Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Stock markets turned from scratch sessions into minor selloffs overnight with a lack of economic news or other catalysts suggesting some buying exhaustion setting in. The USD was largely unchanged against the major undollars, with safe haven buying in Yen abating somewhat, but gold continued its advance above the $1800USD per ounce level. Bond yields fell across the board with the US Treasury ten year yield falling to the 1.4% level for a six week low while commodity markets had modest rises with oil up 1%, copper dropping back more than 0.5% while iron ore remained under pressure, about to crack the $90 per ton level.

Bitcoin made a new record high in yesterday’s afternoon session and get to the $68K level as a result, with price coming back slightly but still above the recent historical high at the $66K level. This breakout maybe a stretch too far with momentum readings reverting but watch that low moving average on the four hourly chart as short term support:

Looking at share markets in Asia from yesterday’s session, where mainland Chinese shares were nearly flat again with the Shanghai Composite closing 0.2% higher at 3507 points while the Hang Seng Index managed to get back on track later in the session, closing 0.2% higher but still  below the 25000 point level at 24813 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 were the fastest movers however with the Nikkei 225 closing 0.7% lower at 29285 points. Futures are indicating a drop below this level on the open this morning as overbought momentum retraces and returns the market to pre-election levels, as resistance overhead at 30000 points proves too hard a target to breach:

Australian stocks remained shaky with no buying pressure evident as the ASX200 dropped some 0.2% to close at 7434 points.  SPI futures are actually up 20 points or so despite the pullback in equity markets overnight, so the return to the former August highs is still on the cards, as daily momentum remains slightly overbought:

European markets stumbling start to the trading week has tripped up into a selloff with most peripheral markets losing ground, particularly the FTSE. Meanwhile the German DAX lost only 6 points and remained basically unchanged to finish at 16040 points, still unable to build above the 16000 point level. The daily chart is showing a near rollover here 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 had larger retracements, finally stopping the series of new record highs with the NASDAQ finishing 0.6% lower and the S&P500 closing 0.3% lower at the 4685 points level. Someone pressed the pause button on the music but it won’t be stopped unless we see a violent retracement below trailing ATR support the 4650 point level, and even that maybe shortlived:

Currency market volatility reduced again overnight without any major moves with consolidation following last week’s NFP print continuing. The US Dollar Index slipped just 0.1% overall with Euro paushing here just below the 1.16 handle after a solid bounce off its strong Friday looses had put in a new weekly low. While short term momentum maintains a positive setting, the medium term direction remains a downtrend, but I’m still watching overhead ATR resistance which could come under threat:

The USDJPY pair is still in breakdown mode but it had a general pause overnight just below the 113 handle as Yen buyers abated somewhat. Short and medium term momentum remains very oversold so there is the potential for a short term swing play higher, but the weight of evidence is against this pair for now:

The Australian dollar failed to comeback following a meek swing play at the start of the week, pushed back below the 74 handle in a general risk off mood. This reversion to the medium term trend is not unexpected as short term momentum gets oversold once again we could see a test of last week’s extreme low for more downside potential:

WTI and Brent crude futures were able to lift strongly again overnight with a 1% higher finish for Brent to almost close above the $85USD per barrel level as this bounce continues. This solid move off daily ATR support has now crossed above the high moving average on the daily chart and sets up for a return to the recent highs nearer the $86 level:

Gold continued its advance above the $1800USD per ounce level with another solid session overnight pushing it through the $1830 level that matches the previous highs from late August. Another close above former ATR resistance has confirmed Friday’s bounceback but momentum has gotten quite overbought here so I expect a mild test or even a retracement soon:

 

 

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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