Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

A relatively mixed night on risk markets and while Wall Street continued its corporate earnings inspired rally, the US Dollar Index (DXY) fell back against the majors, with the Kiwi and Australian dollar doing the most heavy lifting. Meanwhile Treasury yields pulled back from their recent near six month high with the 10 year still above the 1.6% level. Commodity markets were the most bullish, with oil futures up 1% to new yearly highs on stocks drawdowns in the US, copper and gold both lifting 1% or so while iron ore prices remain under pressure.

Bitcoin solidified its breakthrough its previous record high (upper solid black horizontal line) to breach the $66K level overnight, as it twirls onwards and upwards towards freedom with a lot of schadenfreude from the HODLers?

Looking at share markets in Asia from yesterday’s session, where the Shanghai Composites closed nearly 0.2% lower at 3587 points, while nothing is holding the Hang Seng Index back as it surges 1.3% higher to 26136 points. This continues the breakout with another big close above the high moving average and beyond the medium term downtrend line at the 25000 points level. 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 however flat lined with no material gains as the Nikkei 225 closing just 0.1% higher at 29255 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 still not yet taken out nor daily momentum yet positive:

Australian stocks finally joined the risk-on crowd with the ASX200 closing 0.5% higher to get through the 7400 point level, finishing at 7413 points and making a monthly high in the process.  SPI futures are up nearly 20 points, with daily momentum now switching to positive readings and possibly turning this swing trade into something more sustainable:

European markets were again very modest in there gains as the rebounds from last week fizzle out as traders focus more on Wall Street and the higher Euro puts a dampener on risk taking.  The German DAX finished dead flat at 15522 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 but activity was a little muted across the three bourses with the DOW and S&P500 both finishing 0.4% higher, while tech stocks on the NASDAQ pulled back. The four hourly S&P chart continues to exhibit very low volatility with almost no selling pressure but a rising bearish wedge pattern is emerging here, suggesting buying exhaustion setting in as we head into the November taper:

Currency markets lowered in volatility with the antipodean currencies pushing USD lower as the four hourly chart of Euro shows a relatively stable session that finished where it started at the mid 1.16 level. Overall price action is still technically overbought with a lot of short term volatility overshadowing the medium term trend, but watch for any retracements below the 1.16 handle proper:

The USDJPY pair remained in its stabilising mood with a very minor retracement below the mid 114 level yet maintaining its weekly high price action. 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 as we head into the end of the week:

The Australian dollar continues its zoom higher on the back of commodity prices with a solid breach off the 75 handle overnight for another new high.  Price remains well above the previous weekly highs (solid black upper horizontal line) which have firmed into a very solid medium term anchor point with longer term momentum building and little selling pressure evident:

Brent crude futures lifted just over 0.7% in response to the EIA stocks drawdown, finishing well above the $85USD per barrel level overnight for another daily high. Strong momentum readings and price action continued well above the previous medium term downtrend and are still indicating more upside potential. The only fly in the ointment is divergent daily momentum which is declining yet still overbought as a rounding top pattern is beginning to form:

Gold is seeing more support building with a strong move overnight that averted a new intrasession low, closing at the $1781USD per ounce level as it tries to get back to the $1800 level. Sentiment remains somewhat 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 swift return to the recent lows at the $1727 level if buyers disappear:



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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