Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Mixed economic news overnight from the US saw Wall Street wobble and turn away from yet another record session high with the latest retail sales much weaker than expected. Currency markets were mixed although Pound Sterling and Aussie dollar fell back against USD while Euro was contained yet again. Bond markets saw a slight increase overall in yields but volatility remains low. Commodities were all over the place with oil surging, copper flailing, iron ore steady and gold unable to break out of its funk, remaining well below the $1900USD per ounce level.

Bitcoin remained stuck at the $40K level overnight, after bouncing back and gapping higher over weekend trade, clearing two key resistance levels in the process. As I mentioned yesterday, this 30% plus rally is not unusual for the volatile crypto market but watch that low moving average here on the four hourly chart for signs of an inversion back to $38K:

Looking at share markets in Asia from yesterday’s session, where Shanghai Composite returned from its long weekend and immediately sold off, down nearly 0.9% to 3556 points, while the Hang Seng Index fell nearly as much, down 0.7% at 28638 points.  Price action is still showing an inability to decisively clear resistance at the 29000 point level and this could turn into a wider breakdown with support at the 28500 point area withering as new daily lows turn everything over:

Japanese stocks however were no longer in hesitation mode with a big rally on the Nikkei 225, closing 1% higher at 29441 points . Daily futures are pointing to a continuation of this breakout above 29000 points as the low moving average remains solid short term support here with a modest upside target at the 29500 point level:

Australian traders were also in a buying mood with the ASX200 closing nearly 1% higher and push well above the 7300 point level at 7379 points. SPI futures are down nearly 15 points following the slip on Wall Street overnight. The daily chart is still showing a lot of overbought momentum readings, but price continues to be well supported since the breakout above 7000 points, but a breather here would be warranted before the next leg up:

European markets were generally bullish again overnight with the German DAX putting on similar gains instead of diverging in previous sessions, lifting 0.3% to close at 15729 points. The daily chart remains nominally positive, but I’m wary of momentum readings that are only just overbought with acceleration still on the lowside here, despite a much lower Euro:

Wall Street however hit the brakes with all three bourses falling back, the NASDAQ taking back all of its start of week gains to be down 0.7% while the S&P500 slipped only 0.2% but also took back its gains, finishing at 4246 points. Price action on the four hourly chart was showing hesitation mid-session with resistance building at the 4250 point level as my contention of exhaustion setting in here before the FOMC meeting firming. Watch momentum levels and a possible reversion back to trailing ATR support at the 4220 level:

Currency markets were quite mixed with Pound Sterling slipping to a two week low while Euro just sat there and did nothing, remaining slightly above the 1.21 handle and still matching the previous weekly low. A small bounce off the Friday night selloff lows is to be expected, but as I said yesterday this maybe over before it started as the real trend reveals itself:

The USDJPY pair was unable to follow through on its own substantive breakout, remaining just above the 110 handle and just below the previous weekly high. While this should still provide a good tailwind for Japanese stocks, the overbought status and the previous high not that far away does make some cause for concern for any further upside, even though the longer term charts are wanting to return to the March highs:

The Australian dollar is failing to to recover from its Friday night selloff, this time drifting below the 77 handle despite some good commodity price movement overnight. Resistance at the 77.70 level and the dominant downtrend remains too hard to clear and while momentum is now only nominally oversold we could see more downside here and a possible return to the previous weekly lows around the mid 76 level:

Oil prices are no longer just edging higher with WTI and Brent crude surging 2% overnight, the latter pushing through the $74USD per barrel level for another new yearly 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 just can’t get any satisfaction with yet another disappointing session overnight seeing the shiny metal pulled back to the $1860USD per ounce level. There was a glimmer of hope before the NY open with a possible intrasession breakout, but this amounted to nothing. This second close below the low moving average and the touching of ATR support is presaging more downside below:

 

 

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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