Macro Morning

A big night on risk markets with the latest US inflation report coming in as expected, with the ECB meeting also not produce any surprises as stocks lifted across the board. Bond markets spiked before settling down with 10 year Treasuries putting in a three month low with USD slipping against the majors again but not making any shocking moves, even against gold. Commodity prices lifted stronger though on the inflation data, although copper lost ground, gold gained 0.5% to almost get through the $1900USD per ounce level.

Bitcoin’s swing play seems to be over here with hesitation building at the $36K level recently and while price is still above the previous week’s intrasession low, the daily chart shows a series of resistance levels – or steps – that maybe to far away to clear at $38K, $40K and so on:

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite closed 0.5% higher to finally get back above the 3600 point level while the Hang Seng Index put in a scratch session to finish at 28713 points.  Price action is still showing an 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 as momentum flat lines here:

Japanese stocks finally found some upside with the Nikkei 225 closing 0.3% higher at 28958 points. Daily futures are pointing to a possible gain on the open this morning but resistance continues to builds at the 29000 point level proper, so watch the low moving average to come under pressure if Yen appreciates against USD further:

The ASX200 was able to push just above the 7300 point level, gaining some 0.4% to close at 7302 points with SPI futures showing a potential flat end to the week but don’t discount boisterous spirits here locally as iron ore continues its upward trek alongside house prices:

European markets were flat in the wake of the ECB meeting with no new refill of the punchbowl delivered, with only the FTSE lifting slightly as the German DAX lost a handful of points to close at 15571 points. The daily chart is still nominally positive but momentum has now retraced from its previous overbought levels with the moving average band going sideways:

Wall Street finally got out of its unsettled mood as the inflation print proved transitory and unlikely to stop the Fed’s punchbowl filling. The NASDAQ lifted the most, gaining nearly 0.8% while the S&P500 was up 0.52% to finish at 4237 points, making a new record high. Price action on the four hourly charts clearly shows a step above the former megaphone pattern that is well supported and not just a one-off with clear support at the 4200 point level to carry this trend onward and upward:

Currency markets absorbed the two key releases with some intrasession volatility but basically ended where they started with Euro roundtripping around the 1.21 mid level after a brief break below trailing ATR support. The four hourly chart still shows this pair in decline with a series of lower daily highs continuing to push it lower, so watch for another break below ATR support:

The USDJPY pair also tried to breakout on the inflation print but was thwarted and then pushed down to its start of week start point at the 109.30 level. This sets up nicely for a proper breakdown as price is now below last week’s support level as USD withdraws in strength:

The Australian dollar had a mild liftoff overnight but couldn’t make it stick, unable to get past the 77.50 mid handle level and failing to make a new intrasession high for the week as resistance at the 77.70 level and the dominant downtrend remains too hard to clear. Momentum is still nominally positive but I still see a possible reversion here in the short term back to the 77 handle proper even as USD strength is waning:

Oil prices came back slightly on the weaker USD with Brent crude pushed back above the $72USD per barrel level overnight for a new daily high. The potential for a run up to the 2018 high at $83 or so continues to build here with the low moving average never under threat:

Gold is looking better but not great following the transitory inflation print with a solid run overnight to finish just shy of the $1900USD per ounce level after previously making a 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 breakout above 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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