Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Strong economic data from the US is haranguing risk sentiment with the USD strengthening once more on the presumption that the easing may ease off sooner than expected. Retail sales and industrial production all outshone predictions, sending Wall Street down slightly while boosting commodities and a keeping US Treasury yields elevated at year highs.

Bitcoin finally (after only, what – a day?) broke through the magical $50K level, had a little coffee or too before the US open, then burst higher to finish just above the $52K level this morning. Everything is awesome as seen on the daily chart below, having more than doubled since Christmas:

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite remains closed but the Hang Seng Index surged again, this time over 1%, closing at 31094 points. The daily chart shows this big move higher that takes it back to the 2018 highs, but the current trajectory seems unsustainable even though momentum is technically only slightly overbought. I would normally expect a minor pullback to the 30000 point level which should act as support going forward:

Japanese markets have finally pulled back from their bubble, with the Nikkei 225 finishing 0.6% lower at 30293 points.  Futures are unstable so far due to the Wall Street stumble and while daily ATR support continues to firm higher, that trendline in recent weeks is obviously not sustainable, so I would expect price to hover above or slightly break below shortly:

The ASX200 was also in sell mode with a modest loss of only 0.5% to close at just below the 6900 point level. SPI futures are down over 20 points again due to the wavering confidence on Wall Street, but support is quite firm here to keep the market elevated for a little longer, but watch the low moving average carefully and any signs of a momentum crossover on profit taking:

European markets had broad losses across the board after recently halting suddenly after a good start to the week, with the German DAX losing more than 1% to fall back below the 14000 point level again at 13909 points. Price is trying to get back above that level but those former highs in early January continue to firm as strong resistance, so again another market I’m looking at closely for signs of a rollover:

Wall Street is still struggling after getting too many good economic prints which equate to an easing of the easing, with the NASDAQ off by 0.6% while the S&P500 closed a few points lower. The four hourly chart shows price pulling back directly to the 3900 point level with long tails of intrasession buying support but watch for another surge above the 3940 level first:

Currency markets increased in volatility following the trifecta of US releases – the last being the latest FOMC minutes. The USD continued growing in strength against the majors with Euro floping below the 1.21 handle and then some after failing to breakout above the previous Friday night highs. Price cut right through what was firm trailing ATR support on the four hourly chart at the 1.2080 level and while momentum is considerably oversold, watch for another pulldown below the 1.2020 level:

The USDJPY pair oscillated around its recent breakout, eventually pulling back this morning to be just below the 106 handle. Short term momentum was considerably overbought on the four hourly chart as this move has gotten way ahead of itself and my expectations of a minor pullback towards the 105.70 area have followed through, but I also still expect overall USD strength to keep it steady here:

The Australian dollar was on a smooth glidepath down overnight, eventually settling at the mid 77 handle this morning, absorbing the US economic data relatively calmly. This may be due to traders getting ready for today’s numberwang aka unemployment print so keep watching trailing ATR support on the four hourly chart above the 77.30 as the uncle point this morning:

Oil prices are floating higher again with WTI and Brent crude up strongly alongside the USD, the latter extending its gains to be well above the $64USD per barrel level overnight. The upside target at the $70USD per barrel at the 2019 highs remains intact, but this is getting a little too overextended:

Gold continues to fail with the stronger USD pushing it well below the key $1800USD per ounce level again as it broke its previous weekly low and now matches 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 – still 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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