Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

Friday night saw more macro events rather than economic ones push around risk markets with Wall Street finally bouncing back as European bourses bobbed around in the wake of the latest ECB meeting. In currency world, USD was sold off yet again as Euro made a new weekly high, almost reaching its start of year highs while commodity proxies like the Aussie dollar struggled to take advantage as gold and silver faltered as well.

It wasn’t a good week for Bitcoin HODLers as it failed to get back anywhere near its start of week gap down point and indeed has fallen further over the weekend and on this mornings gap open, heading straight to the $48K level to wipe out all of 2021’s “gains”. This could be ominous although momentum is considerably oversold here on the daily chart, the volatility could open up even more so watch out below – $32K is the next technical level:

Looking at share markets in Asia from Friday’s session where Chines markets tried to rebound with the Shanghai Composite edging slightly higher at 3474 points while the Hang Seng Index did a lot better, up more than 1% to 29078 points. Futures are suggesting even more upside on the open this week as this market struggles to get out of its funk and really get moving above the 29000 points and return at least to the March highs. This overall move remains nominally bearish but the technical pattern and positive daily momentum do point to a possible bottom here – the key neckline being the 29500 point ATR daily resistance level:

Japanese markets were in retreat again however, with the Nikkei 225 closing 0.6% lower at 29020 points. The daily chart shows futures suggesting a reversal of this on the open this week given the strong lead on Wall Street despite the big gains in Yen, but I still remain very wary of the continued oscillation between fear and hope. The next technical level below at the 28200 point level is not that far away as this daily chart looks extremely muddled:

The ASX200 had a mild selloff but has recovered most of it, eventually finishing with a scratch session to stay  above the 7000 point barrier at 7060 points.  SPI futures are up only 4 points so that barrier should be supported this week as daily momentum remains nicely overbought and the Aussie dollar not yet providing a headwind:

European markets failed to push through on their own bounceback with a lot of hesitation on Friday night, the FTSE finishing with a scratch session while the German DAX lost 0.3% to finish at 15279 points in the wake of the latest ECB meeting. 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 initially thwarted by the Biden capital gains tax midweek but has now been refilled with the NASDAQ and broader S&P500 taking back their previous losses to both lift more than 1% and finish the week where they started. Price is back on the recent highs after bouncing off tentative support at the 4100 point level with the daily chart poised here with momentum readings nicely overbought and ready for the next up-leg:

Volatility post the latest ECB meeting has been all downside for USD with its major pair Euro putting in a new weekly high to almost breach the 1.21 handle on Friday night. Euro also lifted Pound Sterling along the way but both currencies are not yet back at their 2021 starting highs, although Euro is now in a much stronger position to keep accelerating against King Dollar where I’m watching for overbought momentum to remain so as we start another trading week:

The weekend elections in Japan may cause increased volatility in the USDJPY pair which had a big whipsaw already on Friday night before returning to just below the 108 handle as it continues the appreciation of Yen against USD. 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 had a tepid finish to the trading week with a modest lift that did not match the intraweek highs but still remaining above the 77 handle as we go into a new session. My strong contention (but weakly held) 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 with a key breakdown area at the 77 handle proper:

Oil prices continue to try to get back on and upside track following the recent EIA report but the weekly finish was tepid again with Brent crude hovering just above the $65USD per barrel level. 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 a little upside traction in the wake of a weaker USD but again finished poorly just below the $1780USD per ounce level as it failed to turn this into an outright move higher, 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. British American Tobacco is trading below the forward P/E of 10 again. Time to top it up. Going long on human folly usually pays.

  2. The Traveling Wilbur

    Being made to work on a PH CB? Criminal.

    Unionise. It’s the only way.
    And we’ll completely understand if there’s no Macro Afternoon. 😀