Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

It’s time to crack the knuckles and get set for a new trading year with a quick look at what risk markets got up to over the Xmas/NY break as traders return to their desks slowly full of Christmas food (and possibly COVID blues). Volatility was relatively benign, all things considered, on Wall Street and currency markets overnight as very low trading volumes did equate to some strange moves here and there, but generally markets are where we left them a few weeks ago, ready to lift higher. The mood will be set by the latest unemployment print in Germany tonight and then the US NFP on Friday night.

Bitcoin continued to deflate over the break as it barrels down to the previous daily lows at the $46K level, unable to make the break above the key $50K level stick before Xmas. This is not looking good as we head into a new year, watch that support line to come under pressure soon:

Looking at share markets in Asia where mainland Chinese shares were flat going into the end of the year with the Shanghai Composite finishing at 3639 points while the Hang Seng Index was down slightly, falling 0.5% to 23274 points. This keeps price anchored at the 23000 point level where multi-month support lived previously, just off the 2020 lows (lower black line) which 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 finished the year in meek fashion with the Nikkei 225 closing 0.4% lower on the day at the 28791 point level, although still up nearly 5% for the calendar year. Price action is trying to get back to overhead resistance at the 29000 point level with momentum slowly picking up but I’m still wary of a potential bull trap that could see price revert back to the 27000 point for another step down:

Australian stocks will reopen today with the ASX200 closing out the year above the 7400 point level, SPI futures are showing a potentially dour start to the new year, off by more than 1% due to the ongoing Omicron breakout across the country, despite a rise on Wall Street overnight. The daily chart shows a lot of resistance building here at the 7400 point level with a wide ranging price pattern that could see a return to monthly support nearer the 7100 point area:

European shares ended at all-time highs on Monday, starting the year in an upbeat mood with the German DAX up 0.9% to close above the 16000 point level for the first time since the dip in November. Price action is lifting strongly with nicely overbought momentum ready to engage the new year and try to get back to the 2021 highs, even as the DAX lifted nearly 17% last calendar year, despite the ongoing COVID breakouts:

The good mood continued to Wall Street led by a surge in heavyweight Tesla as the NASDAQ was up 1.2% while the S&P500 gained 0.6% to close at 4796 points, with traders wanting yet another record year, damn the Fed torpedoes cometh! The daily chart shows the Xmas breakout ready to re-engage to the upside with momentum ready to push through the 4800 point level:

The USD lifted against a basket of major currencies on Monday, tracking government bond yields with overall currency market volatility still fairly high. Euro had a wide ranging session that saw it retreat below the 1.13 level overnight, keeping price contained within the bearish rising flag pattern here on the daily chart. Watch for a potential break below the lower level here as we go into the NFP print on Friday:

The USDJPY pair remains poised here at just above the 115 handle, ready to surge higher and continue its uptrend from before the Xmas period. The four hourly chart shows a continued promising setup 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 however had broken down from its bullish rising flag pattern, slammed through the 72 handle for an auspicious start to 2022 as markets react to the ridiculously bad handling of the Omicron breakout locally. This move almost wipes out the pre-Xmas rally and could see a return to the December lows at the 71 handle next:

Oil price volatility is benign but shows some building support with Brent crude lifting up towards the $79USD level overnight. After clearing its previous weekly highs the daily chart is showing a possible second breakout building here that has the potential to get back to the $80 level very quickly, but note that daily momentum is only barely positive. Longer term charts still spell trouble ahead for crude on demand concerns:

Gold was providing a small Xmas present to the bugs with continued strength above the $1800USD per ounce level but last night saw a volatile swing down that almost took out the previous gains before stabilising later in the session. The daily chart shows a potential clearance of overhead trailing ATR resistance at the $1820 level but the lack of truly overbought momentum is showing this move to not be fully supported so watch for a potential fall back below 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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Comments

  1. happy valleyMEMBER

    New PB of 23,131 cases, 28% infection rate and 140 hospitalisations in NSW for happy clappy Domicron.

    • Ronin8317MEMBER

      With the private testing sites closed, that will push everyone to the hospitals to get a PCR test. What I don’t understand is : why they they use RAT test at those sites? Makes no sense what-so-ever.