Macro Morning

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Wall Street at first put in some solid gains overnight but they evaporated towards the close as risk sentiment dampened slightly, despite some good economic and pandemic data. The USD remained strong against most of the majors but only moved higher against gold and silver, with oil prices spiking again alongside copper and Treasury yields continuing to climb. EZ wide inflation was higher than expected, as was the latest US ISM services print overnight which exhibited a lot of hope around the now competent vaccination program in the US.

Bitcoin had another solid gain, this time pushing up through the $37K level as it wants to get back to last week’s false breakout high, now looking overbought but still on target:

Looking at share markets in Asia from yesterday’s session where the Shanghai Composites was flat going into the close but slumped at the end to finish 0.5% lower at 3516 points, while in Hong Kong the Hang Seng Index only put on a handful of points to close at 29307. This rebound is stalling out with price not yet able to get above the high moving average on the daily chart and needs to make a solid new daily high to get going:

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Japanese markets continue to rebound higher with the Nikkei 225 again finishing around the 1% higher mark, closing at 28646 points. Daily ATR support at the 27500 point level remains very firm, and a new daily high shows the potential to want to get back to the former highs at 29000 points:

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The ASX200 had yet another solid session, moving 1% higher to 6824 points as animal spirits dominated and interest rates remain super lows. SPI futures are down about 30 points indicative of the mixed lead from Wall Street, but the daily chart is still showing a lot of buying support below but is resistance getting firmer at the 6800 point level?

European markets were quite mixed as the CPI print jumbled up expectations with the German DAX the only bourse to advance significantly, closing 0.7% higher to 13933 points as other markets gravitated around scratch sessions. Price continues to bounce off its own daily ATR support level and is firming up a return to the former highs in early January:

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Wall Street again was unable to gain any momentum last night with all three bourses treading water, the S&P500 putting on only 3 points to close at 3830 points. The four hourly chart shows the big surge that has almost taken back the bourse to the January highs as stalled out here with successive sessions unable to get back above the 3840 point level, which was the mid range before the mid January selloff. Watch the low moving average very carefully for signs of a capitulation:with momentum getting a little ahead of itself as price stalls very slightly above the 3800 point level:

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Currency markets remain in a strong USD position with Euro stabilising around the 1.20 handle after making a new monthly low but absorbing last night’s CPI print without much fuss. Momentum is reverting back from an oversold status, but I wouldn’t get excited until the high moving average is definitely broken to the upside, so watch for another session low below the 1.2020 level:

The USDJPY breakout has now stalled after failing to breakthrough the 105 handle for nearly two nights in a row. The four hourly chart shows momentum crossing down from high overbought levels as price remains firm around the high moving average but look for a slowdown around the low moving average in the coming sessions:

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The sharp dive by the Australian dollar following the RBA meeting has been abated somewhat overnight after briefly touching the December low at just below the 76 handle before coming back weakly very late in the session. I’m still watching the intraweek low from last week at the 76 level proper as the uncle point, so watch for another inversion today on the trade balance print:

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Oil prices continue their breakout with Brent moving another 2% higher to break the $58USD per barrel level, making a new monthly high and almost back to pre-COVID level trading range. There is a potential upside target here as high as $70 at the 2019 highs:

Gold is slowly breaking down with another failure to make a new daily high yesterday as the pullback towards the previous daily lows extends to the low $1830’sUSD per ounce level overnight. The daily chart is broadcasting a potential breakdown here to the November lows, so watch for a daily close below the $1820 level:

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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!