Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Bond markets are leading the way in dampening risk sentiment overnight with Wall Street pulling back from its recent bounceback while European shares remained in a holding pattern as the German elections put the continent in political limbo. Risk currencies were largely unchanged although USD continued to strengthen against Euro as gold was unable to hold on to its weekend gap gains. Commodities remained bullish with oil putting in a three year high as iron ore soared nearly 9% to start the week in fiery fashion!

Bitcoin was  unable to gain traction following the reaction to the latest Chinese ban on crypto currencies, with the usual weekend gap taking it to the $44K level but not to a new high, pulling back sharply overnight to below $43K this morning. Overheard resistance is quite firm at the $45K level, with support at $40K the key level to watch:

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite couldn’t get any traction, falling 0.8% to close at 3582 points with the Hang Seng Index was up more than 0.5% before it finished flat at 24208 points. The daily chart remains under a lot of pressure here with resistance continuing to build and another downturn below the 23500 level quite likely on the reopen:

Meanwhile Japanese markets pulled back after an exuberant previous week, with the Nikkei 225 closing flat at 30240 points. A pause was overdue here, following the inverse trajectory of Yen so while support is pretty obvious at the 29300 point level it may take more co-ordinated risk taking across other markets to fire this up again above the key 30,000 resistance level:

Australian stocks had a solid start to the week, with the ASX200 taking back its Friday losses to finish 0.5% higher at 7384 points. SPI futures are down at least 40 points for a 0.5% pullback, so here we go again! The daily chart is showing a potential rollover of the dead cat bounce but price may well be supported as iron ore prices surge once again. As I mentioned last week, watch daily momentum which is nowhere near positive so until overhead ATR resistance at the 7400 point area is broken through again this dip is not yet over:

European markets had a slightly better start but it was only minor lifts across the continent with the German DAX moving just 0.2% higher at 15573 points unable to outshine that ominous bearish engulfing candle on the daily chart. While the next level of resistance at 15700 points is not that far away, sentiment is keeping this market depressed while the slightly weaker Euro helps things glide things along:

Wall Street however showed the real risk sentiment with an event pullback in both the NASDAQ and the S&P500, the latter finishing 0.3% lower to close at 4443 points. While this keeps price well above the neckline at the 4400 point level of that large head and shoulders pattern on the daily chart, in the short term resistance is building at the recent daily highs around the 4470 point level. This may well prove too strong even for the BTFD crowd with the Treasury bond market the actual area to watch going ahead:

Currency markets were relatively contained overnight, with continued selling pressure against the majors. Euro maintained its bearish trend with a return below the 1.17 handle as short and medium term resistance remained too strong for the union currency as the German election result stays in limbo. Momentum had swung back to negative readings in the short term with overhead trailing ATR resistance at the mid 1.17 level still nowhere near under pressure, so watch for more downside here:

The USDJPY pair continues to zoom ever higher as it heads towards the 111 handle to create yet another new weekly and monthly high. This puts more pressure on the medium term downtrend, with momentum nicely overbought now but price action seems to be accelerating far too quickly, so watch for a crossover below the overbought reading for a potential reversion back to the 110 level proper:

The Australian dollar was unable to gain any traction although it didn’t make any new session low on the four hourly chart with price bunching up just below the 73 handle. With iron ore breaking out yet again it could follow its trajectory and push up through the 73 handle and the former false break from last week but overhead ATR resistance remains very solid here and could prove an anchor point going forward:

Oil prices had the best moves overnight, with both WTI and Brent making new three year highs with the latter surging above the $78USD per barrel level. Price action has now pushed through the medium term downtrend with momentum readings moving to well oversold here and likely to keep filling in as all short positions are wiped out with support at the low moving average level as a great uncle point:

Gold remains under a lot of pressure from hawkish central banks hell bent on tapering as it returned again to the $1750USD per ounce level. The daily chart still shows a huge weight of resistance above that has not been cleared in the short or medium term.  As I said last week, we could see a full retracement to the previous flash crash lows at the $1700USD per ounce level:

 

 

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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