Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Overnight share markets remains mixed as volatility from bond markets and a steeper expectation of the next Federal Reserve rate rise (now slated for July 2022) impacted risk taking. Wall Street diverged again with tech stocks taking a beating while European stocks continued their selloff despite a much weaker Euro. USD was largely unchanged but remains extremely strong against the major currency pairs, while gold dipped below the $1800USD per ounce level in its post-Powell palsy. Oil prices sharply bounced back with a more than 3% rise on WTI and Brent crude due to a multi national co-ordinate release in reserves, with copper launching more than 5% and iron ore hovering around the $99 level.

Bitcoin is trying to shore up support here at the $56K level following the decline from last week from the recent historic highs above the $68K. The daily chart shows price ready to rollover completely with the downside target at $40K if support at $55 does not hold:

Looking at share markets in Asia from yesterday’s session, where Chinese shares diverged again with the Shanghai Composite closing 0.3% higher at 3589 points while the Hang Seng Index went the other way, falling over 1% to close at 24651 points.  Price action has crossed below major short term ATR support at the 24600 point level with a failure to hold now presaging a return to the September lows:

Japanese markets were closed for yet another holiday somewhat with the Nikkei 225 futures indicating yet another muted start this morning although a tailwind is likely as Yen selling increased overnight. Price action is still above the daily uptrend line but bunching up near resistance overhead at 30000 points which indicates a break soon:

Australian stocks snapped back after a very poor start to the trading week with the ASX200 0.8% higher to close back above the 7400 point level at 7410 points. SPI futures are dead flat, so we should see some consolidation here above the 7400 point level as the daily chart remains a jumble of indications, with a lot of internal buying support but no upside action above these levels as momentum remains neutral:

European markets fell across the continent sharply again even as the latest PMI prints came in firm, while the FTSE continued to lift higher. Concerns about regional lockdowns are weighing here with the German DAX falling over 1% to close at 15937 points, again closing below its own low moving average on the daily chart and making a new weekly low in the process. Momentum continues to invert from its overbought status as the market could not push beyond the 16300 point level last week, and even a vastly lower Euro is not helping with positive risk sentiment. Watch for more downside here after crossing below the key 16000 point level:

Wall Street continues to stumble through however, with tech and growth stocks pulling back while the S&P500 gained a nominal 0.1% again, still failing to get back above the 4700 point level to finish at 4690 points. The four hourly chart shows continued hesitation and a slow decline still evident towards the 4670 point level which must hold tonight or this will rollover:

Currency market volatility is coming back to more neutral levels but the USD is still too strong against everything including gold. Euro is not making any further downside moves and is hovering at its recent weekly low, bang on the mid 1.12 level with momentum nicely oversold and ready for more downside below:

The USDJPY pair however continues to lift with price extending its push above the 115 handle for a five year plus high. This large move  could have extreme breakout potential, but watch for a possible mild retracement on any risk off move:

The Australian dollar is still on a great downtrend as it careens towards the 72 handle albeit declerating overnight as a rebound in commodity prices helped somewhat. This continued pressure due to volatile iron ore price and the stronger USD will continue to weigh heavily for the Pacific Peso, still setting up for more downside action as momentum remains quite oversold:

Oil crude futures were quite volatile again with the strategic release helping offset the OPEC machinations, with Brent eventually finishing back above the $82USD per barrel level and key daily ATR support in a very strong one day move. Daily momentum is still negative however and this requires a follow through above the high moving average or it sets up for a dead cat bounce and a further breakdown:

Gold continues to fall out of bed badly with the push below the $1800USD per ounce level now a reality, wiping out all upside expectations. After not making a new daily or weekly high for some time and taking out short term support at the $1840 level the key psychological $1800 handle has fallen and setting up for more falls. However, there could be a violent rebound here on the oversold status, so watch carefully:

 

 

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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