Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Friday night saw a continuation of positive risk sentiment across the risk complex with Wall Street lifting higher as it goes into a long weekend holiday.  The USD was effectively unchanged with some intrasession volatility across the majors evening out while Treasury yields rose to a near 12 month high. Commodities saw solid returns again as oil prices nearly gained 3% while gold remains depressed.

Bitcoin finished its interesting week with a “stall” above the $48K level as it tried to hit that magical $50K number. It may do so as we start this trading week with weekend trading indicating a gap above or near the $49K this morning as this hugely overstretched “market” goes into overdrive:

Looking at share markets in Asia from Friday’s session where Chinese markets were closed for the New Year holiday. The daily chart of the Hang Seng Index shows price ready to burst through the 30000 point level to exceed the mid January highs as this rebound gains more momentum after a temporary stall with price well above the high moving average on the daily chart:

Japanese markets reopened from their own holiday with the Nikkei 225 sliding back 0.1% to 29520 points. However, futures are bullish with a solid start expected this week as daily ATR support continues to firm higher as medium term support builds at the 28000 point level. Resistance at the 30000 point level needs to be overcome first before getting excited:

The ASX200 moved out of its trading range and slumped over 0.7% to finish out the week just above the 6800 point level. SPI futures are up nearly 40 points or 0.5% so hopefully it can move out of its trading range this week and catch up to other equity markets:

European markets were generally positive with peripheral markets and the FTSE moving higher while the German DAX put in a scratch session, finishing the week above the 14000 point level at 14049 points. Price is trying to stabilise back above that level as it still has not exceeded the former highs in early January which is firming as strong natural resistance and could provide a bearish double top setup:

Wall Street was quite ebuliient going into the long weekend with the NASDAQ and S&P500 both finishing 0.5% higher, the latter pushing above the 3900 point level to finish at 3934 points. The four hourly chart shows price breaking out definitively after stalling late last week just above the 3900 point level, so watch/use ATR support at 3900 points as the uncle point when trading re-commences:

Currency markets are largely unchanged with intrasession volatility not spoiling the overall picture. Euro was unable to advance again on Friday night with a drop down to trailing ATR support that was refilled to close out the week anchored at the 1.21 handle. Its clear that resistance at the 1.2150 level is firmer than expected and lines up with previous weekly resistance so that’s the area to watch going forward:

The USDJPY pair was finally able to move above the 104.50 level that it had been fixed at almost all week with a solid breakout that was unable to make it stick above the 105 handle.  This is an interesting pattern in the short term with momentum still not positive on the four hourly chart, matching up with clear overhead ATR resistance with the possibility of a rollover here at the 104.80 level:

The Australian dollar finished the week on a bullish tone after it recently cleared upside resistance at the 77.50 level but it had a roundtrip in the process before finishing at a new weekly high.  While I still contend that the Pacific Peso is ripe for a small pullback, clearing the previous weekly highs above the 77.40 level and maintaining these levels of momentum do indicate a new trend higher:

Oil prices are putting in another big breakout with Brent pushing up significantly, moving nearly 3% to be well above the $62USD per barrel level on Friday night for a new daily and weekly high. My contention of an upside target at the $70USD per barrel at the 2019 highs remains intact:

Gold continues to fail hard though with a weak finish to the week, closing at the $1823USD per ounce level as it stumbles along. Momentum was slowly picking back up but short term resistance was too hard with the high moving average on the daily chart never closed above since early January – more downside ahead:

 

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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