Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Risk appetites had their fill overnight with stalls on European markets while Wall Street managed a small lift higher as the bond market slid, with the 10 year Treasury yield rising above the 1.5% level. Currency markets upped the volatility with a big breakout in Euro while the Loonie extended its reversal against USD strength as the Canadian central bank held fire on rate rises, pulling the Aussie dollar up in sympathy. Commodity markets are still buoyant with oil prices lifting around 1% while copper did the same as gold almost broke out but was pulled back later in the session as it fails bounce back above the $1800USD per ounce level.

Bitcoin’s bounceback is more like a wet blanket as it can’t gain any momentum above the $51K level. The four hourly chart shows an inability to bounce beyond the high moving average with short term resistance clearly building here. The next support levels are far away at the September lows around $43K, with daylight below to $30K next:

Looking at share markets in Asia from yesterday’s session, where mainland Chinese shares played catchup with the Shanghai Composite up 1.2% to decisively cross back above the 3600 point level, closing at 3637 points while the Hang Seng Index put in a flat session, closing just below the 24000 point level.  This market really wants to get moving with daily momentum heavily reversing after being well oversold but this is still a dead cat bounce until daily momentum switches to a heavily positive setting, with this move just a reaction to being so oversold as price action overall remains in a long term downtrend channel with heavy resistance overhead at the 24500 point level:

Japanese markets are continuing their own bounceback with the Nikkei 225 closing 1.2% higher at 28819 points.  Futures are indicating a stall out today as the lack of a lower Yen may prove too much for this relatively weak market to push through. While there is some potential for this move to continue up towards former support, now resistance at the 29000 point level, daily momentum is not even positive yet, let alone overbought, so remain cautious:

Australian stocks also had a very positive day, with the ASX200 lifting more than 1.2% to be just above the 7400 point level. SPI futures are down nearly 0.4% despite the late lift on Wall Street as the higher Australian dollar starts to weigh on sentiment with heavy resistance at the previous highs around the 7400 point level still not yet cleared:

European markets stalled out after their very solid start to the trading week with minor pullbacks across the continent, with the German DAX finishing 0.8% lower at 15687 points. This move was obviously too far too fast so a minor pullback is expected, with daily momentum almost crossing above the positive setting, but the much higher Euro is providing a headwind. Watch for another close above the 15700 point level as a positive sign for more upside:

Wall Street however continued the party with the NASDAQ up 0.6% while the S&P500 lifted 0.3% to break the 4700 point level, but only just, closing at 4701 points. The four hourly chart shows price action now bunching up at this key level as the Omicron dip is fully filled, but this now almost equals the former highs as well, setting up more consolidation opportunities before another leg higher:

Currency market volatility is stretching against USD again with the risk currencies still lifting while Pound Sterling remains the odd one out, Euro has continued its surge and then some after previously defending support at the 1.1270 ATR level. Overnight it shot substantially higher, breaking the downtrend line and almost got to the previous weekly high at the mid 1.13 level with momentum now considerably overbought. This is all due to the Omicron over-reaction so this violent swing back is not unexpected but relatively sharp, so expect some consolidation in the short term:

The USDJPY pair is in a neutral state after failing to extend its gains earlier in the week, still above the mid 113 level as it comes up against strong short term resistance overhead. While this pair also has the short term potential of  swing higher, the inability to clear overhead resistance at the 114 handle is telling as medium and long term charts continue to weigh against any larger change:

The Australian dollar continues to build higher again overnight, pushing further above the 71 handle in sympathy with the Loonie as the Canadian central bank held rates, with the commodity bounceback helping these currencies. The Aussie is now above the previous weekly intrasession high so my contention of this being short lived is not quite right as momentum gets nicely overbought and ready to engage further to the upside:

Oil prices continued to rally as sentiment shifts to the upside with the latest EIA survey showing a drop in oil stocks with the Brent marker finishing nearly 1% higher to break above the $76USD level. This move may have the legs to get back to the former monthly resistance level at $77, but daily momentum is not yet positive and there’s a lot of upside resistance to get through:

 

Gold remains somewhat depressed although it tried to follow through with another new daily high above the $1780USD per ounce level, pushing through $1790 before settling at the $1783 level this morning. Short term momentum is looking a little more bullish after being neutral as price action continues to suggest a possible bottom, but it really needs a proper punch through overhead resistance with a new significant daily high that at least heads towards the $1800 level:

 

 

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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