Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Sentiment continues to swell positive with another solid night across all equity markets with tech stocks leading the way this time due to some solid earnings results on Wall Street. Bond yields slipped on a very dovish ECB meeting with commodity prices continuing their own bounceback, oil up 2% alongside copper while gold got back above the $1800USD per ounce level again.  The good news should continue here locally in Asia with stock futures pointing to very solid opens across the region.

Bitcoin remains somewhat in favour, with its recent surge up through the start of year position to break $32K stalling out but still making a new intraweek session high. This may well be another dead cat bounce amid the ongoing downtrend, as a sustained move higher requires a daily close above $33K or more:

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite finished up 0.3% to 3575 points while the Hang Seng Index finally found a bottom doing the best in the region to close 1.8% higher at 27695 points. I mentioned yesterday that the daily chart showed price action possibly putting in a double bottom pattern with long tails of buying support building, but this still requires a close above the high moving average to get the swing signal moving:

Japanese stocks were closed for a holiday and will be again today with Nikkei 225 daily futures suggesting a further advance likely on the return on Monday. However I’d still be worries about further outbreaks of COVID at the Olympics so I still expect this to be short lived short covering:

Australian stocks moved higher again with the ASX200 lifting over 1% to close at 7386 points in a very solid breakout even as the Australian dollar lifts slightly higher.  SPI futures are down around 15-20 points, so this bounce may taper slightly going into the weekend break but things are definitely looking up as momentum moves higher into the overbought zone and new weekly and daily highs are made:

European markets were able to follow through on their bounce with the German DAX lifting 0.6% to finish at 15514 points, while the FTSE dropped back on its own. Price action has been pushed back above previous daily ATR support at the 15300 point level with momentum trying to get back to the neutral positive zone. This swing trade has a target around the 15600 point level but I still remain cautious here with some hesitation building intrasession:

Wall Street is not cautious at all, ready to bid and bid hard with house price news helping push all assets higher, particularly tech stocks with the NASDAQ up 0.4% while the S&P500 lifted 0.2% to complete the dip filling. The four hourly chart shows this bounce having finished filling in that deep crack, with price now wanting to return to the previously exhausted levels around the 4380 zone:

Currency markets saw a return of volatility around the ECB meeting with Euro spiking up through the 1.18 handle before getting smashed back down to the where it started, almost making a new weekly low in the process. That’s where it stands this morning, with the idea of a potential short term bottom forming here at the 1.1760 level negated. Price remains unable to firmly get above the downtrend line since last week’s high:

The USDJPY pair was basically listless due to an absence of traders yesterday and just hovered around the key 110 level with momentum remaining decently positive on the four hourly reading but nowhere near overbought and price action unable to breakthrough the recent weekly high at the 110.50 level:

The Australian dollar was able to stabilise once more overnight but its not finding any further upside here as the trailing ATR resistance at the 74 handle proper provides too strong a headwind. This is despite a bounceback in commodity prices so watch for a potential pullback here soon:

Oil continues its bounceback overnight with Brent crude returning above the $73USD per barrel level as internal buying support keeps it above the previous ATR support level. I asked yesterday if it can hold for a second close above the high moving average at $73 and here we are so I expect a big fill in soon:

Gold was just able to cling onto the $1800USD per ounce level overnight after being pushed down all session as the resurging USD is suggesting an inversion below was imminent. Daily and four hourly momentum is still nowhere near positive, with a lack of buying support turning this stabilisation into a possible leg down alongside other undollars:

 

 

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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