Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

Several events pushed around risk markets overnight, thwarting the bounceback on stocks on Wall Street with the latest tax increase by President Biden the main stopper. In the background, the latest ECB meeting went as expected but still involved some volatility around USD as the latest initial jobless claims came in under than expected. Bond markets remain range traded again while commodity prices fell back across the board, but only modestly compared to the previous moves with gold almost hitting the $1800USD per ounce level before retracing.

It wasn’t a good night for Bitcoin HODLers as it fell another 10% after failing to get out of its funk all week with the $55K level proving too strong resistance. Last night is was wallopped back to the $50K level proper before a very meagre bounceback this morning, run over by negative sentiment once more:

Looking at share markets in Asia from yesterday’s session where Chinese markets tried to rebound with the Shanghai Composite closing 0.2% lower to 3465 points while the Hang Seng Index managed to close 0.5% higher at 28767 points. Futures however are suggesting a flat open this morning as price action remains unable to get back above 29000 points and return to the March highs. This overall move remains bearish due to no new weekly high for some time now:

Japanese markets put in the biggest bounce however, with the Nikkei 225 lifting more than 2% to close at 29188 points. The daily chart shows futures pulling some of this back as this market fails to really break above the 29000 point level as I remain wary of the continued oscillation between fear and hope. The next technical level below at the 28200 point level is not that far away:

The ASX200 was able to put on some runs, finishing 0.8% higher to be back above the 7000 point barrier, closing at 7055 points. SPI futures are indicating a minor pullback on the open but we should see a weekly finish above that barrier if not a new high. Support is key here to watch with daily momentum still slightly overbought which is nominally positive, but a stronger Aussie dollar could play a part too – so far its dwindling:

European markets continued their own bounceback with more modest rises overnight, the FTSE up 0.6% while the German DAX regained 0.8% to finish at 15320 points in the wake of the latest ECB meeting which had no surprises. Sentiment continues to oscillate around COVID and while daily ATR support is still firm at the 15000 point level I remain cautious as momentum readings subside and do not yet indicate a re-entry position:

Wall Street’s bounceback was thwarted by the Biden capital gains tax with the NASDAQ and broader S&P500 taking back their previous gains to both lose nearly 1% and end up where they started several sessions ago. Price is right back on tentative support at the 4100 point level after failing to push through overhead ATR resistance on the four hourly chart at just below the previous highs at the 4170 point level. I’ve been questioning if this market can actually push through resistance but this maybe the first step of a wider correction:

Currency markets have finally moved out of their generally calm stages with volatility returning in the wake of the latest ECB meeting although it all came out in the wash with Euro pulling back to the 1.20 handle with another tepid finish this morning.  While this keeps it well above the previous resistance high level reached in early March, its too close to trailing ATR support with signs of a possible swing play building here:

The USDJPY pair looked to fulfill the weak bullish falling wedge pattern on the four hourly chart but was thwarted at the end, falling back below the 108 handle later in the session. With daily ATR support still under stress alongside negative momentum readings and price action well below the March support levels, this still gives all the weight to the Yen bulls:

The Australian dollar finally rolled over overnight with the previous small dip towards the 77 level turning into a selloff of sorts, finishing below that level as we start up this morning. My contention of this oscillating price action confirming the previous selloff hasn’t finished yet remains firm as a nasty bearish head and shoulders pattern is now fully formed on the four hourly chart:

Oil prices were trying to get back on track overnight following the recent EIA report but it was tepid at best with Brent crude lifting just above the $65USD per barrel level as a result. As I noted previously, daily momentum was not yet overbought so this move above the $60-61 zone remains a relief rally and not a new trend. Watch for a potential bearish follow through below the low moving average:

Gold is still getting upside traction after its clear breach above the previous support/resistance swap zone (and 2020 lows) at the $1780USD per ounce level but it failed to turn this into an outright move overnight, after almost making it to what could be a psychologically important $1800 handle.  While the longer term charts continue to signal a downside target at the 2019 pre-breakout highs around $1500, this could have more legs if the USD remains weak against the major currencies:

 

 

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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Comments

  1. Arthur Schopenhauer

    Australian Ski Resorts are offering certificate training as an incentive for locals to work on the ski fields this season.

    Who coulda known…