Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

While the NASDAQ was unchanged overnight, the risk of the risk complex continued to oscillate into negative territory on inflation concerns with Treasury yields spiking yet again. European stocks joined in on the selloff alongside the broader issues on Wall Street, while the USD was largely unchanged as commodity prices continued their advance. This along with the very stimulatory Budget helped the Aussie dollar hold its ground while gold did the same and held above the $1830USD per ounce level.

Bitcoin was looking to break below the $54K level yesterday before a recovery last night saw it bounce up through the $56K level instead but the four hourly chart remains confused as sentiment continues to swing in between all the disparate crypto currencies:

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite was able to put on more gains, standing out from the rest of Asia, to close up 0.4% to 3441 points, while the Hang Seng Index was thumped, closing 2% lower at 28013 points. Daily momentum has returned to the oversold zone, with price pushing right down to the March lows (solid black line) so watch for a potential follow through below that level:

Japanese stocks took the biggest hits however, with the Nikkei 225 closing 3% lower to 28568 points. The daily futures again don’t look very promising at all as momentum goes into the oversold levels once more. I continue to note the lack of any real substantial new daily highs since February but we could get another violent swing in sentiment here as short positions are not yet building up until a crack below the 28000 point level:

The ASX200 was able to escape a wider carnage, losing only 1% to close at 7097 points. SPI futures off by another 50 points so watch the 7000 point former resistance, now support level at the low moving average on the daily chart combined with the Budget reaction to see if this nascent trend from late March is going to be turned around soon:

European markets played catchup with the negative risk sentiment with near 2% losses across the continent, the FTSE falling further, down 2.5% while the German DAX finished 1.8% lower at 15118 points, but almost broke through 15000 points intrasession. Sentiment and momentum are now jostling around this high point with the strong potential to breakdown below daily ATR trailing support with all eyes on that 15000 point level:

The headline Dow fell the most this time, off by more than 1.4% while the broader S&P500 repeated its Monday night selloff with a near 1% lower to 4152 points. The four hourly chart shows how price action overshot and touched the 4100 point level before a small squad of BTFD goons stepped in, but this will the area to keenly watch later tonight:

Currency markets have stabilised post NFP and post the tech stock falls with the USD basically unchanged overnight. The latest German ZEW survey came in better than expected and this helped Euro briefly but the union currency is still stuck in the mid 1.21 level near its recent weekly high. Momentum on the four hourly chart has retraced below the recent overbought reading and coupled with price action stalling here suggests we might get a short term swing play below the 1.21 handle soon:

The USDJPY pair is also looking like inverting today or later tonight with another downturn overnight sending it back to the Friday night lows well below the 109 handle and previous four hourly ATR support. Short term momentum remains oversold so there is potential for more downside if the 108.50 level is broken through:

The Australian dollar however is more neutral short term given the rise in commodity prices – although iron ore pared back slightly from its record highs – with the recent Budget providing a big stimulatory boost and hence possibly playing the RBA’s hand to start tapering soon.  In the short term I’m watching the high moving average at the 78.50 level to come under pressure on the upside, while the 78.20 and ATR support at the former resistance, now support level at the 78 handle proper remains the uncle point:

Oil prices stabilized again overnight without much downside intrasession volatility as Brent crude picked up a little to advance a bit more above the $68USD per barrel level. Daily momentum has not yet kicked into the properly overbought stage yet but price action is firming here so don’t be surprised if we get a violent breakout soon:

Gold really wants to move higher but is being restrained here by a strong USD with a small new daily high but nothing really substantial, closing at the $1837USD per ounce level.  This advance on its recent breakout above the psychologically important $1800USD per ounce level 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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