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EUROPEAN STOCKS CLIMB AS GLOBAL MARKET RALLY; EUROPEAN PPI CAME IN HIGHER THAN EXPECTED, WHILE THE USD TRADES AT THE LOWES LEVEL SINCE SEPTEMBER 22.

European stocks put in their best performance in a long time at mid-session, with the Dax gaining 3.04 %, the Cac40 3.46% and the Eurostoxx 3.44%. Significant gains that follow yesterday’s equally positive Wall Street close. However, many analysts believe that most of these rebounds are due to the rebalancing of managers’ and institutional portfolios after the end of the month and the third quarter. If this is the case, we may soon see the strength of these first two days of the week exhausted. Meanwhile, European PPI data came in this morning, beating expectations for the annual (43.3 % vs 43.1 %) and monthly (5 % vs 4.9 %) figures, indicating that the fight against inflation has yet to be won.

Elsewhere, the US dollar continues to retrace, with the dollar index currently trading at its lowest since September 22, around 111. Looking then at the Sterling and the UK government bond market, i.e., the markets hardest hit by the sell-off in recent weeks, we can see that the market, thanks to the steps backwards promised by the UK government, has managed to recoup all its losses.

As for the macroeconomic calendar, as mentioned earlier, investors’ eyes in the afternoon will be on the new JOLTs jobs in the States, Australian retail sales and the RBNZ interest rate decision, as well as the various scheduled FED and FOMC interventions.

EURUSD, M15

The EURUSD continues its rise. It overcame the first LVN, almost reaching the second after a classic pullback. From a technical point of view, the most significant intraday support area becomes the LVN around the 0.9866 mark, while the most crucial intraday resistance is the LVN around the 0.9907 mark. As long as prices remain above the support, the continuation of the trend is the most likely scenario; a breakout of the resistance could also lead prices to the W-1 VAH in the medium term. On the flip side, an inversion may happen only after a drop below the W-2 POC. in that case, the target could be the 0.9784 mark.

Main intraday support areas where to look for long trades in case of bullish candlestick pattern or short trades in case of bearish candlestick pattern: 0.9866, 0.9838, 0.9784.

Main intraday resistances areas where to look for short trades in case of bearish candlestick pattern or long trades in case of bullish candlestick pattern: 0.9907, 0.9967.

S&P500, M30

The S&P500 is trading at the highest level since Semptember 23 and is now approaching the most important intraday resistance area, which is between the LVN around the 3749 mark and the W-2 VAL. On the other hand, the most significant intraday support area is the W-1 VAH. From a technical point of view, if prices do not break the resistance upward after the US cash opening, the most likely scenario is a drop to retest the support. On the opposite side, if prices break the resistance upward and consolidate above it, a continuation of the current trend toward the weekly LVN around the 3829 mark is expected.

Main intraday support areas where to look for long trades in case of bullish candlestick pattern or short trades in case of bearish candlestick pattern: 3689, 3641.

Main intraday resistances areas where to look for short trades in case of bearish candlestick pattern or long trades in case of bullish candlestick pattern: 3749-3763, 3829.

Key:

POC= Point of Control

VAH= Value Area High

VAL= Value Area Low

LVN= Low Volume Node

HVN= High Volume Node

W-1= last week

W-2= two weeks ago

W-3= three weeks ago

D-1= yesterday

D-2= two days ago

D-3= three days ago

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