Macro Morning

See the latest Australian dollar analysis here:

Goldman folds on Australia dollar bull market

Wall Street was again all over the place on Friday night with tech stocks rebounding after the NASDAQ fell over 3% on Thursday while the rest of the risk complex fell following the moves in Asian and European equities. 10 year Treasury yields again moved, extending gains past the 1.70% level, while the USD remained strong against the major currency pairs with commodities bouncing back, particularly oil and copper while gold was able to put on some meagre gains.

Futures are showing a passive start to the trading week here in Asia with the USD likely to be stronger out of the gate with weekend news of the Turkish central bank governor getting sacked.

Bitcoin remains on trend to breakout above $60K again, making a new weekly high as it started with a bang that fizzed on Monday but caught up by the end of the week to make a new record high, settling just below the $59K level:

Looking at share markets in Asia from Friday’s session where the Shanghai Composite closed 1.7% lower at 3409 points while the Hang Seng Index did much the same, finishing down 1.4% to 28990 points after a series of tepid sessions.  The daily chart is still showing a clear rectangle of tight support and resistance that needs to be cleared soon, with a definite bearish bias on momentum and price action readings with more pullbacks expected due to mixed lead on other risk markets:

Japanese markets also reversed course with the Nikkei 225 closing 1.4% lower at 29792 points. Futures don’t look so good either with the daily candle showing a potential reversal to back below the trendline from the December lows. Again, watch USDJPY for any safe haven Yen buying that may provide a headwind in getting back to 30000 points:

The ASX200 was the relative best in the region, only falling 0.6% to 6708 points capping off a pretty disappointing week for Aussie traders. SPI futures are down 15 points or more, suggesting yet another poor start this week, this time starting below 6700 points and wiping out all of this years nominal gains so far:

European markets were again unified, but this time it was a selloff across the board and across the channel with almost exact losses, the German DAX falling just over 1% to close at 14621 points, but still nominally on trend on its breakout above the 14000 point level. Momentum readings remain overbought with price hovering just on the high moving average level, but watch for a potential topping action here with support key at the 14400 point area:

While tech stocks were able to find a late bid, the S&P500 finished the week with a scratch session with post close futures sending it below the key 3900 support zone. The daily chart showed price wanting to push through the previous February high, but my contention of resistance building here continues to firm with a rollover below the low moving average could see start of trading this week price level further below the 3900 support zone:

Currency markets are seeing another return to strength in USD with Euro again rebuffed at the 1.20 resistance level through the week, setting up a bearish double top pattern here. The key level is very obvious at the recent lows just below the 1.19 handle which is likely to come under pressure straight away when the market opens this morning:

The USDJPY pair is still deflating despite the stronger USD overall, heading below the 109 handle proper on Friday night with a series of no new session highs weighing on overall price action. The catalyst for a double top pattern would be falls below the 108.30 level, so watch for any further downside below the 108.70 ATR support level:

The Australian dollar had some of the biggest moves of the week post the FOMC meeting but deflated all of this away to finish below the mid 77 level with a tepid session on Friday night sending it back where it started the week. Price is set up for more downside if the 77.30 ATR support level is not defended:

Oil prices are trying to push back after the mid week selloff with Brent crude lifting on Friday night to be at the mid $64USD per barrel level in a mild recovery. The 2019 highs at the $74 level are definitely off the table now, so watch for ATR daily support and psychological support at $60 thereafter to come under strain as traders reverse their positions:

Gold is trying valiantly to get off the deck and build back better with a small bounce on Friday night to close at the $1744USD per ounce level for a very small new daily high. I still contend this short term bounce is likely just a short covering move that is likely to hit very strong resistance at the $1770 level, with the longer term chart signalling the next downside target at 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

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