Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

A risk off situation is brewing across stock markets as bond yields drop back to new lows as sentiment around continued COVID outbreaks weighs heavily. Wall Street dropped nearly 1% while European stocks fell nearly 2% as the ECB changed its inflation target regime, with Euro spiking although USD remains strong against the commodity currencies, but Yen safe haven buying accelerated. Treasury and Australian 10 year yields returned to their February lows with commodity prices again quite mixed as oil prices came back slightly as industrial metals fell with gold holding above the $1800USD per ounce level.

Bitcoin is still listless, pushed back down to the $32K level with the daily chart still looking very uneventful but definitely with a bearish bias so watch the recent daily lows for signs of a breakdown:

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite took back all of its previous gains, down 0.8% to close at 3523 points while the Hang Seng Index has broken down completely, falling nearly 3% to 27153 points. This continues a big breakdown below daily ATR support at the 28100 point level that could has surpassed the May lows and wiped out all of calendar 2021 returns:

Japanese stocks were also in selloff mode as COVID hits the Olympics, with the Nikkei 225 closing 0.9% lower at 28118 points. Daily futures are now suggesting further selling off as we close the week out with Yen safe haven buying accelerating with key daily ATR support at the 28300 point level brushed aside and likewise a wipeout of 2021:

Australian stocks were the only good news in the region with the ASX200 closing 0.2% higher as it advances well past the 7300 point level. SPI futures however are down nearly 50 points so we’re likely to see stabilisation at best here going into the end of the trading week, with trailing daily ATR support at 7150 points still holding:

European markets are being very schizophrenic with yet another engulfing session range across the continent as Euro surged higher amid the ECB inflation targeting. The German DAX fell nearly 2% to close at 15420 points, briefly taking out daily ATR support at the 15300 point level with the bullish price pattern wiped out yet again. This sets up for another potential push below if this doensn’t stabilise soon:

Wall Street lost its mojo after yet another reversal but at least all three bourses had similar returns, with the S&P500 eventually closing 0.7% lower to 4320 points. The four hourly chart showed momentum returning back to the overbought status but this was short lived with a sharp selloff taking it well below key trailing ATR support that had held for the last three weeks of this uptrend. With price now below all of this week’s session lows, there is potential – before the inevitable BTFD crowd steps in – for another selloff:

Currency markets are seeing a return of volatility in the wake of the ECB inflation re-targeting with Euro spiking back to its start of week high above the 1.18 handle. While a good surge it doesn’t look like a reweighting as price has been unable to break the steady steps down in the trailing ATR resistance line with momentum only barely positive:

The USDJPY pair failed its own support however after deflating back to the previous weekly low with the spectator ban at the Tokyo Olympics in the wake of another COVID breakout causing a big surge in Yen safe haven buying. This creates a major oversold condition but this could continue further selloff down to the April lows at the 107 level:

The Australian dollar remained in sell mode with a further drop down to the 74 level overnight, with some stability this morning. Momentum remains nicely oversold and with a new low for the calendar year, the next target below is the key 70 handle which is very probable if a wider risk off situation builds:

Oil is trying to find some support here following the lack of outcomes from the OPEC+ meeting with Brent crude lifting slightly overnight to close back above the $74USD per barrel level. While price remains strongly supported in this uptrend, momentum is now inverting and almost crossing into negative zone so watch for a potential return to trailing ATR support at $72:

Gold is still trying to finding some life here with buying support at the $1800USD per ounce level building with the four hourly chart showing price remaining above but finding short term resistance at the $1815 level. 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:

 

 

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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