THE LONDON OPEN 04-10-2022

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THE LONDON OPEN 04-10-2022

EUROPEAN STOCKS OPENED HIGHER AFTER A POSITIVE ASIAN SESSION; THE RBA ROSE INTEREST RATES LESS THAN EXPECTED, WHILE THE US ISM MANUFACTURING PMI BOOSTED MARKETS.

European stocks got off to a positive start this Tuesday after a positive Asian session on the heels of yesterday’s gains. The Nikkei gained a solid 3%, while the ASX200 did even better by closing at +3.75%. Yesterday’s day helped improve sentiment in recent sessions thanks to the U.S. ISM Manufacturing PMI data, which came in at 50.9 versus the 52.2 expected. The level recorded is the worst since June 2020. Still, just as the last positive macro data had been interpreted negatively by the market (because this meant a greater likelihood that the FED would continue with its substantial rate hike policy), this negative data was interpreted daringly by the market and led to a generalized rebound in equity and bonds. At the same time, yesterday evening came the interest rate decision of the RBA, which despite a stronger domestic market and economy than the rest of the world, decided to raise the cost of money by only 25 bp against the expected 50; in this case, the main reaction was on the AUDUSD exchange rate, which lost about 50 pips immediately after the news and then partially recovered.

Elsewhere, the significant performances of WTI (+5.21%), waiting to see how much the OPEC+ production cut will amount to at tomorrow’s meeting, and silver (+8.14%), like gold, benefited from the retracement of the dollar, are worth mentioning.

As for the macroeconomic calendar, today, investors will focus on the European PPI, new JOLTs jobs in the U.S., and Lagarde’s speech; in the evening, the focus will be on Australian retail sales and the interest rate decision by the RBNZ.

EURUSD, M15

The EURUSD rose strongly after the ISM Manufacturing PMI data from the U.S. yesterday afternoon. From a technical point of view, the most significant intraday support area is the W-2 POC, while the most critical resistance area is the LVN around the 0.9866 mark. As long as prices remain above the support, the most likely scenario is a continuation of the current trend to the upper LVN around the 0.9907 mark. In contrast, if prices fall below the support, a retest of the support around the 0.9784 (the blue line on the chart) mark becomes the most likely scenario.

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: 0.9838, 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: 0.9866, 0.9907, 0.9967.

WTI, M15

The WTI rose strongly after the news about the potential output cut by OPEC+ members in the next meeting. At the moment, it is trading above the most significant intraday support area, which is the W-2 POC. In contrast, the most crucial resistance area is the LVN around the 84.25 mark. From a technical point of view, as long as prices remain above the support, the most likely scenario is a continuation to target the resistance. On the flip side, If prices come back below the support, a drop toward the W-2 VAL 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: 82.94, 82.22.

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: 84.25.

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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