Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Wall Street stumbled overnight on some poor earnings results while European markets were more upbeat as the USD finally lost ground against some of the major currency pairs. All eyes remain on interest rate markets however, with the 10 year US Treasury yield falling back slightly to the 2.8% level with the Fed expected to put in another rate rise next month. Yen finally took some ground back against USD but its all relative considered the whopping gains of recent weeks while the Australian dollar remains on a nice swing play higher above the 74 handle but is losing momentum as we get underway here in Asia. Oil prices went nowhere after losing more than 5% at the start of the week, with Brent crude still below the $110USD per barrel while gold is trying to bounce back after recently rejecting the $2000USD per ounce level, now climbing back above the $1950 level.

Bitcoin remains in somewhat of a depressed state, with continued oscillation around the $41K level where it managed to stay above overnight. The lack of confidence in the crypto world could see a further retracement down to the February lows at the $37K level next if the daily high moving average is not breached soon with a proper breakout:

Looking at share markets in Asia from yesterday’s session, where Chinese share markets remain quite unsettled, with the Shanghai Composite closing some 1.3% lower at 3149 points while the Hang Seng Index slipped instead of slumping again, falling just 0.4% to finish at 20944 points.   The daily chart remains stuck below very strong resistance at the 22600 point level with momentum pushing the market ever lower with continued moves below the low moving average likely as momentum keeps going negative here:

Japanese stock markets however continued to bounce higher, lifted by a very weak Yen with the Nikkei 225 closing 0.9% higher at 27217 points with futures indicating a flat start on the open as the Yen finally lifted overnight. Daily momentum is still at a neutral level with price not yet retreating below daily ATR support but its still rejecting weekly resistance at the 27500 point level. Watch for any potential break above the high moving average on a swing play soon:

Australian stocks put in a good start with the ASX200 initially breaking through the 7600 point barrier but eventually closed with a scratch session, finishing at 7569 points. SPI futures are up  nearly 30 points despite the volatility on Wall Street overnight, as the daily chart continues to show a lot of potential with daily momentum still quite strong with price now seeming to push aside resistance at the former highs from December last year – watch for a good close today to clarify a new uptrend:

European shares finally had a solid session with lifts across the continent, led by the German DAX as the Eurostoxx 50 index finished 1.7% higher at 3896 points. Support has continued to hold around the 3700 point area but I still contend there is some big volatility brewing soon, so watch for a potential breakout or breakdown at the obvious levels of support and resistance and keep in mind the longer term picture which still looks bearish here:

Wall Street remains volatile with the headling Dow improving some 0.7% but tech stocks hit hard on Netflix’s reversal with the NASDAQ taking back its recent session gains to fall some 1.2% while the S&P500 finished dead flat at 4459 points. Price action on the four hourly chart is continuing to show a series of steps down as the BTFD crowd try to step in and shore up support with short term price action pushing through ATR resistance overhead and marginally above the previous weeks intrasession high, so this still could have legs going forward as earnings season rolls on:

Currency markets finally saw a weaker USD move things around overnight with Euro bouncing back above the 1.08 level after finding a bottom near weekly support at the start of the week. This breakout is unlikely to have legs as price action is still in line with its longer term downtrend, even as short term momentum reverts back to positive and trailing ATR resistance is breached – overall its fairly weak so far:

The USDJPY pair was literally on one of the biggest rolls ever, going back more than 40 years with its recent surge pulled back overnight to deflate to the 128 level. This is a welcome move and could even extend down to the 127 or lower without upset the overall trend. While short term momentum has reverted sharply here from extremely overbought levels, the trendline looks solid as it will take a very major reversal to move things around soon:

The Australian dollar continued its swing play overnight, almost getting to the mid 74 level before buying exhaustion set in. Price action has stalled just below the previous weekly intrasession high with short term momentum slightly overbought but I’m very cautious here that this swing can turn into a proper uptrend, with the 75 handle acting as strong overhead resistance:

Oil markets continued to sell off but recovered slightly later in the session to finish almost where they started overnight with Brent remaining at the $107USD per barrel level. Daily momentum is not yet providing enough of an indicator to suggest this blip has any upside potential, with a drawback to the key $100 level still possible given this bearish candle and significant overhead resistance:

Gold was able to shore up slightly above the $1950USD per ounce level overnight after failing to breach the $2000USD per ounce level recently, staving off a wider selloff. Price action was looking good here for more upside potential having successfully defended the psychologically important $1900USD per ounce level, but even though daily momentum remains positive, its still nowhere being overbought. The low moving average must continue to be defended here or we could see a swift return to $1900:

 

 

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!

Latest posts by Chris Becker (see all)

Comments