US OPENING BELL 14-10-202

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US OPENING BELL 14-10-202

EUROPEAN STOCKS EDGE HIGHER AHEAD OF THE US SESSION; INVESTORS ARE WAITING FOR THE UK PM PRESS CONFERENCE TO UNDERSTAND IF THE GOVERNMENT WILL ABANDON ITS TAX PLAN WHILE THE BOE ENDS ITS BOND-BUYING SCHEME TODAY AS EXPECTED.

European equities continue to trade in positive territory ahead of the US session. Currently, the Dax is gaining 1.09%, the Cac40 1.49% and the Eurostoxx 1.35%. After the US inflation data released yesterday and the reaction movement of the markets explained in this morning’s analysis, sentiment in Europe today is driven by the developments of the UK’s fiscal plan (the so-called mini-budget). The new government seems once again ready to retrace its steps after several U-turns and a constant and ongoing confrontation with the BOE, which was forced to intervene in the long-dated bond market following the plan’s announcement. A press conference of Prime Minister Liz Truss is scheduled shortly, at 2 pm London time, which should confirm or not the fiscal plan, and the possibility of a surprise announcement on the possible forcing of the Chancellor of the Exchequer Kwarteng to resign is not excluded. Any further backtracking on the initially presented plan could bring additional strength to the market, but the reaction will largely depend on what changes are made. In the meantime, another element that is undoubtedly helping to improve sentiment is the data from France and Spain regarding inflation. In both countries, the CPI is in a downward phase (at least apparently), and several investors are beginning to think that the famous inflation ‘peak’ may have been passed.

Elsewhere, the price of WTI oil (which had benefited from the dollar’s weakness yesterday) fell after Covid’s cases in China resumed sharply, raising the possibility of new lockdowns, and after crude oil stocks published yesterday rose much higher than expected, signalling a drop in demand.

As for the economic calendar, today’s focus for investors will be on the Truss press conference and US retail sales data.

EURUSD, M15

The EURUSD, remaining this morning below the most significant intraday resistance area (W-1 POC), dropped to the support as expected and broke it downward. The area between the current weekly VAH and the 0.9743 mark becomes the most critical resistance for the rest of the day. In contrast, the main support is now the current weekly POC. From a technical point of view, as long as prices remain below the resistance, another drop to target the support is expected. On the flip side, if prices come back again above the resistance and consolidate above it, a stretch to the W-1 POC is expected.

Main intraday support areas where to look for long trades in case of a bullish candlestick pattern or short trades in case of a bearish candlestick pattern: 0.9705, 0.9633.

Main intraday resistances areas where to look for short trades in case of a bearish candlestick pattern or long trades in case of a bullish candlestick pattern: 0.9735-0.9743, 0.9800.

S&P500, M30

The S&P500 recover strongly after breaking the 2-year low around the 3558 mark. Such an inversion could signal a potential upcoming rebound for the next week. From a technical standpoint, the most significant intraday resistance is between the W-2 VAH and the W-1 VAL, while the most crucial support is the W-2 POC. As long as prices remain below the resistance area, a drop toward the W-2 POC and the W-2 VAL is expected in case of a breakout. On the flip side, if prices can overcome the resistance and consolidate above it, another stretch to the W-3 Area becomes the most likely scenario.

Main intraday support areas where to look for long trades in case of a bullish candlestick pattern or short trades in case of a bearish candlestick pattern: 3641, 3619

Main intraday resistances areas where to look for short trades in case of a bearish candlestick pattern or long trades in case of a bullish candlestick pattern: 0.9735-0.9743, 0.9800.

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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