Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

A big night of economic data mixed up with bigger macro news with the breakdown in Russian/Ukrainian peace talks and Finland moving closer to joining NATO. The latest core US inflation print surprised on the downside, sending bond yields lower, with the 10 year US Treasury pulling back to 2.67% and the closely watched German ZEW survey also declined. This kept equity markets on both sides of the Atlantic contained with a slip of around the 0.3% level across the board. The USD rose again to a two year plus high although the Australian dollar managed a bounceback as commodity prices came back slightly. Oil prices zoomed nearly 6% higher on the Russian tensions  with Brent jumping back above the $100USD per barrel while gold continued its breakout above the $1950USD per ounce level.

Bitcoin remains quite depressed, having sold off sharply in the previous session to breakthrough the $40K level after breaching daily ATR support on Friday. This lack of confidence in the crypto world could see a further retracement down to the February lows at the $37K level next:

Looking at share markets in Asia from yesterday’s session, where mainland  Chinese share markets remain unsettled although the Shanghai Composite jumped towards the close, finishing 1.4% higher to 3214 points while the Hang Seng Index managed a meagre bounceback, lifting nearly 0.6% to 21319 points.   The daily chart of the Hang Seng Index remains stuck below very strong resistance at the 22600 point level  with momentum pushing the market lower with continued moves below the low moving average likely:

Japanese stock markets remain in sell mode however with the Nikkei 225 closing some 1.8% lower to 26334 points. Futures are indicating some mild selling on the open despite the weaker Yen that should be acting as a buffer. Daily momentum is now at a neutral level with price breaking below daily ATR support as it rejects weekly resistance at the 27500 point level. This may see further falls and even a reversion back to the March low nearer the 24000 point level:

Australian stocks were not able to escape the selling yesterday, with the ASX200 closing 0.4% lower at 7454 points, remaining well below the key 7500 point level. SPI futures are down only a few points despite the falls on Wall Street overnight, rebuffed by higher commodity prices. The daily chart was showing a lot of potential with daily momentum still quite strong but price is finding stiff resistance at the former highs from December last year – watch that low moving average carefully that must hold;

European shares continued to sell off, albeit in mild fashion across the continent, with the Eurostoxx 50 index finishing just 0.2% lower at 3831 points. A capitulation maybe imminent here as price remains well below the trendline and the low moving average, finding substantial resistance overhead as momentum switches from neutral to negative:

Wall Street remains one of the most volatile markets with a breakout thwarted and turned into a selloff yet again. Overnight both the NASDAQ and S&P500 lost 0.3% with the latter finishing at just below the 4400 point level. Price action on the four hourly chart is now showing bigger attempts by the BTFD crowd to step in and shore up support, but macro news is still dominating here as we head into another Fed meeting and rate rise soon. Watch the recent session lows around the 4400 point level to come under pressure again:

Currency markets continued to see a  stronger USD with Euro rolling over yet again following the poor showing on the German ZEW survey. The oscillation around the point of control at the 1.09 handle has been lost to the bears with price heading towards the 1.08 level instead. This keeps price action in line with its longer term downtrend, although short term momentum switching back to strongly oversold:

The USDJPY pair has paused in its uptrend, after bursting out to make new highs well above the 124 level on Friday night, now consolidating just above the 125 level since yesterday. This keeps price action near decade highs that is unsustainable in the short term as Yen is dumped everywhere. Watch for momentum to revert here from extremely overbought levels:

The Australian dollar finally had a break with a substantial liftoff overnight that almost took it back to the 75 handle before cutting that move in half to finish at the mid 74 level this morning. This was on the back of higher commodity prices but couldn’t be sustained as price is still teetering at weekly support which does not bode well for a medium term uptrend potential:

Oil markets steadied and then launched higher overnight with Brent lifting nearly 6% after recently retracing below the $100USD per barrel level, finishing at just below the $105 level. I still contend that this could turn into a wider rout so watch for a possible return back to nascent support at the last drawback level at just above $97 that must be defended here or the bubble will pop:

Gold continues to find more support after its breakout move on Friday night, again lifting overnight to well above the $1950USD per ounce, finishing at the $1967 level. Price action looks good here for more upside potential having successfully defended the  psychologically important $1900USD per ounce level, but momentum is not yet overbought. The next stage is a follow through above the recent false breakout around the $1960 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!wrong on your position, so cry uncle and get out!

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