US OPENING BELL 17-01-2023

[PocketOption]

US OPENING BELL 17-01-2023

EUROPEAN EQUITIES EDGE LOWER AHEAD OF THE US SESSION; CHINA’S GDP BEATS ESTIMATES BUT REMAINS BELOW THE GOVERNMENT’S TARGET; EU DATA CAME IN BETTER THAN EXPECTED.

Major European equities traded lower in mid-week ahead of Wall Street cash opening (which was closed for holidays yesterday). Currently, the Dax is down 0.13%, the Cac40 0.18% and the Eurostoxx 0.22%.

What seems to have weighed most on investor sentiment appears to have been the Chinese data that arrived overnight. In particular, GDP came in at 2.8% against a forecast of 1.8%, but growth in the world’s second-largest economy came in at 3% in 2022, well below the government target of 5.5%. This was clearly due to the continuous lockdowns wanted by Beijing to counter the spread of the pandemic, which led to the lowest annual growth since 1976.

Even the positive data from Europe failed to improve the situation. In this respect, on the one hand, inflation in Germany confirmed expectations with an annual figure of 8.6%, down from the previous 10%. On the other hand, data on the UK labour market showed that the latter remains healthy, thus putting further pressure on the BoE for the next interest rate hike. Another piece of data that failed to improve market sentiment was the German Zew, which surprisingly came in at 16.9 versus an expected -15, turning positive for the first time since February and indicating the economic outlook for the eurozone’s largest economy is improving markedly.

So why an underwhelming performance by the major European stock exchanges? After two weeks of such fast and sustained rises, some profit-taking is probably weighing on the stock markets, which remain bullish in the short term.

Regarding the macro calendar, no other significant data are expected for the rest of the day, except Canadian inflation, which will be released in the afternoon.

EURUSD, M15

The EURUSD continues its sideways trend, but our most significant intraday support (the W-1 VAH) showed once again a good presence of buyers in that area. The most crucial intraday resistance area remains the 1.0866 mark. From a technical point of view, as long as prices hold above the support, themost likely scenario is a continuation of the rise toward the resistance and, in case of a breakout, toward the yearly LVN. On the flip side, a breakout of the three lows below our support and a subsequent consolidation could lead to a short-term trend inversion. The pair could reach the lower support around the W-1 POC if this happens.

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: 1.0817, 1.0743, 1.0718.

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: 1.0866, 1.0945.

S&P500, M30

The S&P500 is trading above the most critical intraday support area, between the 3980 and the 3976 marks. In contrast, the most significant intraday resistance area is the W-1 VAH. From a technical standpoint, as long as prices remain above the support, the most likely scenario is a continuation of the trend to target the resistance. On the other hand, a breakout of the support could lead the index toward the W-1 POC.

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: 3980-3976, 3944.

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: 4000, 4032.

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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