Macro Morning

See the latest Australian dollar analysis here:

Macro Morning

Wall Street returned from its long weekend and at first was ebullient but sold off all the gains throughout the end of the session, finishing with a scratch result. The US economic releases were solid with a record high manufacturing PMI, while the survey was upbeat but a little mixed. Bond yields moved around a little but finished where they started while currency markets saw mixed moves with Pound Sterling falling, Euro stabilising but in line with US equities while the Aussie can’t find any momentum despite higher commodity prices.

Bitcoin is failing to get any headway again, still unable to return above the $40K level from last week, with the former technical resistance level at $42K completely unattainable. Turn the daily chart upside down and you’d scramble to buy!

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite started out the new trading month with a mild session, closing 0.2% higher to remain above 3600 points while the Hang Seng Index took back its previous losses and then some, closing 1% higher at 29468 points.  The daily chart is now showing a clear bullish engulfing candle that confirms the previous week of daily sessions bouncing higher off the March lows. This pushes aside resistance at the 29000 point level and trailing ATR daily resistance so we should see more upside here to complete the overall double bottom pattern:

Japanese stocks were in hesitation mode without any strong leads with the Nikkei 225 slipping 0.2% to close at 28814 points. Daily futures are not looking promising with the potential breakout above trailing ATR daily resistance thwarted yet again, with an inability to complete another solid session above the 29300 point level. Watch for the low moving average to come under pressure here:

The ASX200 walked back a little but only just, falling 0.3% to hold well above the 7100 point level, closing at 7142 points. SPI futures are up around 15 points or so, so that level should prove firmer support going forward, although momentum is considerably overbought on the daily chart and ripe for another mild pullback or scratch session given the floppy end to Wall Street overnight:

European markets were more upbeat with the return of US traders as the German DAX breaking out above its April highs, finishing up nearly 1% to 15567 points. Sentiment is getting much more bullish now but the question is can it hold with some reluctance shown intra-session and following the Wall Street scratch mood overnight:

Wall Street seemed to be following the European case, with a breakout to above recent highs to start off the session, but took all that back to finish with scratch sessions instead. The NASDAQ fell back slightly while the S&P500 lost 2 points but was still able to finish just above the 4200 point barrier. Price action on the daily chart is still showing an inability to decisively clear that 4200 level with momentum still nowhere near overbought readings, this is all still looking like a stretch as the megaphone pattern plays out. Watch for support to possibly fold here at the low moving average level:

Currency markets effectively round tripped around the US PMI figures and the German unemployment print with Euro initially spiking before heading back towards the 1.21 handle but still above its Monday morning starting point. Momentum is returning to a neutral setup here with all eyes on the low moving average at just below the 1.22 handle:

The USDJPY pair remained a little depressed overnight, but is holding on above the 109 handle. Volatility is abating which means expect a breakout soon, possibly below trailing ATR support here at the 109.30 level:

The Australian dollar is still trying to get out of its funk and while the small 50 pip rally may excite some from the 77 handle low, price action on the four hourly chart is pointing to a rollover here. The Aussie was unable to take advantage of the risk mood overnight despite rising commodity prices, so I’m watching for a break below the low moving average today particularly if the GDP print undershoots:

Oil prices shot out of the gate overnight with Brent crude pushing straight through the $70USD per barrel level to make a new definitive weekly and monthly high. With another session to confirm it, watch for everyone to pile in here for a run up to the 2018 high at $83 or so:

Gold is slowing down some after trying to extend above the $1900USD per ounce level as daily momentum continues to slightly decelerate. 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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