Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Better economic data from the US coupled with better earnings saw yet another reversal in sentiment on Wall Street overnight but it was shortlived as tech stocks moved lower yet again. European markets bounced back very strongly after the previous selloff while Treasury yields were the only stable risk asset out there. Commodities continue to be mixed with iron ore lifting and seemingly on its way to $200 while gold tried again to reach the $1800USD per ounce level.

Bitcoin had another large swing overnight but was unable to get back to its Monday higher, lifting to just above the $57K level before retracing slightly this morning as it tries to play catchup with Dogecoin:

Looking at share markets in Asia from yesterday’s session, with the Shanghai Composite and Nikkei 225 remain closed (until today) it was all eyes again on the Hang Seng Index which failed to make any headway, losing 0.5% to close at 28417 points as daily momentum is still stuck in the oversold zone, with a likely retest of the March low at the mid 27000s if it doesn’t find some confidence soon:

The ASX200 was the standout in the region again, lifting 0.4% to close at 7095 points. The daily chart still shows momentum slightly below the previous overbought levels but the low moving average is no longer under threat as prices want to float just a little higher.  SPI futures are barely moving in line with the flat result on Wall Street overnight but sentiment may overrule here for yet another breakout:

European markets all zoomed back in unison following the previous session of shenanigans on Wall Street with the German DAX gaining the most by lifting more than 2% to get back above the key 15000 point level, closing at 15170 points. This recovers most of what it lost but sentiment is now extremely mixed as price and momentum suggest a possible breakdown below ATR trailing support. Watch for a confirming selloff tonight:

Wall Street fell sharply intrasession and then recovered somewhat on the  back of COVID vaccine IP news plus earnings, plus Trump’s Facebook ban etc etc etcetra. Tech stocks remain under the pump with the NASDAQ still unable to put in a positive session while the S&P500 finished just 3 points higher at 4167, again failing to break back above the 4200 point level. The four hourly chart is still looking bearish here with trailing ATR resistance providing a good guide to where local price needs to shoot higher to finish the week on a better note:

Currency markets were relatively smooth with USD still acting strong as Euro remains under stress with another push back down to the 1.20 handle. Despite this level firming as stronger medium term support, the four hourly chart shows momentum still in an oversold level as price action bears down on the previous weekly lows:

The USDJPY pair was again sanguine, hovering above the 109 handle without much buying support as it remains well above four hourly ATR support waiting for the return of Japanese traders. This is an obvious bullish chart from the end of April but it remains in a stall mode until we see a breakout to the upside:

The Australian dollar had yet another oscillation overnight on the back of commodity prices with a return to the mid 77s and the middle of its recent tight trend channel, after recently breaking through the 77 handle. There is still a series of lower high sessions that point to a more bearish bias here as the dovish RBA outweighs a hawkish Fed and Treasury but be careful for a big swing above trailing ATR resistance at the 77.60 level:

Oil prices wanted to continue their rebound but saw a minor reversion overnight with Brent falling slightly below the $69USD per barrel level. The previous price move almost took out resistance overhead at the former highs which I’ve been saying is the real level to watch out for, with daily momentum now properly overbought and ready to try again:

Gold was unable to break above the psychologically important $1800USD per ounce level as it finished flat at the $1786 level again, with daily momentum still in a nominal overbought mode – watch for any daily close above the current level as the longs will pour in:

 

 

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!

Latest posts by Chris Becker (see all)

Comments