See the latest Australian dollar analysis here:
A big night on equity markets with an avalanche of earnings reports on Wall Street just after the latest Federal Reserve meeting which in the end was a fizzer for stocks all round. The only real volatility was in the currency and bond markets with USD pulling back against all the majors while bond yields eventually also declined back to where they were recently. Commodity markets again saw more upside with only iron ore pulling back in Chinese markets while other industrials like oil and copper put in more record highs as gold is inching higher to that critical $1800USD per ounce barrier.
Bitcoin’s recovery rally has stalled out after a brief false breakout above the $56K level overnight, now firming here at the low moving average/session lows in the last 24 hours at circa $54K:
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Looking at share markets in Asia from yesterday’s session where the Shanghai Composite was looking to put in another scratch session, but eventually found some upside support to close 0.4% higher at 3457 points while the Hang Seng Index followed through with its own late rally, closing 0.4% higher and finally back above the 29000 point level. Again this market is still struggling to make any big move above 29000 points and while positive daily momentum and the overall technical pictures points to a possible bottom here, it really needs to clear the 29500 point ATR daily resistance level soon:
Japanese markets finally got a shot of confidence from a much lower Yen although it reversed slightly going into the close with the Nikkei 225 finishing just 0.2% higher at 29053 points. The daily chart shows futures suggesting a pullback on the open because of the rise of Yen overnight so again we see a market unable to really thrust higher as daily momentum remains in the negative zone and a lack of new daily highs pushes away any risk taking:
The ASX200 loved yesterday’s out of date CPI print, finishing nearly 0.5% higher at 7064 points, with SPI futures up nearly 20 points again despite the mild pullback on Wall Street. The daily chart still shows momentum nicely overbought and ready to make a new daily high as the accomodative RBA and higher iron ore prices provide a tailwind. The 7000 point barrier is turning into firmer support with each session:
European markets were able to engage a little higher across the continent although the German DAX had a relative mild session to only finish 0.3% higher at 15292 points, losing most of this following the pullback on Wall Street. Sentiment is still basically neutral with daily ATR support firming at the 15000 point level but I remain cautious as momentum readings subside and do not yet indicate a re-entry position just yet:
Wall Street absorbed the huge amount of earnings report (although most were post close) and the latest FOMC meeting with aplomb, although some confidence was lost later in the session. The S&P500 finished 0.3% lower to avoid another record high as momentum readings on the four hourly chart are not yet suggesting another breakout but price action is ready for the next up-leg:
Currency markets had all the action and it was mostly one way as the USD flopped against the majors following the FOMC meeting, with Euro popping to a new weekly high well above the 1.21 handle. Overbought momentum readings are suggesting more upside as is the longer term charts with short term support at the 1.2060 level firming as a great uncle point:
The USDJPY pair however was put in back in its place after the recent breakout, although it only lost a little ground – half a handle – to finish just above the mid 108.50 level this morning. Price action and momentum however are pointing to a follow through on the Tokyo open this morning so watch for a swing back down to the 108 handle proper:
The Australian dollar sold off following yesterday’s CPI print to almost break through the 77 handle but then bounced off trailing ATR four hourly support following the Fed meeting, almost getting through the 78 cent level in the process. Unfortunately this is not a new session high, banging up against resistance at the last two week’s high so I’m waiting for a proper breakout abvoe this level before getting excited:
Oil prices were able to take advantage of the weaker USD with a modest up session overnight, with Brent crude lifting through the $66USD per barrel level for a new daily high but not yet a new weekly high as resistance overhead at the $67 level remains firm. This market remains poised as daily momentum is nominally positive but not yet excited with a wait and see mode here above the $60-61 zone:
Gold is still trying to gain upside traction in the wake of a weaker USD and almost got going overnight but failed to finish above the $1800USD per ounce level. Daily price is still above the February lows (solid horizontal black line) so while this completes the short term bullish bottom pattern, longer term charts continue to signal a 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!