizontal line below). This is looking like a shake out with price action continuously spelling more downside volatility, so watch for a new session low below the 103.20 level to match the November low:

The Australian dollar was able to make a move higher, but not create a new session high for the week, rising above the mid 75 level again. This is turning into a pre-breakout position with momentum staging in the overbought zone ready to explode upwards, but still watch for a low probability but still potential reversion below the low moving average:

Oil prices continue to find strength with Brent crude lifting again to be above the $51USD per barrel level for the first time since the start of the year. Momentum remains nicely overbought but not overly so with the trend still moving above the low moving average since the breakout in early November – how far can it go?

Gold is finding more momentum to the upside here and almost got back to its early December highs with a move back above the $1860USD per ounce level. Four hourly momentum remains in positive mode but requires another jolt to the upside soon, so watch for another rollover and a pullback below the $1825USD per ounce level:

 

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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