Macro Morning

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The US unemployment print was bad, which is good for stocks, bad for USD so we saw a continuation of the rally in equities while a big reversal in USD fortunes jolted the currency markets. US Treasury yields made another new one month high while commodities rose across the board, except for iron ore and gold remains depressed with a tiny rebound in silver.

Bitcoin tried and failed again to get past its previous false breakout high above the $38K level, but support is building at the $36K level for another crack this week however:

Looking at share markets in Asia from Friday’s session where the Shanghai Composite was up nearly 0.5% going into the close, before it faltered and slipped around 0.2% to close just below the 3500 point barrier. Meanwhile in Hong Kong the Hang Seng Index managed to hold on and gained 0.6% to close at 29288 points. This rebound is firming somewhat here after a temporary stall with price not yet able to get above the high moving average on the daily chart, so this still needs to make a solid new daily high to get going:

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Japanese markets lead the way, with the Nikkei 225 accelerating 1.5% higher to close the week out at 28779 points. Daily ATR support at the 27500 point level remains very firm, and price is ready to tackle the previous nominal high just below 29000 points with futures are indicating a solid start to the week:

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The ASX200 also had a great session to finish the week, up over 1.1% to close at 6841 points. SPI futures are up only a handful of points which indicates that resistance is getting firmer at the 6800 point level so we could see a rejection here and a trading range to start the week:

Mixed fortunes across Europe and the UK with the FTSE slipping further in the wake of a stronger Pound Sterling while the German DAX pulled back on the higher Euro, losing a handful of points to finish the week just above the 14000 point barrier. Price continues to bounce off daily ATR support level and has matched but not exceeded the former highs in early January which will be natural resistance going forward:

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Wall Street had fairly modest results to finish the week with all three bourses lifting in similar magnitude, the S&P500 finishing 0.4% higher at 3889 points. The daily chart shows the clearance of the former January highs which suggests more upside as daily momentum is also nicely overbought and ready to go further::

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Currency markets had the biggest swing in volatility on the back of the NFP print with the strong USD position wiped out as Euro bounced sharply off of the 1.20 handle in a near 100 pip move back to the mid 1.20’s and almost sticking into positive momentum territory. Wait and see mode here as we start the week to see if further USD weak stimulus is on the cards:

The USDJPY breakout was stifled but only just as it pulled back from the mid 105’s to still finish at a respectable and strong level following the reversal in fortune against other majors for USD. The four hourly chart shows momentum is still at high overbought levels as price pulls back to the lower edge of the moving average band so the expected slowdown is here and will likely test trailing ATR support soon:

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The Australian dollar had a big surge on the back of the weaker USD and took back all of its weekly losses and then some, almost getting back to the 77 handle in the process. The four hourly chart was showing weakness building on weakness so this rapid reversal is not that unusual but can it be sustained as overhead ATR resistance is taken out – the next target to watch is the 77 handle proper:

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Oil prices continued their breakout regardless with Brent moving higher again, almost breaking through the $60USD per barrel level, making another new daily high and well above the pre-COVID level trading range. I still contend there is a potential upside target here as high as $70 at the 2019 highs:

Gold’s large breakdown was thwarted somewhat by the USD reversal but only just as it headed back above the $1800USD per ounce level in what could be only a short term respite. Momentum remains hugely oversold and ripe for more downside with the November lows still the target below:

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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

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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)

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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!