Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

The last two weeks have seen new historic highs across equity markets with bullish economic news helping lift risk spirits across the complex. Friday night saw another positive day for Wall Street while the USD was largely unchanged as  Treasury yields lifted slightly to be back above the 1.7% level as commodity prices were mixed. This trading week should start firmly with the ASX200 pushing to new highs as Chinese and Japanese stocks get ready to breakout on the positive Wall Street lead.

Bitcoin has been able to significantly push through the $60K level after a lot of consolidation around that level, now bursting out to a new historic high above the $64K last week before a minor stall. Momentum continues to be positive on the daily chart although that stall could turn into another volatile consolidation event in the wake of the recent Turkish machinations:

Looking at share markets in Asia from Friday’s session where the Shanghai Composite finished up 0.8% to 3426 points, trying to claw back the previous losses while the Hang Seng Index also rose, lifting 0.6% to 28969 points to make a new daily and weekly high. Futures are looking firmer this morning with price action showing a desire to break out above 29000 points and return to the March highs, but watch daily momentum readings which are not yet positive:

Japanese markets were in hesitation mode again with the Nikkei 225 unable to find any confidence, closing 0.1% higher at 29683 points. The daily chart shows price action gravitating around the 29600 point of control since the false breakout in early April but futures are showing a possible breakout to start the week so watch the high moving average area for signs of a proper close above the 29800 level at least before calling a new rally:

The ASX200 put in a scratch session to finish a stunning week, closing well above the 7000 point barrier to be at 7063 points, and looking to extend gains as the trading week gets started.  SPI futures are up 0.5% or more as all the short positions have evaporated and there’s no reason to not buy here – a crowded crowd for sure but you don’t get in the way of record highs:

European markets remain in a very bullish mood, despite vaccine problems with a sea of green across all markets, the FTSE up 0.5% while the German DAX soared over 1.3% as Eurozone inflation remains poised, finishing well above the 15500 point level. This market is really cooking along now after breaking out in early March above the 14000 point level with daily ATR support rising and locking in gains ever since:

Wall Street is the catalyst pushing everything higher, with the S&P500 breaking out above the magical 4000 point level the day I go on holidays and rallying ever since!  Its a straight line, no resistance to be found as it pushes the bubble ever higher on combined and unheard of levels of fiscal and monetary stimulus – don’t stand in the way!

Currency markets are seeing a continued reversal of the domination of USD against the majors with Euro now rallying over 200 pips in the last two weeks in a solid bounce off the 1.17 level, almost hitting the 1.20 handle on Friday night where its finding not much intrasession momentum. This equates to the previous resistance high level reached in early March, so watch for any new session lows to show a return to the over-riding downtrend:

The USDJPY pair continues its own pullback since the highs reached in late March, but its decelerating here as Yen buying abates a bit just below the 109 handle.  While daily ATR support has been nominally breached, daily momentum is not yet negative and the March support levels around the low 108’s are still holding for now:

The Australian dollar has not had a steady ride these previous two weeks although it broke out of a consolidation base last week to be back above the 77 handle again despite some wavering commodity prices. It still has to breach the 78 handle at the trailing daily ATR resistance level that equates to the March highs before calling this a bottom:

Oil prices had pulled back again on OPEC machinations with Brent crude hovering around the $63USD per barrel level before a definite breakout above the high moving average on the daily chart seeing it push up towards the $67USD per barrel level on Friday night. The daily chart is showing some signs of a slowdown in this breakout as tight daily sessions are not suggesting more upside just yet, so watch for any new daily lows to show this was just a once off catalyst event but be wary that ATR daily and psychological support at $60-61 are still an uncle point going forward:

Gold finally its gaining some upside traction with a retest of the late February/early March lows below the $1700USD per ounce level now turning into a lovely breakout that has breached long held daily ATR support at the $1750 level. While the longer term charts continue to signal a downside target at the 2019 pre-breakout highs around $1500, this could have more legs on the weaker USD as it reaches the 2020 lows (solid horizontal black line to the left):

 

 

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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