Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

The US long weekend had a deleterious effect on trading volume and hence volatility overnight with most risk markets remaining in stalled mode as they await there queues from Wall Street. European bourses had slight rises while currency markets were equally sanguine. Bitcoin started the week with lower volatility than usual, hovering around local resistance at the key $36000 level. I still contend a consolidation trade this week with a slight bearish bias,  with my eye on ATR support at $32000 as the uncle point:

Looking at share markets in Asia from yesterday where the Shanghai Composite started the week in rebound, up 0.8% to 3595 points while in Hong Kong the Hang Seng Index did even better, closing 1% higher to 28862 points. The daily chart of the latter is continuing to show a lovely breakout but momentum is slowly rolling over from the heavily overbought stage, but price is still well above the high moving average which is usually the stop loss point in these big moves to look to take profit if breached soon:

Japanese markets remained in retreat mode though, extending their Friday losses with the Nikkei 225 closing 0.9% lower to 28242 points. As I said last week, currency volatility may not be playing that big a role here and while the obvious 30000 point target level remains obvious, watch the low moving average at around 28000 points proper to come under pressure this week:

The ASX200 was also in sell mode, closing some 0.7% lower to 6663 points, flopping back below the 6700 point level despite a fall in the Australian dollar. SPI futures are indicating a mild lift on the open but due to a lack of a lead from Wall Street, it could go anywhere today. The daily chart still exhibits a clear bullish rectangle pattern but its stalling as momentum flat-lines:

European markets were relatively smooth across the continent although the FTSE kept dropping, meanwhile the German DAX was the best, finishing 0.4% higher at 13848 points. Resistance at 14000 points remains too strong with the current stall phase continuing as momentum reverts to just positive, not overbought. The potential for a swing play back down to ATR support at the 13200 point level is still there, but I’m waiting (like everyone else) for the reopening of Wall Street:

Wall Street was closed for the MLK holiday with no news equating to good news for futures, with mild upticks on the S&P500 likely on the reopen tonight. The four hourly chart remains on its post election trend, but only just as the current futures swing play needs to eventuate into real returns this week. I still contend that the volatility of the upcoming inauguration/impeachment may shake things to the downside:

Currency markets were dead flat overnight due to the lack of volume from American banks with remaining depressed below the 1.21 handle at a two week low, still threatening former weekly support/former resistance at the 1.1950 level. The four hourly chart is showing a whiff of a potential upswing, but its barely there:

The USDJPY pair was in the same boat, not moving or shaking anything up, slowly deflating on the four hourly chart at just above the mid 103’s, still unable to beat the 104 handle, which I’ve considered a key resistance level for sometime now. The long held downtrend from the 2020 highs (upper black sloping downtrend line) is still not under threat:

The Australian dollar had a minor selloff after the weekend open yesterday that kept below the 77 handle overnight, having been quite unable to breach overhead resistance at the 78 level for several weeks now. The four hourly chart is very messy, showing an oscillation around the 77.50 point of control that has the potential to swing back up there on the resumption of proper risk taking later tonight:

Oil prices pulled back only slightly due to the lack of volume with Brent futures still ticking along, although still below the $55USD per barrel level. While its still above the pre COVID February 2020 level (upper horizontal black line) with strong medium term support I have been warning of momentum showing signs of a rollover all last week – that line must hold:

Gold remains the biggest loser with a small flash crash on the open below the $1800 level really not changing the overall deflationary downtrend, remaining below last weeks session lows at the  $1837USD per ounce level. As I said last week, basic price action just did not look good for the shiny metal and I would suggest we are on track to get back below the $1800 level very shortly:


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. My bet is for yields to jump high enough to push price of gold down – short term. Then we go into reverse.