Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Wall Street and European equities bounced back sharply overnight with yet another reversal in risk sentiment as the latest US ISM services and European retail sales print buoyed risk markets. Bond markets saw a small selloff with the 10 year Treasury yield blipping up to the 1.54% level as risk currencies remains contained as commodity currencies lifted slightly against the strong USD. Commodities went ever higher with oil jumping another 2% for a three year high while copper and gold both fell back slightly.

Bitcoin continued its surge out of its recent holding pattern at the $44K level, pushing right through the $49K temporary resistance level and surged through to almost hit the $52K level overnight for a new monthly high. The four hourly chart shows price way overextended and ripe for a pullback but probably unlikely as the latest pump and dump scheme continues:

Looking at share markets in Asia from yesterday’s session, where mainland Chinese markets were still closed for a holiday while the Hang Seng Index held on bravely with a small lift to finish 0.3% higher at 24104 points.  There always remains the small potential for a breakout above the high moving average at 24800 points but its still a long way away for this beleagured market as support at the 23500 point level remains tenuous:

Japanese markets continued their sell mode with the Nikkei 225 closing 2.2% lower to 27822 points. Futures are indicating a bounceback on the reopen, with the recent daily/weekly lows at the 27000 point level currently supported but only just by price action. Momentum readings remain oversold so this will be very dependent on more Yen downside:

Australian stocks managed only a minor selloff with the ASX200 down 0.4% to 7248 points. This looks like being arrested completely with another whipsaw as SPI futures are up nearly 50 points or 0.4% due to another reversal in risk sentiment on Wall Street overnight. Monthly support at the 7000 point level remains key here with daily price bunching up but not yet able to break above the high moving average nor momentum getting out of the oversold stage. Watch for a proper breakout above the 7300 level which could arrest this:

European markets were finally able to get some momentum as negative sentiment held back slightly, with the German DAX surging 1% higher to finish at 15194 points. The overall picture remains quite bearish and while the move lower to weekly/monthly support at the 15000 point level is still setting up a proper selloff, as daily momentum remains oversold there is the slim chance of a swing trade higher here:

Wall Street did the same with the NASDAQ bouncing back the most, up 1.2% while the S&P500 took back all of its losses to finish 1% higher at 4345 points. The four hourly chart may provide that slim chance for markets to get back into the upside groove because a double bottom pattern is brewing here at the 4250 point level. Watch overhead short term ATR resistance at 4350 points which needs to be broken soon or capitulation beckons:

Currency markets were relatively mixed with risk currencies still struggling against a strong USD while commodity currencies moved slightly higher as commodity prices spiked to new multi year highs. Euro continues to find a base at the 1.16 handle but remains unable to push through overhead trailing ATR resistance at the 1.1650 mid level as momentum remains neutral at best:

The USDJPY pair finished its own minor reversal after recently crossing below the 111 handle and finding a base of support at that zone before a slight breakout overnight to almost get to the mid 111 level. This takes it back to the previous resistance/support zone that it failed to truly break out of last week, with price action still below that level so this still sets up for a possible downside swing back below:

The Australian dollar wanted to continue its move higher after bouncing off the recent monthly lows below the 72 handle and while it remains above resistance at the ATR four hourly 72.70 level w momentum readings are not properly overbought. Indeed, price is not above the previous week’s intrasession high at the 73 handle proper which I contend is setting up for a big bear trap with iron ore trading potentially flipping it back over later in the week:

Oil prices continue to get very frothy indeed as WTI and Brent crude futures lift nearly 2% once again to a three year high, with the latter finishing above the $82USD per barrel level. Price action is pushing well above the medium term downtrend with momentum readings blowing out again to overextended oversold levels. While support at the low moving average level is still a good uncle point, I expect a retracement soon as volatility boils:

Gold was unable to continue its mild bounceback, after moving to the $1768USD per ounce level it found significant resistance and has pulled back to the mid $1750 level instead overnight. While daily momentum is no longer oversold, this swing play requires more short term four hourly momentum to get going, which is not yet happening. As I said yesterday, a failure to build support here however will otherwise move to 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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  1. Hugh PavletichMEMBER

    New Zealand …

    Reserve Bank lifts Official Cash Rate for first time in 7 years to 0.50% as widely expected … Jenee Tibshraeny … Interest Co NZ

    Some banks move quickly to raise their floating mortgage rates now the RBNZ has hiked the OCR. Here is where each bank stands … David Chaston … Interest Co NZ

    Barfoot & Thompson’s September sales volumes down 40% on September last year, prices also tumble … Greg Ninness … Interest Co NZ

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