Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Risk markets continued their Santa Claus rally overnight with solid returns on Wall Street and European markets as very low trading volumes mask the veracity of thos returns as we head into the end of the trading year. The latest core PCE and consumer confidence prints for the US came in a little higher than expected, giving a boost to risk taking with risk currencies launching higher versus USD, with commodity markets also seeing a strong bid with Brent and WTI crude up more than 2% while gold remained well above the $1800USD per ounce level.

Bitcoin finally did something after hovering just below the $49K level most of the week, breaking out above the key $50K level for a new weekly high. Is the bottom in? Can HODLer’s get their money back? A one time session does not yet make a new trend with the $48K level needing to be supported throughout the Xmas break:

Looking at share markets in Asia from yesterday’s session, where mainland Chinese shares were flat going into the end of the session, before a big surge saw the Shanghai Composite lift 0.6% to close at 3643 points while the Hang Seng Index was up slightly, lifting 0.4% to 23193 points. This keeps price supported around the 23000 point level where multi-month support lived previously, but remaining here at the 2020 lows (lower black line) still has the potential to start a new bear market if it doesn’t make a substantial new daily high soon above the high moving average line:

Japanese markets also did better with Nikkei 225 closing 0.8% higher at the 28798 point level. Price action could get back to overhead resistance at the 29000 point level that has failed to clear in recent weeks with momentum slowly picking up after remaining negative on the daily charts, but I’m still wary of a potential bull trap that could see price revert back to the 27000 point proper soon:

Australian stocks had a modest session higher, with the ASX200 closing up 0.3% to 7387 points. SPI futures are up more than 0.5% again on the continued rise on Wall Street so we could see a breakthrough resistance again at the 7400 point level, with a potential Santa rally building as traders start to leave their desks. Its an early session today with the market closing at 2pm and not returning until Wednesday:

European markets all had solid sessions to continue their bounceback with the German DAX up 1% to close at 15756 points. The volatile Euro hasn’t provided a headwind so far, with the daily chart picking up slightly, as price action gets back to the previous dead cat bounce breakout level as daily momentum picks up. However resistance overhead remains very strong so this could be short lived low liquidity rally only going into Xmas:

The good mood continued to Wall Street with the NASDAQ up 1% while the S&P500 gained some 0.8% to close at 4733 points, just shy of its all time high. The four hourly chart shows a steady rise since the start of week oversold position at the 4500 point level with a great Santa rally here to end a fantastic year for US stocks:

Currency market volatility is still fairly high with risk currencies getting stronger against USD although Euro had a whipsaw session around the core PCE print, but eventually finished where it started at the the low 1.13 level overnight. This keeps price near but still below the previous weekly highs, but not above them as momentum remains positive so the union currency is likely to slide into the new year at or around these levels:

The USDJPY pair broke out of its tight trading range overnight, pushing further above the 114 level as past the previous weekly highs. The four hourly chart was showing a promising setup before the breakout with price hovering at or slightly above the previous weekly high with momentum remaining in a solid overbought level as resistance is cast aside. The 114 handle should now act as robust support going into the new year:

The Australian dollar also broke above previous weekly highs on the back of the positive risk sentiment, making a new monthly high as it plays catchup going into the end of year.  My contention of price heading above the 72.20 level in the short term has been fulfilled with more USD weakness baked in for now as momentum remains overbought and ready to push as high as the 73 handle next:

Oil price volatility is heading to the upside again with Brent crude lifting more than 2% to exceed the $76USD level overnight. Another market that was looking promising and now cleared its previous weekly highs with the daily chart showing a clear breakout here that has the potential to get back to overhead ATR resistance at the $80 level very quickly, but note that daily momentum is not yet positive so this remains a swing trade only. Longer term charts still spell trouble ahead for Brent so be cautious until the $76-77 zone is cleared:

Gold is providing a small Xmas present to the bugs with continued strength above the $1800USD per ounce level overnight after failing all week to get back on track on last Friday’s similar push. The four hourly chart shows a classic breakout above the descending triangle pattern but not yet clearance of that previous high above the $1810 level – momentum is not yet overbought so stay tuned:

 

 

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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