Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Stock markets were relatively buoyant overnight due to the holiday on Wall Street plus the lack of economic releases, although the calendar plays catchup today with the latest BOJ interest rate meeting leading the charge here regionally. With US bond markets closed, there was no impetus there for change with the 10 year yield likely to remain just under the 1.8% level while risk  currencies stayed weak against USD following the Friday inversion as oil prices and other commodities edged slightly higher.

Bitcoin is struggling to make headway again after capping yet another disappointing week as it fades back to the $42K level after recently finding a potential bottom at the $40K level. Last night saw it threaten ATR support on the four hourly chart with a series of lower highs making a new short term downtrend that could easily turn into a breakdown here as momentum gets into oversold mode:

Looking at share markets in Asia from yesterday’s session first, where mainland Chinese shares surged on the PBOC rate cut with the Shanghai Composite up 0.6% at 3541 points while the Hang Seng Index had another volatile session, down 0.7% to 24218 points.  The break above the 24000 point level is sticking so far, but has not made any further advancements, so this small consolidation phase has to turn around soon with new daily highs or it will prove a false breakout and a return to the 23000 point levels will transpire:

Japanese markets bounced back on a weaker Yen with the Nikkei 225 closing 0.7% higher at 28333 points. Price action is being contained here at short term resistance below the 29000 point level as Yen weakens slightly after several weeks of dominance with futures indicating a slight uptick as we head into today’s session. The BOJ meeting may provide a catalyst to get away from the December point of control at the 28000 point level:

Australian stocks were the worst performers, relatively speaking, with the ASX200 closing just 0.3% higher, lifting back above the 7400 point level to finish at 7414 points. SPI futures are up 20 points with the daily chart continuing to look volatile here even with support building below at the 7250 point zone, but watch for a potential break above the 7400 point area to get things moving again:

European shares all had solid starts to the trading week in absence of leads from Wall Street with the German DAX the relative laggard, up only 0.3% to remain below the 16000 point level, while the Eurostoxx 50 index finished 0.7% higher at 4302 points as peripheral markets did a lot better. The daily chart was showing the potential for a rollover building, but the recently weaker Euro and some price stability here at the 4200 point area keeping things alive, but the inability to clear the daily downtrend line at the 4350 point level remains telling:

Wall Street was closed for the MLK holiday with S&P500 futures largely unchanged, helped along by the lack of any economic catalysts. Tonight will be an interesting session as we move into the new earnings season, but the four hourly remains messy to say the least as trader’s look through to the awaited interest rate rises with the daily chart still building potential shoulder patterns for a bearish head and shoulders setup. Support has been extremely firm at the 4600 point level though:

Currency markets were relatively calm given the holiday in the US and the lack of economic catalysts, although concerns over Russia’s potential invasion of Ukraine are simmering. The Euro remains depressed here but not yet ready to rollover after its Friday inversion, still hovering at the 1.14 handle.  Resistance at the 1.1480 level had already been building before the release and despite the large move, price keeps it above the previous weekly highs with my expectations of a pullback fulfilled. The next are to watch is short term support at the 1.1380 level:

The USDJPY pair was able to push out a small series of session highs on the four hourly chart to extend its relatively small bounceback, lifting through to the mid 114 level overnight, but not yet clearing overhead ATR resistance. As I said yesterday, this swing trade back to trailing overhead ATR resistance is not likely to have legs with momentum remaining neutral, so watch for today’s BOJ meeting to possibly reset the trend here:

The Australian dollar is also seeing little to no movement, despite an uptick in commodity prices overnight, with price stuck at just above 72 handle after taking away the previous attempt to make a new weekly high position. Momentum readings are now definitely negative but not yet oversold with last week’s intrasession low still a long way away, but I’m not certain of much internal buying support for the Pacific Peso. I’m watching the the 71.50 level to come under threat next:

Oil markets are still loving this ride, with futures lifting again despite closed markets in the US, with Brent up slightly to build on its new yearly highs to remain well above the $86USD level overnight. Daily momentum was well into overbought territory before this sruge, as the fill in to reach the October highs was complete but as usual, volatility in oil markets helped push this big trend even higher. With the new highs taken out there’s potential for a move up to $90 next:

Gold is still struggling to get back to its former highs after clearing the key $1800USD per ounce level in previous sessions with an absence of trading volume seeing a muted move back to the  $1820 level on USD strength. The previous session highs are obviously still showing a lot of resistance here on the four hourly chart with an inability to clear the $1830 level which is worrisome. Watch out of another potential “unexpected” rollover to materialise:

 

 

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. The Traveling Wilbur 🙉🙈🙊

    another potential “unexpected” rollover

    Sounds like my usual Monday morning.