Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

 

Last night saw the frothiness in risk markets take a small pause as bond yields rose slightly on the lower than expected US weekly jobless claims, as the latest ECB meeting also made no waves. The USD continued its retreat however, while commodities were mixed, Bitcoin crashed to a new monthly low. The cryptotulip was hovering local resistance at the key $36000 level before stepping down slightly yesterday but last night saw it crush through the $32K support level from last week and is now threatening the $30K handle:

Looking at share markets in Asia from yesterday where the Shanghai Composite broke through the 3600 point level again, closing more than 1% higher to 3621 points, while in Hong Kong the Hang Seng Index has finally  stopped blowing higher with a scratch session to close just short of the 30000 point level.  The daily chart shows a huge lift higher that is not sustainable with a blowout trade here moving too far above the trendline and ripe for a pullback:

Japanese markets however were moving higher again with the Nikkei 225 up by 0.8% to close at 28756 points. Unfortunately, currency strength may be proving a headwind here as Yen firms against USD, with futures suggesting a slight pullback on the open. The obvious 30000 point target level still remains obvious:

The ASX200 made another good advance, closing nearly 0.8% higher to 6823 points, despite the Australian dollar lifted sharply. SPI futures are indicating only small upside on the open as the daily chart shows a nice breakout above a clear bullish rectangle pattern as momentum picks up strongly:

European markets had mild pullbacks across the continent due to a higher Euro despite the positive ZEW survey and the bullish mood on Wall Street, with the German DAX finishing 0.1% lower at 13906 points. Resistance at 14000 points is still too strong with the current stall phase continuing as momentum is no longer overbought. The potential for a swing play back down to ATR support at the 13200 point level is still there:

Wall Street was a little diverged in risk, with the NASDAQ pushing higher again, while the Dow retreated ever so slightly and the S&P500 sat still to finish at 3853 points. The four hourly chart remains well above its post election trend, but taking a pause as obvious overhead resistance at the 3860 point level firms as traders worry about the next stage in the fast moving Biden administration:

Currency markets remained fixed on USD weakness as the latest ECB meeting provided only a small catalyst for a move higher in Euro, which broke out above trailing ATR resistance at the 1.2150 level overnight. This comes after making a two week low, and threatening former weekly support/former resistance at the 1.1950 level, with the next upside target clearly the false mid January high at the 1.22 handle proper:

The USDJPY pair was pushed back only slightly however, with the four hourly chart showing a continued mild decline as it remains below the 104 handle. The long held downtrend from the 2020 highs (upper black sloping downtrend line) was never under threat as we see Yen buyers step in once more, but watch the 103.60 for a potential short term swing play higher:

The Australian dollar surged yesterday on the unemployment print was unable to make it stick overnight despite a lower USD overall, coming back up against the dominant trendline from the start of year high. The four hourly chart shows a potential sticking point here that could resolve in a rollover, so watch the low moving average carefully for signs of weakness:

Oil prices steadied a little overnight as a lower USD helped somewhat with Brent lifting back above the $56USD per barrel level. Price remains just above the pre COVID February 2020 level (upper horizontal black line) with strong medium term support but requires a breach of the previous daily highs soon or could suffer a quick rollover:

Gold is wanting to stage a new rally from here, having broken out with a swing trade higher to beat the $1800USD per ounce level previously, last night saw it firm once again at short term resistance at $1870, having made a two week high. There is the potential for another breakout here:

 

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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