Macro Morning

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Well, that was a fun night! Wall Street is giving it all to stop the Gamestoppers stepping on their sacred ground, but in the end its resulted in a big turnaround in stock market fortunes, with gains across both sides of the Atlantic. The USD reversed course against most of the majors while Treasury yields lifted again with the 10 year brief segue below the 1% level negated back to 1.07% while commodities were mixed as iron ore slumped nearly 6%

Bitcoin is finding its way again with a surge back to the $33K level after briefly matching last week’s intraweek but the key downtrend line remains unbroken and needs a solid surge above $35K or more to stop this decline:

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Looking at share markets in Asia from yesterday’s session where the Shanghai Composite fell nearly 2% alongside other Asian stocks, closing just above 3500 points, while in Hong Kong the Hang Seng Index has also pushed sharply lower, down 2.5% to close at 28550 points. The daily chart shows this big pullback maybe arrested here as price bounces back above trailing ATR support but it really needs to clear the 29000 point in today’s session to get moving again:

Japanese markets also struggled with the risk off activities, as the Nikkei 225 finished 1.2% lower at 28270 points. Its all about risk correlation, particularly with Wall Street rebounding so we should see a small bounce on the open, but resistance at 29000 points is still quite firm:

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The ASX200 was hit hard, falling 1.9% to close at 6649 points, not helped at all by the lower Australian dollar. SPI futures show deep buying support with some upside predicted today, but this depends on risk appetite not faltering as volatility mounts. The daily chart was showing a slight breakout above the bullish rectangle pattern but still not enough momentum to get there:

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European markets fell sharply at the open again, but rallied as the market manipulated itself back into the green as the short squeeze abated somewhat. The German DAX eventually finished with a positive session, closing 0.3% higher at 13665 points. This swing play back down to ATR support at the 13200 point level has shown some intra-session buying support but needs to firm once again to cancel out volatility concerns, or a full break below 13000 is on the cards soon:

Wall Street had a fun fun night, with some big fortunes made in wild swings across the board, with the NASDAQ eventually finishing 0.5% higher while the S&P500 put on almost 1% to be at 3787 points, although futures are pulling back again this morning. The four hourly chart shows a conflicted situation here that is usual in these pump and dumps with price hovering around the post presidential election trend line, after recently breaking through key daily ATR support as well. As I said yesterday, one day doesn’t make a trend but price really needs to stabilise here fast before confidence breaks:

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Currency markets absorbed the other sort of volatility with the German inflation print higher than expected, which saw Euro come back slightly against USD. The four hourly chart shows a return above the 1.21 handle but there’s a lot of intrasession selling going on with momentum not yet positive here, so we could see a quick rollover:

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The USDJPY breakout has again stalled once it hit the 104 handle, which is really firming as medium term resistance. The four hourly chart shows price unable to finalise at that level so I contend another pullback is on the cards, despite the need for more Yen safe haven buying. Watch the low moving average carefully:

The Australian dollar came back late in the session, with a strong rally off the 76 handle lows before running out of puff just before the 77 cent level. The Pacific Peso went a little oversold here so this is to be expected but I’m watching for another rollover soon:

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Oil prices are slowly deflating again as the slightly weaker USD didn’t help with Brent slipping below the $55USD per barrel level and failing to make a new daily high again. Price remains stalled just above the pre COVID February 2020 level (upper horizontal black line) with strong medium term support firming more than expected here even as momentum wanes:

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Gold prices are extremely messy here on the four hourly chart with a potential breakout thwarted and roundtripped back down to the $1843USD per ounce level. There was 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:

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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

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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!