Macro Morning – MacroBusiness

Wall Street fell sharply overnight on some very hawkish comments from Fed officials and while European markets remained upbeat. This saw the one day reversal in USD flip back to the dominant trend again with the 10 year US Treasury yield jumping back through the 2.9% level as expectations of a 50bps rise by the Fed next month firm. Yen was contained while volatility in Euro was epic on comments from ECB President Lagarde, which saw it roundtrip over 200 pips in the last 24 hours. The Australian dollar was sold off sharply as well, with commodity prices a little weaker as oil prices went nowhere as Brent crude remains contained below the $110USD per barrel and gold was unchanged at the $1950 level.

Bitcoin remains depressed state with continued oscillation around the $41K level where it managed to fall below overnight after another failed breakout. The lack of confidence in the crypto world could see a further retracement down to the February lows at the $37K level next if the daily high moving average is not breached soon with a proper breakout:

Looking at share markets in Asia from yesterday’s session, where Chinese share markets sold off sharply in the wake of COVID tensions and growth concerns, with the Shanghai Composite closing some 2.2% lower at 3076 points while the Hang Seng Index has followed suit, down 1.2% to 20682 points.  The daily chart remains stuck below very strong resistance at the 22600 point level with momentum pushing the market ever lower with continued moves below the low moving average likely as momentum keeps going negative here – the trend is pointing to a return to the early March lows at 18000:

Japanese stock markets continue to bounce higher, with the Nikkei 225 closing 1.2% higher at 27553 points with futures indicating a poor start on the open as overnight volatility on Wall Street will drive the final trading session of the week. Daily momentum is still at a neutral level with price not yet retreating below daily ATR support but its still rejecting weekly resistance at the 27500 point level. Watch for any potential break above the high moving average on a swing play soon:

Australian stocks had a solid session with the ASX200 almost breaking through the 7600 point barrier to close 0.3% higher at 7594 points. SPI futures are down nearly 80 points or about 1% due to the falls on Wall Street overnight, so while the daily chart continues to show a lot of potential and daily momentum remaining strong, price is still unable to push aside resistance at the former highs from December last year:

European shares had yet another solid session with lifts across the continent, although the FTSE dragged, as the Eurostoxx 50 index finished 0.8% higher at 3928 points. Post close futures however saw most of that taken back as Wall Street fell, with resistance still too strong at the 3900 zone. Keep in mind the longer term picture which still looks bearish here:

Wall Street couldn’t keep a straight and happy face in the wake of more interest rate rises with all three bourses dropping sharply, the NASDAQ leading the way with a 2% fall while the S&P500 finished 1.5% lower at 4393 points. Price action on the four hourly chart was showing a series of steps down as the BTFD crowd tried and looked like succeeding in shoring up support on the recent step down, but this was too much overnight as we see a return back to the dominant trend as the 4350 point area remains an anchor point for now:

Currency markets finally saw a weaker USD move things around overnight with Euro bouncing back above the 1.08 level after finding a bottom near weekly support at the start of the week. This breakout is unlikely to have legs as price action is still in line with its longer term downtrend, even as short term momentum reverts back to positive and trailing ATR resistance is breached – overall its fairly weak so far:

The USDJPY pair remained contained overnight despite the macro volatility with its recent surge consolidating here at the 128 level. This pause is a welcome move and could even extend down to the 127 or lower without upsetting the overall trend, as short term momentum remains nicely positive after being at extremely overbought levels:

The Australian dollar was flummoxed overnight on the hawkish Fed comments, completely wiping out its gains so far in the trading week to finish well below the 74 handle. This was sort of predictable given the buying exhaustion that had set in mid week as price action stalled just below the previous weekly intrasession high. I was very cautious that this swing play could turn into a proper uptrend, with the 75 handle now confirmed as strong overhead resistance:

Oil markets stabilised overnight with Brent remaining around the $107-108USD per barrel level in a tight trading range. Daily momentum is not yet providing enough of an indicator to suggest any upside potential, with a drawback to the key $100 level still possible but it remains a strong support level in recent weeks:

Gold was able to shore up once more above the $1950USD per ounce level overnight, steadying itself after failing to breach the $2000USD per ounce level recently. Price action was looking good here for more upside potential having successfully defended the psychologically important $1900USD per ounce level, and even though daily momentum remains positive, its still nowhere being overbought hence the upside caution. The low moving average must continue to be defended here or we could see a swift return to $1900:

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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