Macro Morning

See the latest Australian dollar analysis here:

Will Bitcoin destroy the US dollar?

Another reverse in risk sentiment overnight with Wall Street properly falling led by tech stocks this time as the bond market continues its selloff. A possible catalyst was a poor US private employment print but also the latest ISM services PMI didn’t excite, reducing expectations. The USD came back against most of the majors, with commodities mixed again as oil jumped over 2% with copper falling the same as gold took back its recent very slim gains to fall over 1%.

Bitcoin volatility had been relatively low recently which always presages a breakout and here it is, lifting up through the recent downtrend to breach the $52K level before coming back to just over $50K this morning. Note that four hourly ATR resistance at the $52K level is proving short term heady resistance, so watch for another attempt tonight or this could prove a false move:

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite is taking back its previous losses, finishing nearly 2% higher to close at 3576 points while the Hang Seng Index is doing even better, up 2.7% to 29880 points. Futures are indicating a minor pullback on the open this morning with recent session lows at the 28800 point level needing to be firmed as short term support going forward:

Japanese markets are putting in more modest sessions, with the Nikkei 225 closing 0.5% higher at 29559 points.  Futures are again pointing to a mixed beginning this morning as price wants to anchor itself nearer trailing ATR daily support at 29000 points in an effort to take some heat out of this run, although I still contend it needs to correct more down to the more sustainable trend line down nearer 28000 points:

The ASX200 was able to get back above the 6800 points level, rising over 0.8% to 6818 points. SPI futures are down over 20 points with the market looking to open even further down as Wall Street ups the volatility with the messy picture on the daily chart continuing to confuse intentions. While momentum is still in the positive zone I’m still wary of heavy resistance again below 6900 points:

European markets were again able to manage some meagre gains across the continent, although the FTSE lifted nearly 1%, the German DAX was more in line with everything else, lifting 0.2% higher to remain above the 14000 point barrier at 14080 points. The daily chart shows the market wanting to clear resistance at the 14000 point zone but has continued to fail since Christmas last year, although the daily lows are higher it still requires a proper go soon or it will turnover again:

Wall Street stumbled yet again however with all three bourses falling at different velocities, with the NASDAQ leading the way with a 2.7% drop while the S&P500 finished exactly 1% lower to close well below the 3900 points level at 3825 points. The four hourly chart has been showing for sometime now the inability to clear the downtrend line from the mid February highs as this bounce again failed to do, with the obvious drop below the low moving average at the 3850 area sending it almost back to the February lows:

Currency markets are increasing in volatility with Euro unable to make its recent bounce stick as USD asserts itself again. The union currency found it hard to move above trailing ATR resistance overnight with continued negative momentum readings on the four hourly chart still sticking this as a minor swing rally only, not a new trend yet:

The USDJPY pair remains relatively stable and although momentum is nicely overbought, its not getting too excited as the pair manged to just push through short term resistance that had been building at the 106.80 level, but not quite the 107 handle proper. The next upside target remains the 108 handle which equates to the mid 2020 high, but price action is flat lining here:

The Australian dollar also failed to make its recent bounce post the RBA meeting stick as the stronger USD put it in its place with a failure to get above the 78.30 resistance level overnight. This is obviously still nowhere near trailing ATR resistance on the four hourly chart, with momentum still struggling to get out of the negative zone:

Oil prices came back despite the stronger USD, with Brent crude lifting more than 1% to get just above the $64USD per barrel level.  The possible topping action is abating somewhat with this single move, but will require more stability and no more session lows with ATR support at the $60USD level which must hold in the short term:

Gold had a very minor reprieve on USD weakness, but this was very short lived as it flopped again overnight, making a new daily low at the $1715USD per ounce level, briefly dipping below the $1700 level proper. Momentum remains considerably oversold and while there is the potential for a violent upswing here on short covering/profit taking, the longer term chart is more illustrative of where this can go:



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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  1. oil is the new safe haven 🙂 2 days of selling at the open. Both indices trading under vol trigger levels, vix closing near the highs or slightly above. Calls still being bought and for a few days puts sold. Looks ripe to crack, but hopefully a tradeable dip unless spx cracks proper. I would presume if futures get up again, it would probably get sold for a decent gut check this time (if it happens, lets see after that for the tradeable dip) but really this is a gamblers market now, good to be on the sidelines.