Macro Morning


A more positive result for Wall Street on Friday night with the USD retreating slightly as the latest Michigan consumer sentiment print came in better than expected, while the latest durable goods order was also more favourable. European shares are still struggling to find momentum but combined we should see a better start to the trading week here in Asia. The Australian dollar broke below the 66 cent level briefly but has again escaped disaster by bouncing back slightly.

While shorter term yields lifted slightly, the 10 year Treasury pulled back slightly but remains above the 4.4% level while oil prices initially lost a lot of ground with Brent crude dipping below the $80USD per barrel level before recovering above later in the session. Gold remains under a lot of pressure with a slump down to the $2330USD per ounce level in the wake of the stronger USD not yet showing any signs of stabilising.

Looking at markets from Friday’s session in Asia, where mainland Chinese share markets are trying to hold after some poor recent sessions with the Shanghai Composite off by 0.2% or so while the Hang Seng Index is down more than 1%, currently at 18629 points.

The Hang Seng Index daily chart was starting to look more optimistic with price action bunching up at the 16000 point level before breaking out in the previous session as it tried to make a run for the end of 2023 highs at 17000 points with the downtrend line broken. Price action was looking way overextended but this retracement is now taking some unwanted heat out of the market:


Meanwhile Japanese stock markets are feeling the heat as well with the Nikkei 225 down nearly than 1.2% at 38646 points.

Price action had been indicating a rounding top on the daily chart with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level almost in full remission. Short term resistance had been defended with short term price action now rebounding off former support at the 39000 point level with short term momentum still indicating a potential breakout, but futures are not looking optimistic:


Australian stocks are playing the same tune with the same amplitude, with the ASX200 down nearly 1.2% to 7721 points.

SPI futures are up more than 0.6% due to the solid lead on Wall Street Friday night. The daily chart was showing a potential bearish head and shoulders pattern forming with ATR daily support tentatively broken, taking price action back to the February support levels. Momentum was finally getting out of its oversold condition but it looks like any potential upside has evaporated:


European markets were again quite mixed on Friday with only the German DAX advancing as the Eurostoxx 50 Index closed dead flat at 5035 points.

The daily chart shows price action off trend after breaching the early December 4600 point highs with daily momentum retracing well into an oversold phase. This is still looking to turn into a larger breakout with support at the 4900 point level quite firm but that bearish engulfing one day candle last week is now indicating a reversal:


Wall Street finally found its lost confidence though, with the NASDAQ moving more than 1% higher while the S&P500 gained more than 0.7%, finishing just above the 5300 point barrier at 5304 points.

The daily chart was showing a large move higher as all Fed roadblocks seemingly were cleared with price action getting well out of its previous slightly stalled position above the 5200 point area. However this mid week slump could turn into a reversal yet daily momentum has only just retraced from a full overbought mode:


Currency markets were moving more towards USD dominance as the latest US initial jobless claims indicated a quite firm employment market with traders swinging back to King Dollar as a result but a lot of that movement has been thwarted by the double whammy better than expected prints on Friday night. Euro rebounded, leading the majors to head back above the 1.08 level.

The union currency had previously bottomed out at the 1.07 level at the start of April as medium term price action with a reprieving reversal in price action back towards the 1.09 level before its own inflation print. Short to medium term support at the 1.0630 level has been respected but momentum settings did get into strongly negative territory, and have now gone positive with the potential to refill the lost ground:


The USDJPY pair wasn’t able to advance further from its new weekly high to stay just below the 157 handle but still looks positive.

This price action post the epic BOJ meeting volatility was much more welcome but this reversal is not that surprising given the weakness of the USD. ATR resistance at the mid 155 handle continues to play a role this trading week as a launching point, with support advancing in each session:


The Australian dollar was facing increasing pressure as more pro-US economic measures come in while the local economy is staring down recession, but the Pacific Peso was able to stave off falling sharply below the 66 handle on Friday night.

The Aussie has been under medium and long term pressure for sometime before the recent RBA and Fed meetings and while there was optimism in the last couple of weeks, resistance at 67 cents was too high to breach. I still reckon the 66 handle will break soon as successive levels of resistance continue to ramp down:


Oil markets are no longer holding on as intrasession volatility increases as Brent crude fell below the $80USD per barrel level for a new weekly low before a very late rebound saw it almost go back to the $82 level on Friday night.

After breaking out above the $83 level last month, price action has stalled above the $90 level awaiting new breakouts as daily momentum waned and then retraced back to neutral settings. Watch daily ATR support here at the $86 level which is still broken and will likely be resistance for sometime:


Gold was able to only just get above the $2400USD per ounce level briefly but was then unable to hold on to this excessive volatility with somewhat settling down at the $2330level but looking very tenuous on Friday night.

Short term momentum was in extreme overbought mode so I was always wary that this move will stick with price action unable to be supported here at trailing short term ATR support at the obvious $2400 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!