Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

A lack of economic releases or controversial Fed opinions through a spate of speeches overnight kept risk markets in line as While Wall Street continued to rally on solid corporate earnings results. The US Dollar Index (DXY) fell back against the majors, with Euro breaking out alongside the Aussie dollar while Treasury yields rose again to a new five month high well above the 1.6% level. Commodity markets had the most volatility, with oil futures up 1% to new yearly highs while Chinese coal futures plummeted and iron ore stabilised.

After a very short term stall, Bitcoin has broken through its previous record high (upper solid black horizontal line) to breach the $64K level overnight, only a few dollars short of the intrasession high and ready to zoom to $100K if you believe the HODLers?

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composite closed up 0.6% to 3593 points, recovering most of its previous losses while the Hang Seng Index surged even stronger, finishing up 1.5% to 25787 points.  This solidifies the previous breakout above the high moving average and beyond the medium term downtrend line at the 25000 points level as a new trend is developing here with a probable push beyond 26000 points and momentum getting nicely overbought with the next target at the 26600 point level:

Japanese markets did much better than the previous session as they go into election mode, with the Nikkei 225 closing 0.6% higher at 29215 points. The daily chart shows a near complete fill of the previous swift corrective phase that took the market down to monthly support at the 27000 point level with trailing ATR resistance overhead at 29300 points likely to be taken out in today’s session:

Australian stocks were the odd ones out – again – with the ASX200 closing dead flat and still shy of the 7400 point level, finishing at 7374 points.  SPI futures are up over 40 points or 0.5% on the rally on Wall Street overnight, with daily momentum now switching to positive readings and possibly turning this swing trade into something more sustainable:

European markets had very modest gains with some peripheral bourses treading water as the rebounds from last week remain in focus but not yet fulfilled.  The German DAX finished 0.3% higher at 15515 points with the daily chart showing this bounce off that key 15000 point level still only a classic swing play that has yet to turn into a re-engagement of the major trend, which requires a proper clearance of overhead trailing ATR resistance at the 15800 point level:

Wall Street continued its bounceback with all three bourses putting in new highs, the NASDAQ and S&P500 both finishing 0.7% higher, the latter closing at 4519 points. The four hourly chart exhibits low volatility and almost no selling pressure as it twirls towards freedom on the back of inflationary concerns as we head into the November taper:

Currency markets were again quite volatile with the four hourly chart of Euro showing another wild oscillation that eventually saw a whipsaw around the point of control at the 1.16 handle. The union currency broke out above the 1.1630 level, ramping up too fast and then pulled back late in the session. Overall, price action is getting nicely overbought and better supported with a medium term bullish view starting to prevail, with a lot of short term volatility to be avoided:

The USDJPY pair remained in its stabilising mood after its recent breakout and yearly high, continuing here almost at the mid 114 level. The technical picture remains quite bullish but momentum readings are retracing from their overbought settings, which could translate into a further retracement around the 113.70 level above ATR trailing support throughout the week:

The Australian dollar zoomed higher on yesterday’s RBA minutes release and held onto those gains overnight, almost breaching the 75 handle for a new high.  Price remains well above the previous weekly highs (solid black upper horizontal line) which I contend is still a solid medium term anchor point with longer term momentum well estabilished now with little selling pressure evident:

Brent crude futures came back to make another new daily high, finishing above the $85USD per barrel level overnight. Strong momentum readings and price action well above the previous medium term downtrend continue to indicate more upside potential with uncle points at the trailing low moving average level doing well for now to lock in profits, but watching declining daily momentum:

Gold is seeing a lot of intrasession selling with another failure to get back on track overnight, pushed back down to the $1769USD per ounce level after recently trying to get back to the $1800 level. Sentiment is still muted for gold, with daily momentum still negative so continue to watch for a possible retracement below the low moving average here on the daily chart for a return to the recent lows at the $1727 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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