Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Stock markets were nominally weak overnight until after the Wall Street close, with economic data in the US not inspiring but keeping the stimulus floodgates open. USD again surged particularly against Yen, although it continues to lose ground against Yuan as Fed TaperTalk dominates forex trading decisions, with end of month window dressing (Monday being a holiday for the US and UK) also helping. Commodity prices were more bullish with both oil and copper picking up strongly, while gold hovered just below the $1900USD per ounce barrier.

Bitcoin and other crypto’s continue to flat line with the former still unable to get back above the $40K level as volatility reduced further overnight, which normally presages a big breakout either way soon. Technically, it still needs to clear the $42K level from the intrasession high on Friday before calling this a bottom, and although daily and four hourly momentum have now switched to positive readings, its going nowhere so far:

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite was up 0.4 % to close just above 3600 points while the Hang Seng Index pulled back slightly after a previously solid session, down 0.2% to close at 29118 points.  The daily chart is still 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 the brakes, with the Nikkei 225 closing 0.3% lower to 28549 points.  Daily futures are looking more promising given the upcoming window dressing on Wall Street overnight as this still remains a swing long short term play only until trailing ATR resistance is broken:

The ASX200 put in a scratch session, finishing where it started as it absorbed the latest CAPEX print at 7094 points. SPI futures are up over 50 points on the end of session window dressing, with the 7100 point resistance probably pushed through today to end the trading week on a solid note as the rounding top bearish pattern becomes negated on the daily chart:

European markets remained in hesitation mode with another mix of small falls and rises across the continent, with the German DAX losing 0.3% to finish at 15406 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 started slowly at first alongside European shares but was then able to accelerate the gains towards the close due to the end of month window dressing although the NASDAQ put on a scratch session, the S&P500 lifted a meagre 0.1% in has moved higher in post close futures to get back above the 4200 point barrier. Price action on the four hourly chart is still showing an inability to decisively clear that 4200 level with momentum waning and getting back below overbought readings:

Currency markets were again the ones that moved the most on USD firming against almost everything, although Euro was stalled overnight on a poor German consumer confidence print and then absorbed the US economic data with aplomb, still stalled out just below the 1.22 handle.  Watch for a move below support at the 1.2150 level if the current session lows are no longer defended:

The USDJPY pair was able to finally breakout higher, clearing overhead resistance at the 109.20 level decisively in a big surge overnight. This exceeds the previous weekly highs and while momentum is off the charts and extremely overbought its likely to stick here or at least be supported at the 109.60 level:

The Australian dollar was almost in a coma overnight, unable to move out of a very tight trading range despite some good economic print catalysts and burgeoning commodity prices, finishing at the 77.40 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 better overnight with Brent crude pushing up over the $69USD per barrel level to almost get back to its previous weekly high. The current price action is now firming a little as price is able to get back above the $67 support level but it still has 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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