Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

It was all about the USD overnight in a nearly uneventful trading session as European and US stocks were largely unchanged while the major currency pairs all pulled back strongly as Treasury yields firmed slightly. Again, Fed TaperTalk may be the cause of the catalyst, as traders position for a more robust and hawkish Fed – at some time in the future! Commodity prices were mixed again with oil and copper up slightly, while gold hovered around the $1900USD per ounce barrier.

Bitcoin and other crypto’s continue to flat line with the former unable to get back above the $40K level as volatility reduced yet again overnight, leaving it just above the $38K level. Technically, it still needs to clear the $42K level from the intrasession high on Friday before calling this a bottom, although daily and four hourly momentum have now switched to positive readings:

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite finished up 0.3% to close at 3592 points while the Hang Seng Index pushed even higher, closing up 0.8% to 29151 points.  The daily chart is showing a solid bounce off the March lows with resistance at the 29000 point level almost decisively punched through with momentum now showing overbought and ready to clear away:

Japanese stocks also put on some gains with the Nikkei 225 closing 0.3% higher to 28642 points.  Daily futures are looking a little promising despite the flat moves on Wall Street overnight as this very mild move higher still remains a swing long short term play only as the medium term pattern is still pointing down:

The ASX200 was the only loser in the region, finishing 0.3% lower at 7092 points in the wake of a much stronger Australian dollar. SPI futures are flat once again, with the 7100 point level now firming as overhead resistance as the rounding top bearish pattern is still forming on the daily chart:

European markets were again full of hesistation and lacking confidence with scratch sessions pretty much across the continent, with the German DAX losing a handful of points to finish at 15450 points. Sentiment is still slowly moving to a more bullish phase but actual price action has yet to confirm this breakout through overhead resistance and the previous April high:

Wall Street stumbled at first alongside European shares but was then able to put on some minor gains towards the close, although it was almost all tech stocks with the NASDAQ up 0.6%, the S&P500 only managing a meagre 0.2% return that didn’t even cover the previous session losses, finishing again just below the 4200 point barrier. Price action on the four hourly chart is still showing an inability to clear that 4200 level with momentum waning and getting back below overbought readings:

Currency markets were the ones that moved the most on USD firming against everything, with Euro pushed well below its previous resistance breakout zone and then again through the 1.22 handle overnight. As I noted yesterday, while the breakout was nominally a bullish move there was a lot of intrasession selling on the four hourly candles showing another line of resistance above, and here we are pushed back to the point of control for the last two trading weeks. Watch for a move below support at the 1.2150:

The USDJPY pair was able to move slightly higher overnight due to the strong USD but its a relatively weak breakout that has yet to clear overhead resistance at the 109.20 level. This could be shortlived so I’m watching for a return below the high moving average in today’s session:

The Australian dollar broke out yesterday alongside Kiwi on the RBNZ meeting but this was completely negated and then some overnight as it returned back on trend below its downtrend line to finish just above the 77 handle this morning. I’m still watching for a return to last week’s low and for a potential capitulation below the 77 cent level proper:

Oil prices came back only slightly overnight with Brent crude still hovering above the $68USD per barrel level. The current price action remains somewhat confused, elevated, but a little bearish as price is able to get back above the $67 support level but it has been unable to clear the $69 to $70 zone so watch daily momentum readings for signs of an inversion:

Gold is just hanging on to the $1900USD per ounce level, despite the ever stronger USD, which shows the internal strength of this new uptrend. The next level to reach are the November 2020 highs at the $1960 level, with a clear uncle point at the low moving average to continue to add to positions, but watch for any pullback on profit taking:

 

 

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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