Macro Morning

See the latest Australian dollar analysis here:

Australian dollar climbs with global stock surge

The USD retreated overnight slightly, helping risk currencies like the Australian dollar as the bond market settled with 10 year Treasury yields pulling back to the 1.70% level. Wall Street was more unified with tech stocks pushing the whole edifice higher, starting the week on a BTFD fill, while Euro stocks diverged in response to the Turkish rout and more lockdowns across the continent. Commodities were mixed with no big moves outside the iron ore complex, with oil and copper up a little and gold pulling back slightly despite the lower USD.

Bitcoin was on trend to breakout above $60K again, but flopped below its four hourly trend line to break below the $55K, almost taking it back to last week’s low. It seems resistance is too much in the short term:

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite finished 1.1% higher at 3443 points while the Hang Seng Index pulled back 0.4% to 29005 points.  The daily chart is still showing a clear rectangle of tight support and resistance that needs to be cleared soon, as the bearish bias on momentum and price action suggest a stalled mood here as leads remain mixed on other risk markets:

Japanese markets however fell fast on the open and stayed down, with the Nikkei 225 closing 2% lower at 29174 points. Futures are flat lining as well as domestic inflation expectations take hold once more and price shows 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 took back its Friday session losses, lifting just over 0.6% to close at 6752 points. SPI futures are down 20 points or more, although there could be a sympathetic bounce given the good lead from Wall Street thereafter, but the 6700 point level could well be an anchor this week:

European markets were all over the place in response to the Turkish market dropping some 9% which affected some European banks, so peripherals markets fell while the FTSE and German DAX lifted 0.25%, the latter closing 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:

Wall Street however remained on track with a fill at the open sending all three bourses higher, the S&P500 finishing up 0.7% to 3950, bouncing off the key 3900 support zone. The four hourly chart shows that fill at just below the 3900 support zone but is this move strong enough yet to push it back to the former highs – watch momentum readings going into tonight’s session:

Currency markets are seeing another reversion of strength in USD with Euro bursting up through the 1.19 level in response to ECB President Lagardes remarks overnight. The bearish double top pattern from the last two weeks remains in full however as this is likely just a short burst up but not through the very strong 1.20 resistance level:

The USDJPY pair is still deflating although its not finding any new session lows on the four hourly chart, with price gravitating around the 108.80 level in what looks like a bottoming coil action, ready to spring higher. Watch for any breakout above the high moving average here:

The Australian dollar gapped lower on the weekend open due to the Turkish Lira rout but then filled in overnight to be just below the mid 77 level in what looks like a tepid start to the trading 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 last week’s selloff with Brent crude lifting very slightly overnight to remain just over the $64USD per barrel level. The 2019 highs at the $74 level are definitely off the table now, so watch for ATR daily support and psychological support at $60-61 thereafter to come under strain as traders reverse their positions:

Gold is still trying to get off the deck but can’t seem to make a substantial new daily high, closing overnight a little lower at the $1738USD per ounce level. 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 – even lower going by these very small moves – 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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  1. migtronixMEMBER

    What in a gram? A letter.
    What’s in a graph? A thousand words.
    What’s in a word? More than a letter and less than the whole picture.
    What’s in a bank? None of the above