Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Equity markets dragged out scratch sessions across both sides of the Atlantic overnight, with European shares pulling back slightly while Wall Street advanced ever so slightly but still put in new record highs. The USD lost ground against the major undollars as the post NFP shakeup continued, with safe haven buying in Yen continuing while gold solidified its advance above the  $1800USD per ounce level. Bond yields rose slightly after the sharp pullback on Friday night with the US Treasury ten year yield getting back to the 1.5% level while commodity markets had modest rises with oil up 0.6%, copper lifting more than 1.5% while iron ore remains under pressure.

Bitcoin’s rebound above the previous record high (solid black horizontal line) has continued with aplomb and as of this morning looks set to exceed the actual recent historical high abvoe the $66K level! Short term support at the $60K level has been very firm, and while daily momentum was not yet overbought, this breakout is not that surprising – $70K next?

Looking at share markets in Asia from yesterday’s session, where Chinese shares tried to bounce back a little going into the afternoon session but the Shanghai Composite only managed a 0.2% lift, closing at 3498 points while the Hang Seng Index finished down nearly 0.5% as it pushes lower below the 25000 point level to close at 24763 points.  Price action continues to show a return to the dominant downtrend, now threatening nominal ATR support at the 24500 point zone, with daily momentum fully negative with this close below the 25000 point level acting as confirmation of more downside to come:

Japanese markets also failed to gain traction with the Nikkei 225 closing 0.3% lower at 29507 points. Futures are indicating another possible small uplift but this market is running out of puff as overbought momentum starts to retrace to lower levels, as resistance overhead at 30000 points starts to weigh:

Australian stocks were a bit shaky with commodity plays weighing on the local bourse, with the ASX200 falling a handful of points to close at 7452 as SPI futures indicate a mere 10 points or so uplift that could recover this minor loss.  A return to the former August highs is still on the cards, as daily momentum moves from positive to overbought,  as short term support builds strongly here:

European markets had a stumbling start to the trading week with a series of scratch sessions across the continent as the German DAX was basically unchanged to finish at 16046 points, unable to build above the 16000 point level. The daily chart is showing this runaway trend definitely slowing down and almost ready to rollover after clearing the previous highs and moving past the critical 16000 point level. While daily momentum is still nicely overbought, short term price action is indicating a pause or small retracement ahead:

Wall Street was more bullish but only just with minor results across the board, nominally putting in new record highs though. The NASDAQ only finished 0.1% higher while the S&P500 just closed above the 4700 point level for a similar result. You still can’t stop the music – nobody but the Fed can stop the music – with daily momentum and price action all looking extremely overbought, but what else is there to do but buy the dips:

Currency market volatility reduced somewhat following last week’s NFP print but the US Dollar Index has fallen back around 0.3% overall with Euro filling in its Friday looses after previously putting in a new weekly low. It almost climbed above the 1.16 handle in a one way move overnight, with short term momentum switching to positive, but the medium term direction remains a downtrend – watch overhead ATR resistance which could come under threat however:

The USDJPY pair remains in breakdown mode as it continues to make new weekly lows, almost heading below the 113 handle. Short and medium term momentum remains oversold and in the zone for more downside here with resistance at the 113.50 mid level that was previous weekly support building:

The Australian dollar is coming back meekly despite continued falls in iron ore prices, but I would contend this is some positioning after being extremely oversold following the RBA meeting of last week and Friday’s NFP print that was very USD positive.While momentum in the short term has reverted somewhat, the medium term trend is still down, but there is continued potential here for a short term swing play:

WTI and Brent crude futures were able to lift again overnight following the very solid finish on Friday night, the latter closing back above the $83USD per barrel level to continue the bounce. While my contention of a rounding top bearish pattern has not yet come to pass, this small bounce off of ATR support has not yet crossed the high moving average on the daily chart:

Gold’s move above the $1800USD per ounce level continues to stick with another very solid session overnight pushing it the $1824 level as of this morning. Watch for another close above former ATR resistance and the previous highs (around $1830 – note the higher black horizontal line to the left) to confirm Friday’s big bounceback:

 

 

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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