Macro Morning

See the latest Australian dollar analysis here:

Australian dollar climbs with global stock surge

Tech stocks fell sharply again on Wall Street as volatility around currency and bond markets was abated somewhat, despite the release of solid flash PMIs and a poor durable goods order print blamed mainly on the weather. The USD firmed again, while oil prices jumped on the Suez canal supply blockage, in what looks like a temporary state with other commodities steady.

Bitcoin remains under enormous pressure here, despite a big flip up towards the $57K overnight that was completely reversed this morning as it makes a new low for the week at just below the $54K level, with the short term downtrend still intact:

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite finished 1.3% lower at 3365 points for a new monthly low while the Hang Seng Index fell faster, down just over 2% to 27972 points.  The daily chart clearly shows a significant break of the rectangle of tight support and resistance that had been forming since mid February, with this action potentially unwinding all the post Xmas buildup:

Japanese markets joined in with a straight 2% drop on the Nikkei 225 as it falls through the 29000 point barrier to close at 28405 points. Futures are pulling back yet again so we’re likely to see another sketchy session today with the next level of support at the 27200 point level from mid January the target in this move:

The ASX200 was the standout by actually putting on gains, closing 0.5% higher to 6778 points. SPI futures are down 12-15 points or so, with daily momentum still flat here, I don’t expect much upside here given the late selloff on Wall Street but the local market has proved resilient so far this week, with the 6700 point level acting as strong support:

European markets were a little more relaxed overnight as the Turkish ructions seem to dissipate with some mild moves higher, although the German DAX fell back slightly, losing 0.3% to finish at 14610 points. While the market is still nominally on trend on its breakout above the 14000 point level, I still contend we may be seeing a potential topping action here with support key at the 14400 point area:

Wall Street is teetering on correction territory here with another volatile session as the NASDAQ rolls over once more, signalling a potential bearish head and shoulders pattern that will affect all markets. The S&P500 finished 0.5% lower at 3885 points, finally crushing below the key 3900 support zone that really needed to hold here. The four hourly chart shows price is now below last week’s session lows with momentum well in the negative zone, so without some good/bad economic news soon, could flip over and selloff sharply:

Currency markets continue to see strong USD dominating with tEuro putting in another session low, finishing just above the 1.18 level overnight in the wake of the solid flash PMI’s.The bearish double top pattern from the last two weeks remains in full with price moving below the previous weekly low (solid horizontal black lower line) so watch for an ominous fall below the 1.18 handle next:

The USDJPY pair was able to put on mild gains overnight, just below the 109 handle before deflating again but this could be the first signs of some life for this par. Safe haven buying could still become more prevalent as the risk off mood widens:

The Australian dollar continues to be a big casualty in the risk off mood however, breaking below the 76 handle last night after the previous sharp falls. Watching commodity prices should provide some reprieve here, but that is likely as the Pacific Peso takes out key support levels on weekly charts

Oil prices bounced back only because of the Suez canal blockage affecting supply in the short term with Brent crude bouncing up through the $64USD per barrel level on a big short covering move. However, this is likely to be temporary with ATR daily and psychological support at $60-61 having been broken with more price downside to be expected as traders reverse their positions:

Gold is still unable to get off the deck, still not making any substantial new daily high, closing slightly higher overnight to the $1734USD 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 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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    • The Traveling Wilbur

      Well, it wouldn’t be the first time he’s had to clear out a massive load someone’s stuck in the wrong tightspace.

      If he got the job though, think of the billable travel time!