Macro Morning

See the latest Australian dollar analysis here:

CS: US dollar bull market intact

Sour risk sentiment seems to be gravitating along Wall Street again with another 2% drop across the main bourses overnight, as the fallout from the selloff on the bond market continued. Ten year Treasury yields popped through the 1.5% level with Fed Chair Powell disappointing the market with his recent comments as the USD soared higher against all of the major currencies, Euro particularly. OPEC restricted production and pushed oil up 4% to a new yearly high while gold slumped below the $1700USD per ounce level to almost a new yearly low.

Bitcoin had seen a blip up towards the $52K level before reeling that back in yesterday, but overnight it fell even further to the $48K level showing the recent breakout to be false. I had noted that four hourly ATR resistance at the $52K level was proving short term resistance, so we’re likely to see this rollover continue down to the former lows at the $45K level:

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite took back its previous gains and then some, closing 2% lower at 3506 points while the Hang Seng Index is fell about the same, down 2.1% to 29236 points. Futures are indicating a further pullback on the open this morning with this series of new daily lows and now negative daily momentum pointing to a possible return to the January lows at just above 28000 points:

Japanese markets also showed the way with the Nikkei 225 closing 2% lower at 28230 points to break daily ATR support. Futures are again pointing to a mixed beginning this morning as price wants to anchor itself nearer the 29000 point level in an effort to keep the longer term trend alive, but watch daily momentum readings which are indicating more trouble ahead:

The ASX200 was the relative winner, only losing 0.8% to slip back below the 6800 points level, closing at 6760 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 daily chart still in a confusing mode. While momentum is still in the positive zone I’m still wary of heavy resistance again at or around the 6900 point level:

European markets continue to stand out with their modest volatility with only some minor falls following the rout in Asian markets yesterday. The FTSE took back some of its recent gains, but the German DAX lost only 0.2% and remains above the 14000 point barrier. The daily chart shows the market wanting to clear resistance here but has continually failed since Christmas last year, and even now with a vastly lower Euro, it really needs to punch through or confidence will evaporate:

Wall Street’s stumbles are turning into a full rout with the NASDAQ bubble quickly deflating, falling another 2% overnight while the S&P made new ground and fell over 1.3% to a new weekly and monthly low at 3768 points. The four hourly chart shows a break of the lower trend channel that has almost sent it back to the February lows:

Currency markets are increasing in volatility with Euro flopping sharply on the run to USD with Fed Chair Powell’s comments overnight signalling no alteration on their stance on bond yields. This saw all undollars selloff with the union currency flopping to a new weekly low well below the 1.20 handle in what looks like an overdone move:

Conversely, the USDJPY pair is shooting for the moon, heading up towards the 108 handle in a big breakout on the Powell  comments. This really stirred up the almost stagnant pair and should provide a good tailwind for Japanese stocks, as the equates to the mid 2020 high, but price action and momentum is now way overdone and ripe for a minor at least pullback:

The Australian dollar fell in kind with a classic failed ascending triangle pattern that broke through the short term uptrend and took the Pacific Peso back to its previous weekly low just above the 77 handle:

Oil prices came back and then some on the OPEC news, and despite the stronger USD both WTI and Brent crude lifted more than 4% with the latter almost breaking above the $67USD per barrel level.  This pretty much guarantees a return to the $70 upside target level as all short positions are tossed aside:

Gold’s minor reprieve has disappeared with a big slump overnight, sending it right through the $1700USD per ounce level for a new monthly low. While momentum remains considerably oversold there is no upside potential here save a very short term short covering move, with the longer term chart is more illustrative of where this can go (aka the 2019 pre-breakout highs around $1500):

 

 

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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Comments

  1. Ronin8317MEMBER

    Powell no longer have a US President threatening to fire him on Twitter, so he can revert to doing nothing until it is too late.

  2. innocent bystander

    oil up. AUD down. bowser prices up.
    geez, ppl might even get back on public transport at this rate.