Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

The buy the dip crowd stepped in on Wall Street overnight following the previous session late bounceback as testimony from Fed Chair Powell on balance sheet adjustments saw USD weakness across the board that should result in higher risk taking here in Asia. The bond market firmed a little although the recent shorter term Treasury auctions sold at higher yields, 10 year Treasuries pulled back from the 1.8% level as risk currencies pushed higher against USD. Gold in particular climbed back above the key $1800USD per ounce level while oil prices and other commodities advanced in the wake of the weaker USD.

Bitcoin’s breakdown paused overnight after finding a potential bottom at the $40K level, now making a new intraweek high above the $42K level. There’s still daylight below to the next major support levels at $30K, but this could be the start of a new bounceback up towards former support now major resistance at the $46K level:

Looking at share markets in Asia from yesterday’s session where mainland Chinese shares were weak across the board with the Shanghai Composite down 0.7% to 3567 points while the Hang Seng Index paused its bounceback, a scratch session to stay well above the 23000 point level, closing at 23739 points. Price support had been building at the 23000 point level where multi-month support lived previously, with a substantial break above the 24000 point level still required to get moving higher with price pausing here but ready to take out trailing ATR resistance shortly:

Japanese markets fell back sharply on the back of a stronger Yen with the Nikkei 225 closing 0.9% lower at 28222 points. Price action has been trying to push through overhead resistance at the 29000 point level previously but the stronger Yen continues to dominate, with volatility on Wall Street not helping at all here. Futures are indicating a possible bounceback is on the cards with a move higher today, but momentum remains negative at best as we potentially head back to the December point of control at the 28000 point level:

Australian stocks fell throughout the session, with the ASX200 eventually closing 0.7% lower to 7390 points . SPI futures are showing a 0.8% gain to clawback these losses and while the daily chart continues to look volatile here with the previous false breakout above the 7500 point level, there is support building below where the long tails cross the 7250 point zone so despite COVID problems its all about the correlation with Wall Street:

European shares finally got a wriggle on after a wobbly start the trading week with meaningful gains across the continent, the German DAX closing 1% higher while the Eurostoxx 50 index finished exactly 1% higher as well to almost get back above the 4300 point level. The daily chart shows the potential for rollover building, particularly with a stronger Euro that continues to dominate risk taking, but it appears that support at the 4200 point area is remaining firm so watch for price to tackle that daily downtrend line next at the 4350 point level:

Wall Street saw a solid bid with the NASDAQ coming back the strongest, up 1.4% while the S&P500 closed 0.9% higher to 4713 points, getting back above the 4700 point level and finally making a new session high since last week’s sudden pullback. The area to beat in tonight’s session are the session highs from late last week (solid black horizontal line) to properly clear out any of the remaining short positions. Momentum is still signalling this as a swing trade only, but the BTFD crowd could come through here:

Currency markets remain volatile after being directionless following Friday’s uncertain NFP print, but Powell’s comments about “perhaps” moving balance sheets down took the wind out of the USD with the beleaguered Euro firming its bounce back to move a lot higher above the 1.13 handle. In fact it cleared last week’s highs and is almost back to the uptrend line with the four hourly chart starting to clear up, with clearance above ATR resistance at the 1.1360 level as the 1.13 level proper firms as solid support going forward:

The USDJPY pair wobbled around but eventually got back on track – down that is – despite the obvious short squeeze on Wall Street and the lower USD against everything else. Yen buying remains stronger than risk taking with price still below previous trailing ATR four hourly support previously as it heads towards the 115 handle, which could prove too tough a headwind for Japanese stocks at least:

The Australian dollar was under a lot of pressure with its weak post NFP bounceback, but this pressure release saw a big uptick above the 72 handle after recently making a three week low. Helped by stronger commodity prices this time, support has finally eventuated but there’s a lot of resistance overhead to clear at the 72.30 level and then 72.60 at last week’s high next:

Oil prices are pusher higher on the weaker USD after a mild pullback to start the week with Brent crude surging well past the $83USD level overnight. Resistance at the $82-83 level has been cleared with daily momentum now moving into overbought territory with the target to reach here the October highs:

Gold had been struggling to get back on track as it scraped back to the $1800USD per ounce level in the previous session but Powell’s comments saw a big surge to past the $1822 level that almost took it back to the start of year highs. Clearing overhead ATR resistance at $1810 at will now begin a move to get to the $1830 level but we could see a small consolidation move first:



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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