Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Friday night saw the release of the latest PMI surveys on both sides of the Atlantic, with the US print unexpectedly higher but that economic recovery didn’t help risk markets higher with Wall Street finishing the trading week on a sour note. The USD came back slightly in defence while US Treasury yields lowered slightly, the 10 year still above the 1% level while commodities fell back the sharpest in unison.

Bitcoin had a solid session to finish above the $33K level after crashing to a new monthly low intraweek as this bubble tries to find new life and new fools to join in. The daily chart shows how price fell below the $32K level that had been previous weekly support and indeed touched below the $30K handle before the usual 10% plus volatility saw it regain. It is still well under pressure here, being in the next stage of a classical technical bubble blowout with a rejoinder back up to the $37K to $40K highs likely before another downleg:

Looking at share markets in Asia from Friday where the Shanghai Composite pulled back to the 3600 point level, down nearly 0.4% while in Hong Kong the Hang Seng Index reversed course entirely, down over 1.6% as it proved again unable to get above the 30000 point level to finish at 29444 points.  The daily chart had shown a clearly unsustainable lift higher with a blowout trade moving too far away from the trendline/moving average band, so I expect more heat to come out of this market with a further pullback:

Japanese markets slipped in the wake of a higher Yen with the Nikkei 225 finishing some 0.4% lower at 28631 points. Currency strength is still a slight headwind for Japanese stocks as Yen firms against USD, with the 30000 point target level slowly becoming resistance as the steps higher slow down on the daily chart:

The ASX200 was able to finish dead on the 6800 point level, having lost a handful of points and making for a good week. The daily chart shows a slight breakout above the clear bullish rectangle pattern but only just as momentum requires another push to get things moving along back to the magical 7000 point level:

European markets had mild pullbacks across the continent, with the German DAX finishing 0.2% lower at 13873 points. Resistance at 14000 points is still too strong with the current stall phase continuing as momentum remains positive, but not overbought. I still contend there is potential for a swing play back down to ATR support at the 13200 point level but watch short term support at the low moving average at the 13600 point level to hold first:

Wall Street again diverged in risk, with the NASDAQ pushing slightly higher again, while the Dow retreated 0.6% and the S&P500 finished 0.3% lower at 3841 points. The daily chart remains well above its post election trend, with a small move away from the trendline that should translate into further pullback this week, as we go into the next FOMC meeting and the next stage in fiscal response (aka tax increases!) from the fast moving Biden administration:

Currency markets had a mild night to finish the trading week with USD weakness reversing slightly as covid concerns continued to weigh. Euro’s breakout above trailing ATR resistance at the 1.2150 level stalled on Friday night as price got slightly overbought, taking the union currency out of its two week low but unable to get back to the false mid January high at the 1.22 handle proper. Watch for any stalled attempt at breaking higher as a catalyst for more short positions to gather pace:

The USDJPY pair came back a little higher on Friday night, with the four hourly chart showing the mid week decline recovering back towards but not above the 104 handle. The long held downtrend from the 2020 highs (upper black sloping downtrend line) is still not under threat but watch for overhead ATR resistance to come under threat in the short term:

The Australian dollar slumped on Friday, continuing its deflation from the mid week rally and rejecting a breakout above the dominant trendline from the start of year high. As I suggested last week, this rollover was to be expected and could fall back to the weekly lows at the mid 76 level but watch for short term support at the 77 handle to firm here:

Oil prices fell back 1% or more on Friday as the USD lifted slightly higher with Brent coming back to the $55USD per barrel level proper again. Price remains just above the pre COVID February 2020 level (upper horizontal black line) with strong medium term support but I still think this requires a breach of the previous daily highs very soon or could suffer a quick rollover:

Gold prices are very messy here on the daily chart with a mid week breakout still not sticking above short term resistance at $1870, despite making a two week high. There is potential for another breakout above $1875 or so to get back to the previous monthly highs at $1950 but it all depends on short term support at $1830 holding:

 

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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