Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

The BTFD crowd stepped in on Wall Street overnight just after Asian stocks took a hammering in yesterday’s session. The latest US CPI figure had spooked risk markets but last night’s PPI print and some very bullish Fed comments sent traders back to the buy buttons, lifting the risk complex higher. Commodities however were all over the place with oil dropping sharply alongside iron ore, while gold clawed back its meagre losses from the past few days. In currency world, it was a case of steady as she goes as major currencies are still reeling from the recent surge in USD with the Australian dollar in particular trying to stabilise above the 77 handle.

Bitcoin was sold off extremely sharply due to the DogeMaster Musk as Tesla abandoned its positions and acceptance of the cryptocurrency. This sent it down nearly $10K to the $44K level, wiping out all hope of ever getting back to the previous $60K high. A modest rebound has seen it come back to just below the $50K level but I think Dogecoin is on everyones radar next:

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite played catchup to the risk off mood and fell nearly 1% to 3429 points, while the Hang Seng Index fell even further, down nearly 1.8% at 27718 points. This puts price straight at the March lows (solid black line) so despite the rebound overnight watch for a potential follow through below that level:

Japanese stocks were well into correction mode again, with the Nikkei 225 closing 2.5% lower to 27448 points. The daily futures however are looking a bit more promising given the Wall Street rebound but it still doesn’t look very promising at all as momentum remains deep into oversold mode:

The ASX200 finally broke through the 7000 barrier level, finishing some 0.8% lower at 6982 points. SPI futures however are suggesting we could end the week just above that level on the BTFD trade overnight, but I still contend we are likely to see this dip to continue down to the previous March/Feb weekly highs at or around the 6900 level:

European markets were quite mixed as regional expectations continue to change with the FTSE taking back most of its recent losses, down 0.6% while the German DAX continued to bounce back with a modest 0.3% gain to 15199 points. The psychologically important 15000 point level is still being supported despite some big intrasession volatility as sentiment remains mixed and while momentum readings remain oversold here, capitulation potential is slowly dwindling due to that support:

Wall Street came back fairly solidly with all three bourses finishing higher, the NASDAQ still lagging with a 0.7% lift while the broader S&P500 gained more than 1% to finish at 4112 points. The four hourly chart clearly shows its not out of the danger zone yet with price action stalling just below the mid April support and daily ATR support levels. If it can’t clear 4120 points or more tonight, the next level down is the March resistance areas at the 3950 point level:

Currency markets continue to stabilise with not much volatility and trading ranges developing with USD still strong against almost everything. Euro is still looking weak below the 1.21 level with buying support evident at the 1.2050 zone as no new session lows are created. Momentum remains negative but only just so there is a small potential for some upside soon, but the USD remains too strong in the short term:

The USDJPY pair breakout is waning slightly but is not yet over with some intrasession buying support to keep it above the 109 handle. I did expect this reversion to the 109.50 level in last nights session because price action and momentum was so overbought but this looks more like a deceleration – taking foot off the peddle – instead of slamming the brakes. Either way, look for continued support at the low moving average into tonight’s session:

The Australian dollar remains depressed but there is some light on the horizon with a very small blip above weekly support (lower solid black horizontal line) at the 77 level, forming the weakest bullish inverse head and shoulders pattern for the last 24 hours but the recent rut in iron ore prices could see this breakdown very quickly. Watch for capitulation below 77 cents proper:

Oil prices failed to stabilize and have turned down due to the turmoil in Israel with an imminent breakdown possible as Brent crude pushed straight through the $67USD per barrel level overnight. Daily momentum was getting into a proper overbought stage as price action continued to firm but my expectation of a breakout has not yet come to pass. Watch for a follow through below the low daily moving average level:

Gold continues to be restrained by a strong USD with a recent pulldown in price in the wake of the CPI print but it managed a small comeback overnight to finish at the $1826USD per ounce level.  While the advance on its recent breakout above the psychologically important $1800USD per ounce level is not yet over, this 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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