Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Overnight stock markets rallied strongly overnight on the poor US GDP number, although bond markets looked straight through that print with 10 year US Treasury yields pushing back up to the 2.9% level as Wall Street rallied on lower expectations of Fed tightness around the corner. The USD remains on a tear against everything, helped by the BOJ bond buying that saw Yen move  to multidecade levels while commodity prices oscillated, as WTI and Brent crude oil both firm a little while gold remains depressed well below the $1900USD per ounce level.

Bitcoin is still on a downward tear after recently making a new weekly low but it managed to climb above the $40K level overnight, where its hovering just below this morning. As I’ve been saying for awhile, the lack of confidence in the crypto world could see a further retracement down to the February lows at the $37K level next and we’re almost there as this trendline attests:

Looking at share markets in Asia from yesterday’s session, where Chinese share markets were the relative laggards across the region with the Shanghai Composite up over 0.5% at 2975 points while the Hang Seng Index did even better, surging at the close to finish up 1.5% at 20276 points.  The daily chart remains in a near freefall on COVID and growth fears with a return to the early March lows at 18000 still possible here although this swing trade could be brewing to push through to the 20000 point level temporarily:

Japanese stock markets rebounded the fastest as Yen took a steep dive, with the Nikkei 225 closing 1.7% higher at 26847 points but futures are indicating a further uplift at the open as overnight moves in Yen via BOJ bond buying give it more support. Daily momentum is still in a negative state but has reverted sharply above its oversold status with price action poised here at the previous weekly high that was rejected:

Australian stocks ended up a bit better than expected, with the ASX200 climbing  1.3% to try to clawback some of its poor start to a truncated trading week, closing at 7356 points. SPI futures are up nearly 50 points so far with the daily chart showing price action in a classic bounce back proving the 7100 point level as strong support so far, but needs to translate into a proper close above the high moving average next:

European shares had a much better night, with the Eurostoxx 50 index closing more than 1% higher at 3777 points. The daily chart picture remains quite bearish and would require a much firmer breakout above trailing daily ATR resistance at the 3900 to 4000 point level proper before calling this move over. I still contend another breakdown with a return to the February lows as the energy crisis and Ukrainian invasion risks widen:

Wall Street sharply bounced out of correction mode, with the NASDAQ remaining the most volatile to launch more than 3% higher while the S&P500 had a super solid session, finishing nearly 2.5% higher at 4287 points. Price action on the four hourly chart was showing a series of dog tails wagging here which indicated a lot of intrasession buying support from the BTFD crowd that finally translated into a proper breakout, although I do note trailing ATR resistance has not yet been taken out. As I warned yesterday, this could be a swing play only, with the potential up to 4300 before turning into another dead cat bounce as the medium term target remains the 4000 point level:

Currency markets remain dominated by a strong USD which continues to push Euro and Pound Sterling to further structural lows overnight, the union currency falling through the 1.05 handle this time. My expectations of a short term swing bounce on quite oversold conditions has not yet come to pass but short term momentum is diverging here, so be ready for anything on the road down to parity:

The USDJPY pair surged out the gate yesterday following the BOJ moves in the bond market, wiping out the previous structural high to surpass the 130 handle where it hovered at overnight. These moves are always filled with caution, but you can’t fight the central bank on this one, so I expect any small retracements to be filled from here:

The Australian dollar is still under enormous pressure from USD, slipping further below to crack the 71 level overnight after absorbing the outsized CPI print earlier in the week and not seeing any upside from commodity prices. I’m watching for a further break below the low moving average as short term momentum remains nominally oversold:

Oil markets continue to stabilise with a fairly firm session overnight with Brent solidifying above the $100USD per barrel support level to make a new daily high above $107. Daily momentum is slowly retracing out of the negative zone, but a drawback or breakdown below the key $100 level is still possible given no new weekly highs being made for sometime now:

Gold remains under a lot of pressure with yet another session below the $1900USD per ounce level, although it did managed a small blip higher to finish at $1894 or so. Daily momentum is still deep into oversold territory with the January lows around the $1800 level the next possible downside target:

 

 

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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