Macro Morning

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Risk markets turned from relatively quiet to very cautious overnight as US traders returned from their long weekend in a poor mood, with Wall Street slipping. European markets all retraced sharply on the poor German ZEW showing with factory orders also disappointing. Commodity prices were all over the place with Brent oil initially higher before getting sold off later in the session, with a similar move in gold which retraced back below the $1800USD per ounce level.

Bitcoin has been unable to gain any momentum following its weekend trade as it hovers around the the average price for last week around the $33 to $34K level. This is getting a little boring as range trading takes hold with support at the $33K and resistance at $36K the key areas to watch:

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite sold off at first, down nearly 0.5% before a slight recovery at the end of the session to close only 0.1% lower at 3530 points while the Hang Seng Index is going further again, this time down 0.3% to 28072 points. This continues the breakdown below daily ATR support at the 28100 point level that could now extend to the May lows:

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Japanese stocks tried to come back however with the Nikkei 225 nearly closing 0.3% higher at 28643 points. Daily futures are now suggesting further selling with daily ATR support at the 28300 point level directly under threat as the wider risk off mood grows:

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Australian stocks fell back sharply following the RBA meeting with the ASX200 closing down 0.7% to 7261 points with the selling accelerating into the close. SPI futures are down nearly 15 points due to the falls on Wall Street so this looks a potential test of trailing daily ATR support at 7150 points soon as momentum inverts:

European markets all pulled back from their previous positive sessions in the wake of some poorer than expected economic data with the German DAX representative, falling nearly 1% to close at 15511 points. Daily ATR support is coming under attack here again, and while firm at the 15300 point level the lack of any new daily highs in quite awhile is starting to weigh on this market:

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Wall Street reopened after the July 4th holiday long weekend with a mish mash of returns as the NASDAQ put on a few points while the S&P500 fell back from its recent record highs, closing 0.2% lower to 4343 points. The four hourly chart shows momentum continuing its inversion back to the mean with a possibility of breaking below key trailing ATR support that has held for the last three weeks of this uptrend:

Currency markets are moving well away from their previous holding patterns and into some big volatile moves as SD gains strength against the majors on the risk averse trade. Euro plunged back down to its previous weekly low just above the 1.18 handle after failing to break out yesterday above trailing overhead ATR resistance. This sets up for more potential downside:

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The USDJPY pair however is still deflating back to the previous weekly low with a series of small selloffs on the four hourly chart, now down to the mid 110 level. As I warned on Monday, there is a growing possibility that if risk markets here in Asia do not respond to the Wall Street rally on Friday this could produce more Yen safe haven buying:

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The Australian dollar was flummoxed overnight, dropping nearly 100 pips as it tried to breakout above the 76 level but falling down below the 75 handle instead. Momentum had been pushing into the overbought zone and up through trailing resistance but I was always concerned that the upside target at just below last weeks inversion high was the extent of this move:

Oil prices are having a similar inversion in the wake of the lack of outcomes from the OPEC+ meeting with Brent crude unable to close any higher above the $77USD per barrel level and pushed lower instead to the $75 zone. While price remains strongly supported in this uptrend, with momentum nicely overbought and not too far overextended, the 2018 high at $83 could still be too far to reach:

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Gold was trying to finding some life here after being in the doldrums for several weeks and almost cracked decisively above the $1800USD per ounce level yesterday before retracing just below late this morning. To keep this moving requires another big move above the high moving average and then way up through previous ATR support at the $1840 level but would require a lot more USD weakness:

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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)

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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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