THE LONDON OPENING 01-09-2022

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THE LONDON OPENING 01-09-2022

EUROPEAN STOCKS OPENED LOWER AFTER A NEGATIVE ASIAN SESSION IN WHICH WORSE-THAN-EXPECTED CHINESE DATA WEIGHED ON SENTIMENT; MEANWHILE, FED OFFICIALS MADE INCREASINGLY HAWKISH COMMENTS AHEAD OF TOMORROW’S NFP.

European stocks opened lower again this morning after a negative Asian session, where the ChinaA50 index lost 0.82 %, the ASX200 2.02% and the Nikkei 1.75%. The sentiment was driven downward by continued concerns about a possible generalized recession and PMI data from China, which were worse than expected. In particular, the Caixin Manufacturing PMI came in at 49.5 against an expected 50.2 and down from 50.4 in the last survey. The country had not seen a contraction in the sector since last May. That figure was likely impacted by continued local lockdowns due to Covid and power shortages in some areas of the country.

Meanwhile, in the day yesterday came more hawkish comments from the Cleveland FED President, who reiterated how in his view, FED Funds should reach 4% early next year, but at the same time, she does not expect any rate cuts in 2023.

On the commodities front, oil continues its decline for the time being despite threats from OPEC to cut production. It recovered from intraday lows yesterday and closed at -2.93% but is currently down 0.93%. Among the causes of the recent decline was the oil tanker that ran aground in the Suez Canal yesterday, blocking traffic for several hours before the situation normalized.

In terms of the economic calendar, investors will focus today on PMI data from major European countries and, on the U.S. front, Initial Jobless Claims benefits and the ISM Manufacturing PMI.

EURUSD, M15

The EURUSD is currently trading below the weekly POC and the W-1 VAH, which is a negative bias for this morning. However, the setup could change entirely due to the European PMI data, which will be released later this morning. From a technical point of view, the most important intraday resistance area is between the current weekly POC and the W-1 VAH, while the most significant intraday support is around the W-1 POC (with intermediate support around the 0.9986 mark). As long as prices remain below the resistance area, the most likely scenario is a continuation of the downtrend towards the W-1 POC. On the other hand, if prices break the resistance upward, they could target the Current weekly VAH and the LVN in extension.

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: 0.9986, 0.9975, 0.9943.

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: 1.0021-1.0024, 1.0041, 1.0076.

WTI, M15

The WTI continues its drop and is currently fighting to hold the 88.50 mark. From a technical point of view, the main intraday support area is the W-2 POC. As long as prices can maintain the support, the most likely scenario is a retest of the most significant intraday area, which is between the W-2 VAH and the W-3 VAL. On the other hand, if prices drop below the support, a continuation of the current downtrend to target the W-2 VAL is expected. A more solid rebound can be expected only if the WTI can break the W-2 VAH upward.

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: 88.53, 86.94.

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: 89.72, 90.01, 93.37.

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