Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Stimulus and vaccine hopes are overriding concerns of more market regulation from a Democrat-controlled Congress, as Wall Street surged to big new record highs overnight, overshadowing the political turmoil seen in the Capitol yesterday. Oil prices continued to lift while Bitcoin remains unstoppable, lifting to a new record high after briefly breaching the $40,000 level, settling just below the $39000 mark this morning as froth turns into pure air – is this single four hourly bearish engulfing candle a sign of a top?

Looking at share markets in Asia from yesterday where the Shanghai Composite was falling going into the close, but managed a big reversal to finish up 0.7% to 3576 points, while in Hong Kong the Hang Seng Index was unable to follow, eventually closing 0.5% lower to 27548 points. The daily chart however is still showing this breakout has more legs, although momentum is rolling over from its way overbought levels, watch price to come back below the high moving average and settle above key support/former resistance at the 26800 point level:

Japanese stock markets are finally finding some life with a big surge on both the TOPIX and the Nikkei 225, the latter up 1.6% to finish at 27450 points all caused by a much lower Yen. Futures are suggesting more upside due to the big selloff in Yen overnight so we could see a new monthly high again here:

The ASX200 finished above the 6700 point barrier by rising nearly 1.6% to 6712 points, with SPI futures supportive of more upside today and a possible move to the 6800 point level. The daily chart is forming a nice rectangle pattern with clear uncle and breakout points to trade around as momentum remains positive and signals a breakout:

European markets were a bit more modest overnight with some mild gains across the continent and in locked-down UK, the FTSE lifting only 0.2% while the German DAX was 0.5% higher at 13968 points. The solid push above the previous highs as it reaches the 14000 point level is getting a little overbought but nothing is holding back equities supported everywhere by liquidity, despite the continued pandemic:

Wall Street had a field day, lifting to new record highs as the Biden election was certified with tech stocks up nearly 3% while the S&P500 closed 1.5% higher to breach the 3800 point barrier. The four hourly chart shows a clear breakout above the previous high as the S&P500 wants to accelerate further:

Currency markets are starting to focus on tonight’s NFP release and absorbed the latest initial jobless claims numbers with a slightly stronger USD pushing the majors down as a result. Euro was pushed decisively below the 1.23 handle, thwarting any attempt at a breakout, taking it back to the start of week point at the mid 1.22s. The area to watch tonight is trailing ATR support on the four hourly chart at 1.2230 or so:

The USDJPY pair not only got out of its rut as Yen buying abated in the afternoon session, it soared during the NYLON hours as USD strength increased, sending the pair straight through the 103 handle and towards the 104 level in a big move. This takes it above the late December false breakout high and wipes out my contention of a lower low towards the 100 level. While considerably overbought here, watch for more upside on the NFP print tonight if numbers are bullish:

The Australian dollar was unable to hold onto its recent overbought gains with the USD pushing it back from staying above the 78 handle and towards the low 77s where it found short term support. This puts it in the middle of the trend channel and possibly holding on here as commodity prices remain well bid (read:iron ore) and the risk on mood on Wall Street continue to give the Pacific Peso a great boost with the move to the 80 cent level still on the cards in the medium term:

Oil prices continued to lift post the Saudi cut and OPEC+ meeting, with Brent crude remaining nicely bid above the $54USD per barrel level, now above the pre COVID February 2020 level (upper horizontal black line). Medium term support continues to firm here as this breakout continues unimpeded:

Gold remained depressed against USD overnight, falling back to the $1914USD per ounce level as all eyes remained on frothy Bitcoin. This sharp retracement could spill over if speculative longs give up in the short term, so watch for a break below the $1900 level next:

 

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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Comments

  1. bought more BBUS – against the trend as everyone says the only way is up due to all the stimulus. I am more concerned with the politics there though as Pelosi and hell bent to impeach.

  2. Everything feels really frothy now. 2021 is going to be the top for everything.
    There is going to be a major bull run on everything over the next couple of months then that’s it.
    Nasdaq and S&P is at the blowoff top phase. Its got 5 months I think and 60-70% gains.
    Bitcoin is at the blowoff top phase. Its got 1-2 months with 90% gains.
    Gold and Silver have broken out. This will be the last chance to squeeze out a bit more over next month.
    Then that’s it. It’s over for another 5-10 years.

  3. Tesla up 24% in one week! 8% yesterday!
    This is dot com bubble stuff right here for those who didn’t get to experience it the last time.
    Still big gains to be made in such a short time

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