Macro Morning

See the latest Australian dollar analysis here:

Australian dollar rides the energy panic

Wall Street was looking to put in a sixth consecutive down session last night, but managed a very late comeback as concerns about growth and vaccination mandates amid rising delta outbreaks lingered. Bond yields fell back slightly with the lack of any relevant events on the economic calendar providing little catalysts to move bond or currency markets around. The USD effectively range traded against all the major currency pairs with gold unchanged and still below the key $1800USD per ounce level.

Bitcoin continues to descend down to the early August lows (lower black horizontal line) with a wide ranging session overnight, finishing at the $45K this morning but looking tenuous at best here in line with other crypto nuttiness:

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite put in a solid finish, remaining above the 3700 point level, up 0.3% to 3715  points while the Hang Seng Index has fallen completely out of bed, taking back all of its Friday gains and then some, off by more than 1.5% to finish at 25813 points.  The daily chart is showing price going sideways yet again as it struggles to decisively clear its own high moving average nor trailing ATR resistance above the 26000 point level:

Japanese stocks continued their epic runup though with the Nikkei 225 finishing 0.2% higher to 30447 points. The daily chart continues to show a very overextended rally with the 30000 point level not really turning into a resistance level as I expectedd with futures indicating more upside on the open. So far, longs have held out here for more upside with price well above the high moving average, but I still contend a high risk/reward short trade opportunity is brewing here:

Australian stocks were able to stave off another selloff with the ASX200 eventually finishing 0.25% higher at 7425 points. SPI futures are down nearly 20 points however with downside pressure still evident on the daily chart. Today’s speech from RBA Governor Lowe could be a catalyst, but also watch Chinese stocks because while ATR support has been very solid at the 7360 point level, this could break:

European markets were much more ebullient for once and were co-ordinated across the continent with the German DAX lifting 0.7% in a straight forward bullish session, finishing at 15709 points. The daily chart is still showing a bearish picture but notably ATR support at the 15500 point level is firming up again with momentum quickly inverting from the oversold pace in recent sessions. Another close above the high moving average at the 15800 point level is required before calling this a bottom however:

Wall Street continues to wobble however with the prospect of the punchbowl draining out faster than expected dominating risk expectations, with the S&P500 eventually finishing 0.2% higher at 4468 points, but not after dropping sharply mid-session as it remains well below the key 4500 point level. The four hourly chart shows increased intrasession volatility with dip still not filled by the usual BTFD crowd, with a wider correction still possible if price doesn’t get back above the high moving average or 4470 point level soon:

Currency markets absorbed some minor weekend gaps across the complex but were again relatively flat with USD strength still dominating. Euro oscillated around the 1.18 level with momentum still in the negative zone with the four hourly chart not providing much clue to future short term direction as overhead resistance remains strong:

The USDJPY pair however reversed direction after an Asian session breakout that saw it peak above the 110 handle, then hit overhead ATR resistance on the four hourly chart at the 110.20 level and then come back to where it started this morning. The four hourly and daily charts still look like sine waves and not providing any real directional plays so far:

The Australian dollar is slowly going nowhere as well, still hovering slightly above the mid 73 level with short term momentum still in the negative zone but not yet showing a breakdown. Today’s RBA speech could be a catalyst, but its likely tonights US inflation print will do the damage. Watch for a potential breakdown below the 73.40 level:

Brent crude finished nearly 1% higher and provided a proper breakout for traders to work with last night, bursting through the $73USD per barrel level. Price action had bene bunching up into a congestion zone here that has now escaped above the daily high moving average and should progress into a rally up to at least the $75 level:

Gold remains relatively stable but still below the key $1800USD per ounce psychological level with intrasession volatility abating considerably as the trading week restarts. The rejection of overhead resistance at the $1830 level in the medium term is still the big picture here so even a breakout above $1800 may not yet be enough to get things going:



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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