Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Last night saw equity markets twitch moods with European bourses surging while Wall Street treaded water in the wake of more tech earnings, and while the latter did put in new nominal highs, its was literally only a handful of points. The USD remained strong against Euro and Pound Sterling while commodity currencies were a little muted as well. Commodity markets however pulled back and while oil was basically unchanged, copper and gold lost nearly 1% as US Treasury yields pulled back again towards the 1.6% level.

Bitcoin is deflating again, unable to follow through on its recent new record high last week as it encounters new resistance around the previous high (solid black horizontal high) at the $63K level.   Short term momentum is still negative and price remains below the Friday session highs so watch for any action below the low moving average for signs of a wider breakdown:

Looking at share markets in Asia from yesterday’s session, where Chinese shares struggled to gain traction again with the Shanghai Composite pushed back below the 3600 point level, down 0.3% while the Hang Seng Index is off 0.4% to finish just above the 26000 point level. Price action was slowing down from its recent upside moves in the past few sessions as it hits a solid level of resistance at the key 26000 points level, equating to the previous September highs. The daily chart is suggesting a rollover is possible here, so while daily momentum readings remain overbought, the lack of a new daily high is weighing:

Japanese markets however bounced back strongly after the poor start to the trading week with the Nikkei 225 closing 1.7% higher at 29106 points. The daily chart shows price poised here after a dead cat bounce that failed to get through trailing ATR resistance overhead at 29300 points, with daily momentum still negative, so don’t get excited until we see the recent highs cleared at the 29300 point level:

Australian stocks have gone nowhere, with the ASX200 still closing above the 7400 point but dead flat at 7443 points.  SPI futures are relatively flat, reflecting the muted gains on Wall Street overnight, and also some possible hesitation over today’s inflation print. With daily momentum well into positive readings and the 7400 level is cleared, we could see a return to the former highs in August:

A very solid session for European markets with the bullish mood returning across the continent as the weaker Euro helped deliver the best returns overnight. The German DAX surged 1% higher to close at 15757 points with the daily chart showing a near completion of the recent dip down to the 15000 point level. Watch for a proper clearance of overhead trailing ATR resistance at the 15800 point level next:

Wall Street technically made new highs but it was only a handful of points with the NASDAQ not even up 0.1% while the S&P500 managed a near 0.2% finish higher at 4574 points before losing ground in post close futures. The four hourly chart is still nearly a straight line though – don’t fight the Fed or the 1% buying stocks off each other like laundering fine art to boost prices everywhere:

Currency markets continued to reflect a strong USD with Euro continuing its own deflation after the recent poor German IFO survey with the four hourly chart of Euro showing a break below short term ATR support at the 1.16 handle proper. The union currency is now teetering on edge here and could retrace all of its breakout from the last two weeks if price isn’t supported at the 1.16 level:

The USDJPY pair lifted throughout the Asian session, and then pushed through the 114 handle to just hold on to those gains overnight. Short term momentum readings are now positive, but not yet overbought with the previous weekly high at the mid 114 level proving solid resistance:

The Australian dollar tried to re-engage to the upside, but like gold was thwarted at its own resistance level, unable to properly clear the 75 handle proper. As we head into today’s inflation print, traders will continue to watch short term momentum and support levels at the mid 74 level as price action remains muted:

WTI and Brent crude futures tried to lift higher, with the latter finishing at the mid $85USD per barrel level after briefly touching the $86 level for a three year high. I’m still concerned about divergent daily momentum readings here that indicate a rounding top pattern is beginning to form, but overall price action is still very bullish with firm support firm and no new daily lows, so the bears are asbent:

Gold was supposed to clear the key $1800USD per ounce level and head to the stars but was thwarted yet again overnight, taking back the new monthly high with a new daily low, finishing at the $1792 level instead. Sentiment had shifted from muted to somewhat bullish for gold, with daily momentum pushing into the positive zone, but the potential for a medium term uptrend looks like an actual resistance level at $1830 or so that needs proper clearance:

 

 

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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