Macro Morning

Its a big waiting game out in the risk complex right now as traders position for tonight’s US inflation report, with Wall Street stalling again overnight. Bond markets however are rallying with a big move in 10 year Treasuries that seems to be presaging a robust inflation print while the USD is also slowly firming against the majors again. Commodity prices have come off the boil once more with only iron ore putting on any gains as the USD strength negates the current uptrends, although there have been some big inversions like with lumber recently.

Bitcoin has had its classic swing play played out overnight with a near 20% rally since the nadir reached only a few days ago, settling just above the $36K level this morning. This doesn’t get it out of the woods just yet, although price is above the previous week’s intrasession low, with a series of resistance levels to clear at $38K, $40K and so on:

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite was the only standout, rising a little over 0.3% to close at 3591 points, while the Hang Seng Index is falling back alongside everything else, down 0.2% to 28742 points.  Price action is showing a clear inability to decisively clear resistance at the 29000 point level keeping this market contained with only a little support building at the 28500 point level:

Japanese stocks continue to struggle with the Nikkei 225 closing 0.3% lower at 28860 points.  Daily futures are pointing to more downside on the open today as resistance builds at the 29000 point level proper, watch the low moving average to come under pressure today as momentum switches to the negative zone:

The ASX200 finally lost some ground, falling some 0.3% to close at 7270 points in the wake of a declining consumer confidence print. SPI futures are essentially flat however, but we could see a follow through here on overall risk aversion as momentum retraces from its extremely overbought levels:

European markets again diverged regionally with peripheral bourses lifting slightly while the FTSE pulled back 0.2% alongside the German DAX, which was off by 0.4% to finish at 15581 points. The daily chart is still nominally positive with momentum nicely overbought and the moving average band continuing to track higher, but its not yet like the May run up so I’m keeping an uncle point clearly at the low moving average level:

Wall Street continued in its unsettled mood, but it was co-ordinated across all markets with the NASDAQ falling back 0.1% and the S&P500 down 0.2% to finish at 4219 points, still well shy of its recent record high. Price action on the four hourly charts is trying to clear to the upside here but the lack of a proper positive close and another record high is keeping risk spirits at bay:

Currency markets are buiding volatility levels again as we work up to tonight’s US inflation print and ECB meeting with a false breakout in Euro up through considerable resistance overhead at the 1.22 level before getting back to where it started at the 1.2170 level. This is a definite holding pattern and won’t break out proper until tonight, with the previous weekly highs at the 1.2270 to overcome  on the upside:

The USDJPY pair had a milder breakout that actually held but its not as aggressive as expected with a move up to the 109.60 level out of the previously tight moving average band. This may pullback again before the US inflation print with support building at the 109.40 level as a possible uncle point to extend that breakout towards the 110 handle proper:

The Australian dollar continues on its deflation ride yet again, pushing back towards the 77 handle as resistance at the 77.70 level and the dominant downtrend remains too hard to clear. Momentum is reverting to a neutral and almost negative level on the four hourly chart, and combined with the clear deceleration and waning intrasession momentum, we could see a reversion here in the short term back to the 77 handle proper if USD proves too strong tonight:

Oil prices pulled back slightly after the previous bullish move, with Brent crude pushed a little bit below the $72USD per barrel level overnight. While there is still the potential run up to the 2018 high at $83 or so but I’m still cautious here despite some good momentum and a not so strong USD – yet:

Gold is trying to fightback following last week’s NFP print but again failed to get back above $1900 level, settling at the $1888 level with an ominous new daily low. Trailing daily ATR support at the $1850 level is the key level to watch in the short and medium term as we require another solid session to break the high moving average soon:



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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