Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Tech stocks sold off significantly overnight on Wall Street, bringing the rest of the risk complex down as inflation fears reared their ugly head once more, although European stocks escaped most of the carnage. The USD advanced against most of the majors with commodity prices coming off the boil slightly as a result, but most are still in a near-parabolic uptrend although gold is still holding on above the $1800USD per ounce level.

Bitcoin took a dump alongside other cryptos following the Dogecoin cliff drop with a selloff down through the $54K level before a very slight recovery this morning. This is not quite a new intrasession low but is close with a nice double top bearish pattern forming here on the four hourly chart:

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite closed 0.3% higher at 3427 points, while the Hang Seng Index failed to make any headway, closing down 0.1% to 28558 points. While daily momentum is no longer stuck in the oversold zone, price action remains neutral and below daily resistance at 29000 points with risk sentiment pointing to further downside today:

Japanese stocks did a lot better however, with the Nikkei 225 closing 0.55% higher to 29518 points. The daily futures don’t look promising with a big tail of selling overnight in line with the tech selloff on Wall Street, so I’m positioning here for a fall back towards the low moving average below the 29000 point level. Note overall the lack of any real substantial new daily highs since February:

The ASX200 had a great start to the week, finishing more than 1.3% higher to 7172 points. This might all be taken back today with SPI futures off by at least 50 points or more than 0.75% so we watch and wait if the tech wreck goes down under. The 7000 point former resistance, now support level at the low moving average on the daily chart makes for an interesting inflection point to watch:

European markets were quite unmoved for their start of week session after being up more than 0.5% at the start, with the German DAX finishing dead flat to close at 15400 points. Sentiment and momentum is still trying to get back into the overbought mode after the recent break down below daily ATR trailing support, but so far there has not yet been the confidence to advance past the previous high at the 15500 point level:

Wall Street backed up the bad jobs news on Friday night with the bad inflation news on Monday night with a wide selloff, with tech stocks losing the most ground. The Dow lost only a handful of points while the broader S&P500 took back all of its Friday gains and then some to close 1% lower at 4188 points. The four hourly chart shows how price petered out at the 4235 point level and was overstretched, but this move lower – sharp as it is – should be supported at the 4100 point level, so watch closely for any signs of the BTFD crowd to step in:

The NASDAQ on the other hand fell more than 1.5% with the daily chart showing all the signs of another correction like in February underway as daily support is definitely broken:

Currency markets had a reversal yet again across most majors with USD strengthening following the tech rout on Wall Street in an otherwise empty economic calendar. The post NFP run up in Euro was way overdone, so this was not overly  unexpected with the union currency pulling back towards but nowhere near the 1.21 handle and still near its recent weekly high. In the short term however, price is hovering just below the low moving average on the four hourly chart with the potential for more downside in a swing short trade so watch momentum readings to invert here:

The USDJPY pair was relatively unscathed overnight, still hovering below the 109 handle and previous four hourly ATR support as it still absorbs the Friday night fall. There is still a lack of buying support above the 109.40 level and momentum remains oversold so there is potential for more downside if the 108.50 level is broken through:

The Australian dollar pulled back immediately after almost hitting the 79 level before the Wall Street open, crushed down to the 78.30 level but still well above the previous weekly resistance level at the 78 handle. Tonight’s Budget may provide a small catalyst but really its all about commodity prices from here on in as it tries to get back to the 2021 nominal high at the 80 handle proper:

Oil prices continue to fail in their rebound overnight as Brent crude remained just above the $68USD 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 requiring another kick into the properly overbought stage before engaging again:

Gold was not moved at all by the reversion in USD strength against the other currencies, nor the falls in crpyto-weird-universe although its admittedly looking toppy here on the daily chart with no new daily high. This advance on its recent breakout above the psychologically important $1800USD per ounce level maybe stalled but is not yet over, although momentum is way overbought so a small reversion to the mean trade back to the low moving average is not to be unexpected:

 

 

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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