Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Wall Street followed through on its bounceback with a new intraweek high heading into tonights employment print as the latest initial jobless claims buoyed spirits. European equities followed suit and were supported by a slightly lower Euro as the USD remains relatively strong against most of the major currencies, although the Australian dollar pushed through the 73 cent level on the back of higher commodity prices. 10 year Treasury yields pushed higher again above the 1.5% level as industrial metals, oil and other commodities rose while gold was contained.

Bitcoin paused on its breakthrough of the $55K level with a minor retracement and consolidation here still above its new  monthly high. The daily chart shows how price is above the August highs but momentum is also getting a little overbought. The next move is likely to be the previous historic highs above the $60K level but watch for support that must hold here at the $50K level:

Looking at share markets in Asia from yesterday’s session, where mainland Chinese markets remain closed for a holiday while the Hang Seng Index had a major surge, closing 3% higher to finish at the 24701 point level. This breakout above the high moving average at 24800 points has been on the cards for more than a week as this beleagured market built support at the 23500 point level so with the return of mainland markets today we could see some even larger volatility spark a follow through:

Japanese markets also got out of their sell mode with the Nikkei 225 closing 0.5% higher to 27678 points. Futures are indicating a follow through again on the reopen, with the recent daily/weekly lows at the 27000 point level continuing to be supported by price action but not yet indicating a proper breakout. However, because momentum readings had pushed into extreme oversold levels there is the potential for a swing play here above the 28000 point level:

Australian stocks reversed their previous losses with the ASX200 closing more than 0.7% higher at 7256 points. Instead of a whipsaw there is likely to be a breakout to end the trading week with  SPI futures up more than 30 points or nearly 0.4% supporting a move higher. 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 but momentum is ready to get out of the oversold stage. Watch for a proper breakout above the 7300 level before getting excited:

European markets immediately went into buying mode on the open and stayed there all night, with the German DAX finishing more than 1.8% higher at 15250 points, crossing back above the key 15000 point level. While the overall picture remains quite bearish, this break below weekly/monthly support at the 15000 point level has not yet set up for a proper selloff and could be a bear trap with a lot of intrasession buying support indicating long swing setups are about to kick in:

Wall Street was pretty solid throughout the session as well, rallying on the back of the debt ceiling deal in the US Senate and the solid initial weekly jobless claims, with the NASDAQ up 1% while the S&P500 finished 1% higher at 4399 points. The four hourly chart shows the range trading we’ve seen since the Friday session has finally broken through to the upside, pushing aside overhead short term ATR resistance at 4350 points with momentum nicely overbought here and ready to re-engage to get back to the previous resistance level at 4470 points – IF – the NFP doesn’t show any surprises later tonight:

Currency markets continue to reflect a strong USD with commodity currencies slightly higher as oil and industrial metals re-engage to the upside. Euro is quite depressed here after recently discarding a base of support at the 1.16 handle and is stuck at the mid 1.15 level after making a new weekly and monthly low in the process. The union currency remains the one not to bid for now with price unable to go anywhere near overhead trailing ATR resistance:

The USDJPY pair had a very mild push higher overnight as it tries to play catchup with the overall risk on mood, finishing just above the 111.60 this morning with positive momentum still holding. The key limiting factor here is the inability to get back above the previous resistance/support zone above the 112 level that it failed to break out of last week, so while this little breakout is interesting it may not hold:

The Australian dollar is following risk markets properly now after the recent whipsaw move down to the 72 handle, instead re-engaging and getting back to both the 73 level and the previous weekly highs (solid black upper horizontal line). Commodity, energy and transport prices are going to help the Pacific Peso here but again, let’s wait for the potential big bear trap when Chinese iron ore markets reopen (this is a strong opinion, weakly held!):

Oil prices had a wide trading range overnight but eventually got back to their recent highs with WTI and Brent crude futures lifting more than 1%, the latter back above the $82USD per barrel level. This still doesn’t take much heat out of recent price action which had been pushing well above the medium term downtrend as momentum readings were at overextended oversold levels. A further retracement is now unlikely given price roundtripped to the low moving average so watch for another potential blowout here above the $83 level:

Gold wasn’t able to hold on to its recent bounceback due to the continually strong USD, failing again to make a new daily high, finishing at the $1755USD per ounce level. Note the daily chart showing a lot of intrasession buying support (long tails under the daily candles) but an inability to break through the downtrend line from the early September rout. Momentum remains negative so everything is weighing against any further upside potential:



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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