Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Strong corporate earnings kept Wall Street elevated overnight, but only just with the selloff in Chinese tech issues overshadowing the new record highs as Treasury yields bounced a little after some strong auction results. USD sold off mainly against Euro while commodities lifted with oil up 1%, copper up over 4% while gold fell back below the key $1800USD per ounce level.

Bitcoin put in a stonking rally to start the week, hitting the $40K level just because Amazon posted a crypto currency job vacancy, before falling back to the $37K level where it sits this morning. This definitely triggers an upside condition with a daily close well above $33K and then a clearance of trailing ATR resistance at $35K with the four hourly chart already looking extremely overbought and overextended though:

Looking at share markets in Asia from yesterday’s session, where Chinese markets were hit hard from regulatory foot shooting with Shanghai Composite sold off 2.3% to 3467 while the Hang Seng Index was off by more than 1000 points, down 4% to 26192 points. Capitulation and then some is definitely here with a hard breakdown through to the 2020 resistance highs at 26000 points:

Japanese stocks did much better after a very long break, with the Nikkei 225 up 1% to 27833 points. While I’m still worried about possible volatility around further outbreaks of COVID at the Olympics this short lived short covering rally could turn into something wider, so watch daily momentum to possibly switch positive here as the first sign:

Australian stocks were again basically unchanged – probably scratching their heads after the rat-licking going on in Sydney over the weekend – with the ASX200 moving 1 point lower to remain just over 7400 points, with SPI futures suggesting a slightly better result this morning, up 20 points so far. Momentum has moved higher into the overbought zone with new weekly and daily highs being made:

European markets were relatively quiet overnight with some minor pullbacks in the central markets offset by rises in peripheral bourses with the German DAX dropping 0.3% to finish at 15618 points. Price action remains above previous daily ATR support at the 15300 point level with momentum now back to the positive zone with this swing trade target fulfilled above the 15600 point level. The next stage is again another attempt at breaking through the previous weekly highs that are forming staunch resistance at the 15800 point level:

Wall Street was more cautious overnight with tech stocks basically flat lining better moves in industrials as earnings kept on surprising to the upside. The S&P500 lifted 0.2% to another record high at 4422 points with the four hourly chart now getting into the overbought mode with trailing ATR support providing a good uncle point for further upside:

Currency markets saw some relief from USD strength but it was mainly in Euro rebounding after being oversold for several weeks now. The union currency lifted through the 1.18 handle after previously making a new weekly low with a solid swing trade that has gone through the downtrend line since the previous weekly high but not overhanging ATR trailing resistance on the four hourly chart at the 1.1820 level, which is the target for this move:

The USDJPY pair was unable to extend its breakout from last week on the return of Japanese traders with a modest start to the week, hovering around the previous resistance zone at the 110.30 level. The 110 handle should continue to provide solid support in the short term but the weekly high at the 110.70 level is likely to prove hard to push through in the medium term:

The Australian dollar at first dipped into the low 73’s before coming back last night to its previous Friday night finish at just below the  74 handle. Notably however it still remains stuck below trailing ATR resistance at the 74 level proper which could be indicating a bunch up of buying support ready to breakout, but the long tails on the four hourly session candles indicate otherwise for now:

Oil prices rose nearly 1% to start the week in a better fashion with Brent crude almost breaking through the $74USD per barrel level as internal buying support keeps it above the previous daily ATR support level. There needs to be a substantive second close above the high moving average at $73 with a solid switch to positive momentum before calling this dip over:

Gold is slowly losing buying support here with another session held mainly below the $1800USD per ounce level overnight after it deflated all last week. Four hourly momentum is switching to oversold status and price action is setting up for a further breakdown here so watch out below for another 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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