Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

A strange one-two punch overnight on the back of US economic prints, namely a disappointing private jobs data print and then a booming service PMI, all wrapped in a nice ball by the latest round of Fed hawkish comments sending Wall Street lower and currency volatility through the roof. Never a dull moment! Treasury yields also roundtripped but ended up where they started with the 10 year still at multi month lows while commodity markets finished clearly to the downside, with oil selling off another 3%, copper down 1% and gold doing its undollar thing with a near $50 roundtrip but still closing above the $1800USD per ounce level.

Bitcoin is following technical analysis rules after, falling through the $39K level previously and then forming a bullish falling wedge pattern on the four hourly chart, brokeout last night to almost climb through the $40K level this morning. Can it HODL on though?

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite bounced back sharply, finishing up 0.8% to 3477 points while the Hang Seng Index finally got some momentum going, closing 0.9% higher to 26426 points. The daily chart remains poised here as a potential bottom continues to form with a series of higher lows not yet confirmed by a substantial breakout above the 26700 point level, but the swing trade setup is now confirmed:

Meanwhile Japanese stocks pulled up short with more COVID concerns, with the Nikkei 225 closing 0.2% lower at 27584 points. Futures are mixed yet again as the descending triangle pattern on the daily chart continues to confirm the bearish mood, but at least offers clear enter/exit positions on the next move:

Australian stocks were able to put in modest gains with the ASX200 taking back the previous losses, finishing 0.4% higher to finally crack the 7500 point barrier. SPI futures are down over 15 points due to the wobble on Wall Street but this bullish mood should continue as daily momentum remains nicely overbought and the daily chart still good in the medium term:

European markets looked through the currency volatility with a more co-ordinated bounceback that saw the German DAX lead the pack, up nearly 0.9% to close at 15692 points. Price action is building well above previous daily ATR support at the 15300 point level as momentum picks up past the previous neutral setting, but requires another close above the high moving average on the daily chart to suggest more sustainable upside:

Wall Street however wasn’t having any of it with the headline Dow off by nearly 1%, although the NASDAQ eked out a scratch session while the S&P500 surged fell back 0.5% to finish barely above the 4400 point level again. The four hourly chart still has a tight band of support and resistance at the 4360 and 4420 point levels respectively but the lack of any new session highs since late last week maybe suggesting a medium term rounding top pattern still forming here:

Currency markets exchanged calmness for high volatility overnight on the Fed hawk comments with Euro exhibiting some of the worst (or best depending on your point of view) with a big roundtrip following a boom in Euro-wide retail sales data. The ADP and ISM prints however saw it launch up through the 1.19 handle before slammed back to trailing ATR support at the 1.1830 level with the somewhat rounding top pattern on the four hourly now suggesting a breakdown below:

The USDJPY pair also had a similar Blackadder wobble, falling through the 109 handle for a new intraweek low before surging on USD strength up to the mid 109 level. Notably, four hourly momentum is not yet positive nor is the clear ATR trailing resistance line above cleared so we have to look through this volatility and decide its still on a downtrend, unless it can clear the start of week point:

The Australian dollar was already breaking out to new highs above the 74 handle before the volatility kicked in overnight but the ride was smoother with a nice smackdown through the recent highs and settling just below its own low moving average on the four hourly chart at the 73.80 level.  The medium term price pattern is still bearish and this may have been confirmed with the inability to really stick it above that 74 cent resistance level:

Oil prices are no longer poised but in a slump and look like matching the mid July lows as WTI and Brent fell more than 3% overnight on the ADP and Fed comments, with the latter almost breaking through the $70USD per barrel level. The previous daily candle had set this rollover up with a worrisome bearish engulfing candle and ready to retest the previous lows at the $68 level:

Gold traders had a wild ride overnight, ramping up to the previous weekly high nearer the $1830 level before slammed back down on the Fed comments to finish at the $1811USD per ounce level, just above short term ATR trailing support level. Daily and four hourly momentum remains nominally positive so there is potential for another crack higher but overall this market remains in a bear phase until the $1830 level can be properly breached:



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!

Latest posts by Chris Becker (see all)