Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

Last night saw a wobble in Wall Street despite the IMF upgrading global economic growth projections and a fall in the USD. European stocks lifted strongly to the upside, but US stocks couldn’t follow in kind despite some vaccine good news.  Treasury yields lowered slightly, the 10 year remaining above the 1% level while commodities slipped inline with the overall risk appetite.

Bitcoin continues to struggle with finding its way with yet another volatile day, heading back towards the $31K level before settling at just over $32K this morning. It really needs to get back abov the $34K level soon to abate the deepening downtrend:

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite remained well below the 3600 point level, closing 1.5% lower to 3569 points while in Hong Kong the Hang Seng Index moved sharply lower as well, falling over 2% to finish at 29391 points.  The clearly unsustainable lift higher on the daily chart is now in stall mode and needs further pullback before re-engaging. Watch for a drop below the 29000 point proper:

Japanese markets slipped as well as the higher Yen continued to weigh, with the Nikkei 225 finishing nearly 1% lower at 28546 points. Currency strength is still a headwind for Japanese stocks as Yen firms against USD, with the 30000 point target level still well above resistance building at 29000 points as seen quite clearly on the daily chart:

The ASX200 was closed for Australian Day holiday with SPI futures indicating a modest re-open this morning. 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 solid sessions to begin with but have pulled back in post close futures, with the German DAX nominally finishing 1.6% higher at 13870 points. Resistance at 14000 points is still too strong even though 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 was again all over the place but couldn’t make anything stick, with scratch sessions across the three main bourses, the S&P500 finishing 5 points or 0.2% lower to 3849 points. The four hourly chart shows price wanting to push through the 3850 point level but unable to find that momentum. Maybe the punchbowl needs another hit from the FOMC meeting?

Currency markets wavered around USD weakness and strength as Euro did a round trip towards the 1.21 handle overnight. The four hourly chart shows a very small blip higher above the 1.2150 level but not able to get back above Friday nights higher and thus 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 continues to deflate on risk taking and Yen buying (but I repeat myself) with a dip into the mid 103’s overnight. The four hourly chart shows price still well below the long held downtrend from the 2020 highs (upper black sloping downtrend line)and overhead ATR resistance at just below the 104 handle still not a concern in the short term:

The Australian dollar came back strongly after dipping into the London session, rallying over night for a new intraweek high, but still looking depressed here in the medium term. The Pacific Peso is still following the dominant trendline from the start of year high but watch today’s CPI print which could provide a big catalyst – given there’s been no data for several months now:

Oil prices fell back 1% or less overnight as trade wobbled around the fortunes of the USD and consumer confidence prints with Brent remaining above the $55USD per barrel level again. Price remains stalled 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 still very messy here on the daily chart with the 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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