Macro Morning


Risk markets hinged on comments from Fed Chair Powell that signalled more rate rises are likely on the way in the battle to combat inflation, with bond yields rising across the curve while the USD strengthened alongside. Wall Street fell back despite a positive European session while the Australian dollar broke below the 64 cent level as the effect from the RBA rate rise evaporated.

US bond markets saw short and longer term yields lifting with 10 year Treasuries back above the 4.5% level while oil prices bounced slightly after their sharp drops with Brent crude still hovering at a monthly low near the $79USD per barrel level. Gold remains under the pump with a very minor gain as it still fails to get back above the $2000USD per ounce level, consolidating around the the $1960 level this morning.

Looking at share markets in Asia from yesterday’s session where mainland Chinese share markets were still treading water with the Shanghai Composite up only 0.1% at 3055 points while in Hong Kong the Hang Seng Index continues to slide, down 0.3% to 17513 points.

The daily chart is still showing a significant downtrend that has gone below the May/June lows with the 19000 point support level a distant memory as medium term price action stays well below the dominant downtrend (sloping higher black line) following the previous month long consolidation. Daily momentum readings are retracing back to negative settings with the potential for a fill in rally here towards the ATR resistance at the 18000 point level evaporating:


Japanese stock markets finally rebounded on the weaker Yen with the Nikkei 225 gaining just over 1.4% to 32646 points.

Trailing ATR daily resistance was coming under threat in a very fast bounceback with daily momentum retracing back from oversold settings to make a new weekly high here. Futures are indicating another slight pullback on the open with the September highs at the 33000 point level remaining the upside target to beat:


Australian stocks were finally able to push the ASX200 back above the 7000 point level with a 0.2% gain, closing at 7014 points.

SPI futures are dead flat due to the continued wobbles on Wall Street so we could see the 7000 point resistance level come under pressure. The daily chart is still not looking optimistic here in the medium term but short term price action is trying to fill a hole against the tide:


European markets were able to find more positive momentum with the Eurostoxx 50 Index gaining some 1.2% to close at 4229 points.

The daily chart still shows an overall decline with weekly support at 4100 points no longer defended, as weekly resistance firms at the 4300 point resistance level. There were signs the previous little bounce was running out of steam as daily momentum remained neutral at best, with a rebound out of oversold settings now encroaching on trailing ATR resistance above but possibly turning into a dead cat bounce:


Wall Street however had the wobbles following the Fedspeak as the NASDAQ finished nearly 1% lower while the S&P500 lost 0.7% to finish at 4350 points.

Short term momentum remains only slightly overextended after last week’s rally as price action bounced strongly off the recent low at the 4100 point level. There is the potential for a retracement back to trailing ATR support on the four hourly chart back down to the 4330 point level to take some heat out of this:


Currency markets are reducing somewhat in volatility but keep bouncing around on central bank speak with USD firming yet again overnight with Euro failing to bounce back later in the session to retrace solidly below the 1.07 handle.

The current consolidation was after the union currency was unable to extend its Friday night gains and is now in a neutral condition. Support at the recent weekly lows around the 1.05 level was tested before the Fed meeting last week and now it seems the recent tow week high at the 1.0670 level has become the new short term support which is likely to hold here:


The USDJPY pair is advancing further on its weekend gap rebound with a proper breakthrough of the 151 handle overnight, almost reaching the previous week high.

Four hourly momentum remains stuck on overbought settings as Yen sells off unabated with price action now well above the previous ATR support level. Watch for a potential consolidation here with increased volatility:


The Australian dollar however remains on a downward track after retracing all of its post NFP bounce, following the RBA meeting and rate rise which saw it break below the 64 cent level proper overnight for a new weekly low.

The Pacific Peso remains under medium and long term pressure but was just holding on above the 64 handle as part of what looked like a consolidation, but risk sentiment is proving too negative as short term momentum followed closely:


Oil markets remain in flux with the growing conflict in the Middle East not spiking as expected with a series of previous retracements leading to a proper breakdown with Brent crude still depressed at the $79USD per barrel level.

After almost reaching $100 in mid September, price was looking to return to the August levels around the $85 area where a point of control had been established before the recent breakout. Daily momentum is now well oversold settings with this failed test of support at the August level setting up for further falls below:


Gold was able bounce back slightly overnight despite USD firming against others across the undollar complex with the shiny metal rebounding to just below the $1960USD per ounce level.

Daily support remains broken however and the four hourly chart shows even short term resistance is still not under threat so this could be just temporary:


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!