Macro Morning


Bond yields fell back amid the return of Wall Street which fell sharply as tech stocks dragged the edifice down while the USD went soft as dovish comments from the BOE didn’t help. The economic calendar was again fairly empty although the latest European wage data suggested a quietening in inflation on the continent. The USD pulled back against most of the majors although the Australian dollar again couldn’t get past the 65 cent level.

10 year Treasury yields fell back towards the 4.2% level while oil prices are in hover mode as Brent crude stayed around the $83USD per barrel level. Meanwhile gold continued its fight back after being under pressure following the US CPI print and almost broke out above the $2030USD per ounce level.

Mainland and offshore Chinese share markets started off hesitant yesterday after their NY break with the Shanghai Composite eventually moving some 0.4% higher while the Hang Seng put in a late rebound to finish 0.6% higher at 16247 points.

The daily chart is starting to look a bit more optimistic with price action bunching up around the 16000 point level, ready to possibly burst out here and make a run for the end of 2023 highs at 17000:


Japanese stock markets however wanted to pullback with the Nikkei 225 closing 0.3% lower at 38363 points.

Trailing ATR daily support was never threatened by price action after this bounce went beyond the September highs at the 33000 point level with daily momentum getting back to overbought readings with a significant breakout. A selloff back to ATR support at 32000 points remains unlikely as the November highs are wiped out in this breakout but I’m cautious of a strong pullback here on any volatility:


Australian stocks range traded again throughout the session with the ASX200 closing nearly 0.1% lower at 7659 points.

SPI futures are indicating a minor drop on the open of around 0.3% although this could be wider given the late falls on Wall Street overnight. The daily chart was looking firmer with the medium term uptrend and short term price action coming together to take out the previous December highs. As I said previously, watching for any continued dip below the low moving average could see a significant pullback but watch ATR support which has been defended so far:


European markets again only saw rises in the periphery with the German DAX down slightly which led to the Eurostoxx 50 Index eventually finishing some 0.1% lower at 4760 points.

The daily chart shows price action still on trend after breaching the early December 4600 point highs but daily momentum has now retraced from being well overbought with futures a pullback this evening. There were are hopeful signs this could turn into a larger breakout but markets were overextended but watch for any falls below the low moving average or ATR support proper:


Wall Street reopened from its long weekend (where Trump won the poll again as worst president ever!) with the NASDAQ leading the selling down, off by nearly 1% while the S&P500 finished nearly 0.7% lower to finally cross below the magical 5000 point level, finishing at 4970 points.

The four hourly chart shows short term momentum now back into oversold territory with a nascent bearish double head pattern plus a break below the daily trend line from the January lows broken. The previous fill above the 5000 point level may have been short lived:


Currency markets saw a big move against USD initially overnight with some retracement later in the session but still keeping the likes of Euro on track which managed to extend its gains above the 1.07 level and break through the 1.08 handle proper.

The union currency had already been at a new weekly low almost below the 1.07 level but this was taken out and then some for a new monthly low, hovering over that level this morning. Short term momentum has reversed into overbought mode, with price action now above trailing ATR resistance:


The USDJPY pair remains somewhat stable but again retraced below the 150 handle after a minor late bounce last week, finishing this morning just above short term support.

This was looking very optimistic as Yen sells off due to BOJ meanderings with momentum now retracing to slightly negative settings in the short term, so I’m watching for any major pullback to the 150 level proper as part of a mid trend consolidation:


The Australian dollar is no longer experiencing its recent pressure cooker following the US inflation prints and some possible direction from the RBA, with yesterday’s minutes release giving it some further life overnight, making a new two week high at the mid 65 cent level.

The Aussie has been under medium and long term pressure for sometime with the short term moves above the 65 level setting up for another breakout the mid 65 cent area:


Oil markets continue tried to lift higher but Brent crude retraced below the $83USD per barrel level on the return of US traders overnight.

After retracing down to trailing ATR daily support at the $77 level, price is still above the weekly resistance levels that so far have held from the January false breakout with the short term target the late January highs above $84 still the next target:


Gold is still trying to get out of its formerly depressed state following the US CPI print last week with this rebound slipping slightly in the later session overnight after almost breaching the $2030USD per ounce level.

Daily momentum is no longer oversold with short term support at the $2000 level the critical area to watch with a further session highs and a bounce above short term ATR resistance required to stay on trend:


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!