Macro Morning

See the latest Australian dollar analysis here:

Macro Afternoon

Last night saw a failure to confirm Friday’s bounceback on stock markets with both European and US shares playing the wobbly game amid tension over interest rates and Chinese growth concerns. The bond market moved around only a little with the 10 year US Treasury yield easing off to just below the 2.9% level, with interest rate markets still forecasting nearly 2% of rate rises to come from the Fed by the end of the year. Meanwhile the USD pulled back 0.4% as some risk currencies swung a little higher with Euro trying to find a bottom alongside the Australian dollar. Commodity prices were the standout with oil lifting 2% to a one month high, copper and gold both up 1% with the latter bouncing back after briefly dipping below the $1800USD per ounce level.

Bitcoin is still trying to get out of capitulation mode, unable to start the week above the $30K level after cracking through the $25K level last week. The desire to bid this back up may clash with reality here as trailing resistance is a long way away:

Looking at share markets in Asia from yesterday’s session,  where Chinese share markets got wobbly following the latest retail sales print with the Shanghai Composite closing down 0.3% to 3077 points while the Hang Seng Index flat lined to close 0.2% higher at 19950 points. The daily chart shows price action wanting to lift higher but still poised below the high moving average and still nowhere near the trailing daily ATR resistance at the 21000 point level as the overall picture still looks bearish despite a one off rally:

Japanese stock markets did much better with the Nikkei up nearly 0.5% to 26547 points. The daily chart of the Nikkei 225 still has a bearish bent and requires a lot more upside from here to get traders more confident again with a breakout above the previous daily/weekly highs near the 27500 point level required to properly reverse the downward trend from the March highs. Futures are indicating a pullback here however:

Australian stocks had a good session with the ASX200 up nearly 0.4% to 7100 points. SPI futures are indicating more upside on the open, up 30 points or 0.2% despite the pullback on Wall Street. The daily chart has a very interesting bullish engulfing candle above bouncing off below the 7000 point level so watch for a further close above the high moving average here next:

European shares started the trading week in mixed fashion, with only the FTSE putting in proper gains as the continent pulled back, the Eurostoxx 50 index finishing down 0.5% at 3685 points. The daily chart picture remains bearish as the March lows still beckon but daily momentum has finally switched from very oversold to just nominally negative, but nothing will change until a close above trailing ATR resistance at around 3800 points at a minimum:

Wall Street also stumbled and while the headline DOW put in a positive result, the ever volatile NASDAQ pulled back more than 1% while the S&P500 hesistated above the 4000 point key support level to finish 0.4% lower at 4008 points. The four hourly chart still shows a classic V-bottom but price is not yet above trailing ATR resistance or the start of week session highs, so we must be cautious here, as price could easily rollover:

Currency markets are still relatively quiet with Euro remaining depressed but thinking about lifting up slightly on oversold exhaustion, pushing up through the 1.04 handle overnight but not making a new substantial high on any of the timeframes. Price remains firmly anchored near the previous weekly low at the 1.05 handle and while short term momentum is slowly moving back from its oversold settings the conditions for a swing trade are not yet in place with trailing ATR resistance level at the 1.05 level proper a long distance away:

The USDJPY pair is being contained somewhat following it Friday bounce back up towards the 129 level as short term momentum created a swing opportunity that has run out of puff. This still keeps price below new trailing ATR resistance with short term momentum remaining in the negative zone so watch for a possible pullback towards the 128 area:

The Australian dollar had another uplift overnight after breaking through the 69 handle as part of a post oversold bounceback. As I mentioned yesterday, it remains to be seen if this is enough to bring it back to weekly support at the key 70 handle as the longer term bearish picture is still forming as part of a multi month technical setup. Watch for any break below the recent session lows at the 69 level and conversely any attempt to cross above the 70 level at trailing ATR resistance:

Oil markets put in a proper uplift, finally making a new weekly high with Brent closing at the $114USD per barrel level overnight. Daily momentum remains nicely positive but not yet overbought so I’m still cautious here with trailing ATR daily resistance at the $116 area the next level to cross as daily momentum starts to heat up:

Gold crossed below the $1800USD per ounce level overnight before rebounding to almost put in a new daily high, finishing at the $1824USD per ounce level with the possibility of a bottom forming here in the short term.  This downtrend has been entrenched for several weeks as daily momentum remained stuck in oversold territory with the January lows around the $1800 level the target that has been reached but is it temporary or a new support 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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