Macro Morning


A much lower USD is supporting risk markets with Friday night seeing another surge across European shares while Wall Street eked out a small gain. The Australian dollar almost matched its previous monthly high at the 65 cent level as Euro broke out above the 1.09 handle.

US bond markets saw short term yields lifting while 10 year Treasuries were unchanged at the 4.4% level as oil prices bounced nearly 4% on their previous reversal as Brent crude remains near its monthly low at the $80USD 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 $1980 level.

Looking at share markets in Asia from Friday’s session where mainland Chinese share markets were still treading water with the Shanghai Composite up only 0.1% at 3054 points while in Hong Kong the Hang Seng Index continued to slide, down over 2% to 17454 points.

The daily chart was showing a significant downtrend that had 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 positive settings despite Friday’s reversal with the potential for a fill in rally here towards the ATR resistance at the 18000 point level:


Japanese stock markets were able to continue their big rebound on the weaker Yen with the Nikkei 225 gaining just over 0.4% to 33584 points.

Trailing ATR daily support is a long way below the current bounce that has now exceeded the September highs at the 33000 point level with daily momentum also in the overbought zone but not over-extended. I’m watching correlations with Wall Street and Yen to see if there is more upside heret:


Australian stocks were unable to push into the positive zone with the ASX200 remaining above the 7000 point level with a 0.1% loss, closing at 7049 points.

SPI futures however are more optimistic with a 0.4% gain expected on the open despite the flat finish on Wall Street so we should see the 7000 point level firm as daily support this trading week. The daily chart is trying to look more optimistic here in the medium term with short term price action filling a hole against the tide:


European markets were able to find more positive momentum with the Eurostoxx 50 Index gaining some 0.9% to close at 4340 points.

The daily chart shows weekly resistance at the 4300 point resistance level nearly taken out with this large bounce setting up for further gains if that level is pushed aside proper. Support at the 4250 level should be quite firm on any pullback but I’m watching the much higher Euro possibly providing a headwind as the week progresses:


Wall Street wanted to follow suit but had the late session wobbles as the NASDAQ finished just 0.1% higher while the S&P500 did the same to finish at 4514 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 4360 point level to take some heat out of this:


Currency markets are really pushing back against USD, which is back at its September low on the DXY as Euro pushed through temporary short term resistance to resoundingly breakthrough the 1.09 handle on Friday night.

The current consolidation was after the union currency was able to fend off more Fedspeak in recent weeks and remain in a bullish, albeit neutral condition. Support at the recent weekly lows around the 1.06 level was not tested with new short term support upgraded to the 1.07 mid level at a minimum:


The USDJPY pair is dropping further on its mid week pullback, now matching the start of November lows at the 149 handle on Friday night.

Four hourly momentum has reverted to nearly extreme oversold settings on the lower USD with price action suggesting a possible consolidation on the open of the new trading week this morning. albeit with increased volatility:


The Australian dollar however remains ready to take advantage of the weaker USD with another attempt at breaking through weekly highs at the 65 level on Friday night, with a sneaky peek that matched its mid-week attempt but no more.

The Pacific Peso remains under medium and long term pressure but was able to test the mid 63 level following the RBA’s recent rate hike with momentum not yet overbought but looking very positive as we start a new trading week:


Oil markets remain in flux with the growing conflict in the Middle East not spiking although potential OPEC cuts saw it lift on Friday night with Brent crude up more than 4% to just above the $80USD 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 still in 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 falling sharply against others across the undollar complex with the shiny metal rebounding to just below the $1980USD per ounce level.

Daily support is building again here as the four hourly chart shows short term resistance now coming under threat to get back above the $2000 level again:


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!