Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Wall Street returned from its most ironoic holiday over night and stumbled, pulling back European stocks and potentially upsetting the groove that started in Asian equities at the start of the trading week.  The USD came back against the majors with the Aussie dropping alongside gold while US Treasury yields rose again with the 10 year up past a one year high. Commodities slipped only slightly though as oil prices remain broadly firm.

Bitcoin really wants to get to that magical $50K level and had a little peak at it over night before moderating to be back below the $49K level this morning. Is that a slight taper/bearish rising wedge pattern on the four hourly chart?

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite remained closed for the Chinese NY holiday while the Hang Seng Index returned and surged over 1.9% higher, closing at 30746 points completely gapping above the previous highs and making a new monthly high in the process. The daily chart shows this big move higher that takes it back to the 2018 highs, but is it sustainable?

Japanese markets are getting way ahead of themselves with the Nikkei 225 finishing more than 2% higher to close at 30693 points for yet another record high. Futures are looking for a 200 point plus pullback on the open today due to the Wall Street stumble and while daily ATR support continues to firm higher, that trendline in recent weeks is obviously not sustainable, and this is to be expected:

The ASX200 had another great session, lifting over 0.7% to extend its move out of its recent trading range as it pips above the 6900 point level. SPI futures are down over 20 points due to the wavering confidence on Wall Street, but support is quite firm here to keep the market elevated for a little longer:

European markets finally stopped moving higher with scratch sessions and mild pullbacks the order of the day with the German DAX dropping 0.4% to remain just above the 14000 point level again at 14064 points. Price is trying to stabilise back above that level as it begins to slowly creep above the former highs in early January which had been firming as strong natural resistance:

Wall Street reopened and pulled back immediately, taking back the gains that futures assumed would happen as the NASDAQ pulled back 0.3% and the S&P500 closed a few points lower although it extended that later in futures. The four hourly chart shows price inching higher but then pulling that back to reality as it fails to extend its breakout from late last week just above the 3900 point level:

Currency markets finally moved in a different direction with false breaks against USD coming back sharply on the EZ wide GDP prints with Euro heading straight back to the 1.21 handle after briefly matching its Friday night highs as trailing ATR support on the four hourly chart remains firm at the 1.2080 level. Resistance at the 1.2150 level however is building yet again and continues to line up with previous weekly resistance so that’s the area to watch going forward:

The USDJPY pair however continues to standout with its breakout still moving higher and this time pushing through the 106 handle overnight. Short term momentum is now considerably overbought on the four hourly chart, as this move has gotten way ahead of itself so watch for a potential minor pullback towards the 105.70 area, although overall USD strength may abate that:

The Australian dollar had started the week on a bullish tone, with a weekend gap higher that almost saw it clear the 78 handle but the eventual pullback has happened here, pushed down to the mid 77’s, but still above the previous weekly highs above the 77.40 level. If it can stay above trailing ATR support on the four hourly chart this may only be a minor situation before another leg up:

Oil prices are floating higher with WTI and Brent crude only up slightly higher on the strong USD, the latter remaining above the $63USD per barrel level overnight. The upside target at the $70USD per barrel at the 2019 highs remains intact, but this is starting to get overextended:

Gold continues to fail with the stronger USD pushing it back below the key $1800USD per ounce level as it matches its previous weekly low and almost down to the November low. 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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