Macro Morning

See the latest Australian dollar analysis here:

Will Bitcoin destroy the US dollar?

President Biden’s new big infrastructure plan didn’t shake up markets as expected with Wall Street absorbing the proposed tax increases while the USD finally gave up some ground against the major currencies after being super strong all week. Treasury yields fell back slightly again but still remain above the 1.7% level as commodity prices were mixed with oil continuing to fall as the OPEC meeting ramps up while gold leapt higher on the weak USD move to get back above the $1700USD per ounce level.

Bitcoin is again trying to significantly push through the $58K level overnight after some volatility around that level, sitting just below the $59K area, matching the previous weekly high. Momentum continues to be nicely overbought on the four hourly chart so watch for another attempt higher today:

Looking at share markets in Asia from yesterday’s session where the Shanghai Composite started poorly with an immediate near 1% selloff before recovering nearly half that to still close in the red, down 0.4% to 3441 points while the Hang Seng Index pulled back even further, down 0.7% to 28378 points. Futures are looking a bit better this morning with price action showing a desire to get back to the previous support level at 28700 or so but momentum remains heavily oversold:

Japanese markets were in hesitation mode again with the Nikkei 225 unable to find any confidence, closing 0.8% lower at 29178 points. The 29000 point level remains a key anchor point, with price action gravitating around that point of control since late February with futures showing yet another flat start for this morning with a continued series of lower daily highs weighing, watch for a rollover back to the low moving average:

The ASX200 was the best market finally and stood out by putting substantial gains, closing 0.8% higher at 6790 points, helped by the weak Australian dollar. SPI futures are up nearly 20 points as the lower Aussie dollar gives a bit of a tailwind but there’s still a lot of congestion to get through here on the daily chart above the 6800 point level even as daily momentum flops back to a positive setting:

European markets flipped from their recently near bullish mood, with peripheral markets down between 0.2% and 0.4%, the FTSE off by nearly 0.9% while the German DAX finished dead flat remaining just above the 15000 point level. I noted a rising bearish wedge pattern forming here on the daily charts yesterday as momentum got a little ahead of itself so while these returns are not to be discounted, warnings signs are building that it’s going too far:

Wall Street flipped again overnight with the headline DOW down, tech stocks rebounding sharply with the NASDAQ up 1.5% while the S&P500 finished 0.4% higher at 3972 points but still unable to breach the magical 4000 point level yet again. Resistance at the 3960-4000 point area remains the key area alongside momentum readings to watch with this latest surge the possible catalyst to get into a new record high and start another bull trend before May rolls around:

Currency markets finally saw a reversal of the domination of USD against the majors overnight with Euro blipping higher as it breached the 1.17 handle into the mid 1.17s before rolling over later in the session. This looks weak with momentum still in deep negative territory and is unlikely to have another further legs, but watch for any breakouts above the high moving average for a swing trade back up towards the 1.18 handle:

The USDJPY pair was pulled back ever so slightly from its way overbought surge but remains well above the 110 handle. There’s still no reason to buy up Yen big at the moment so this should normally be a nice tailwind for domestic Japanese stocks but has not yet translated. There is the possibility of a small short term dip down towards the 110 handle again to test support:

The Australian dollar was the loser again as other undollars bounced back against USD, it continues to deflate and remained below the 76 handle despite some mixed signals from commodity prices overnight. Price was almost below last week’s low and is almost ready to takeout key support levels at then return to the mid 75’s:

Oil prices pulled back again on OPEC machinations with Brent crude off by 1% to finish just below the $63USD per barrel level. The daily chart was starting to firm to the upside here with a nearly clear breakout but as I said previously, I’m waiting for a proper move above that high moving average with ATR daily and psychological support at $60-61 still an uncle point going forward:

Gold continues to struggle to gain traction and got a very short term reprieve overnight to bounce back above the $1700USD per ounce level. This is likely short term as it doesn’t breach any of the downtrend technical areas including trailing ATR resistance on the daily chart.  The longer term charts continue to signal a downside target at the 2019 pre-breakout highs around $1500, so watch out below if we get another daily low:

 

 

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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