Macro Morning

See the latest Australian dollar analysis here:

Australian dollar climbs with global stock surge

Friday night saw risk sentiment firm once again going into the end quarter/month as the hastened pace of the vaccine rollout in the US embiggened economic efforts as the Fed gave US banks the go ahead to increase dividends. This lead to another record high on Wall Street will seal the deal for Asian stocks on the open here this week with commodity prices bouncing back alongside. The USD was steadier in the wake of a better than expected consumer sentiment survey alongside a much firmer German IFO survey as well. It seems the Suez Canal blockage is not yet providing any impediment to risk taking!

Bitcoin remained under a lot pressure, deflating below the $53K level and looked to retest its recent weekly lows as daily momentum subsides. The daily chart shows prices still on trend but only just although there is some short term support building here at the $52K level:

Looking at share markets in Asia from Friday’s session where after a turgid week, the Shanghai Composite put in a big bounce of 1.6% to finish at 3418 points, getting off its recent monthly lows. Meanwhile the Hang Seng Index managed a similar move higher, up 1.5% to 28366 points. This move is much wanted by the bulls as the daily chart clearly shows price action was ready to go into deep correction territory after breaking decisively below the 28000 point level after momentum got way oversold. It remains to be seen if it can get back above the previous support level at 28700 or so this week:

Japanese markets also bounced back on a selloff in Yen with the Nikkei 225 lifting over 1.5% to 29176 points, with a much better looking daily chart albeit more volatile as the point of control around the 29000 point level continues to be argued. Futures are showing a bigger push for this morning alongside a big surge in the USDJPY pair and action on Wall Street which suggest more upside on the open this morning, but price needs to exceed the former weekly high at just below 30000 points to get out of this funk:

The ASX200 was the relative loser on Friday, only lifting 0.5% to close the week out at 6824 points. The daily chart and SPI futures are showing a much better start this week, up over 50 points so we’re likely to see a solid move above the 6800 point level as daily momentum go into a nicely overbought pattern:

European markets were united again with solid moves across the continent with the German DAX up nearly 1% to 14748 points on the back of the better than expected IFO business survey. This has lead to a new monthly high with more upside potentially on the way as short term support at the 14400 point level firms once again:

Wall Street had been teetering on correction territory all last week but the BTFD crowd – aka the Fed – came to the rescue with the NASDAQ up 1.2% while the S&P500 finished 1.7% higher at 3974 points, almost up to the magical 4000 point level. This move back above the key 3900 support zone can be seen clearly on the daily candle from Thursday with daily momentum also bouncing back, but all eyes are on the 4000 point level next:

Currency markets were a little bit more subdued compared to equities, having seen a strong USD dominated throughout the week with Euro putting in a small bounce on  Friday night to almost get back above the 1.18 handle. The bearish double top pattern from the last two weeks presaged a big move lower but the next pattern is harder to discern with a possible follow through on this bounce, so watch four hourly momentum and for a solid close above the high moving average:

The USDJPY pair was the standout however, continuing its surge to way overbought levels on Friday, pushing up towards the 110 handle after its mid week breakout above the high 108 level. After beating back previous resistance at the 109.30 level this was inevitable but it has gone way over the top so we should see a pullback on the weekend gap this morning towards the mid 109 level:

The Australian dollar had deflated into a mild area of buying support, remaining below the 76 handle all week but found some life on Friday night on the surge in commodity prices and on Wall Street with a bounce through that level and then some, almost finding positive momentum on the four hourly chart. As I said last week, watching commodity prices should provide some reprieve here, but key support levels at the mid 75’s on weekly charts bear (sic) watching too:

Oil prices remain volatile in the wake of the continued Suez canal blockage with Brent crude bouncing back another 4% to get back above the $64USD per barrel level again, with yet another short covering move. A quick glance at the daily chart shows a big contentious battle over where this is going to go so carefully watch ATR daily and psychological support at $60-61 for a proper big breakout or breakdown:

Gold is still unable to get off the deck, once more unable to make any substantial new daily high, closing the week at a very tepid $1732USD per ounce level. The previous short term bounce was nothing more than a small short covering move that can’t even get back up to previous 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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