THE LONDON OPEN 10-10-2022

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THE LONDON OPEN 10-10-2022

EUROPEAN STOCKS OPENED LOWER AFTER A NEGATIVE ASIAN SESSION IN THE WAKE OF THE CONFIRMATION OF THE STRENGTH OF THE US LABOUR MARKET; THE USD GETS READY TO REACH NEW HEIGHTS WHILE THE WTI REMAINS ABOVE 90$.

European stocks opened down this week after a negative Asian session, where the ChinaA50 index lost 1.43%, the ASX200 lost 1.40%, and the Tokyo Stock Exchange remains closed for holidays. Sentiment thus continues to be negative and worsened late last week after the release of U.S. NFP and unemployment data. Both readings came in above expectations (unemployment at 3.5% vs 3.7% expected and NFP at 263K vs 250 expected) and left the way clear for the FED to pursue its sustained policy of raising interest rates to cool inflation that does not seem to be showing any signs of abating. Market reactions were as anticipated, i.e., all risk-on assets were penalized, while the dollar and bond yields benefited. As for today, the movement that began at the end of last week is likely to continue, especially since some of the most important stock exchanges, including the Canadian and Japanese, not to mention the U.S., on a semi-holiday for Columbus Day, will remain closed, resulting in less liquidity in the market.

Elsewhere, the dollar, as mentioned, is preparing to reach new all-time highs, as are bond yields (the U.S. 10-year closed Friday at 3.885%); continuing on the currency front, of note is the renewed weakness of the JPY, which has returned to the point where, a few weeks ago, the BoJ was forced to intervene to stem the collapse of the national currency. Stable instead is the WTI oil, which remains firmly above $90 a barrel.

As for the macroeconomic calendar, no major data will be released today, but it will be interesting to follow the scheduled speeches of the FED and ECB officials.

EURUSD, M15

The EURUSD continues its bearish trend ad is now trading below last week’s Value Area, which could be a negative bias for today. From a technical point of view, the most significant intraday resistance area is the W-2 VAH & W-1 VAL, while the most critical intraday support area is the W-3 VAL. As long as prices remain below the resistance, the most likely scenario is a continuation of the trend to target the W-3 VAL and the W-2 POC in extension. On the other hand, if prices break the resistance upward 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: 0.9699, 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: 0.9743, 0.9800.

GBPUSD, M15

The GBPUSD also suffered from the U.S. dollar strength and is trading below last week’s Value Area, which could be a negative bias for today. From a technical point of view, the most critical intraday resistance area is between the W-1 VAL and the W-3 VAL, while the most important intraday support is the weekly LVN around the 1.1007 mark. As long as prices remain below the resistance area, the most likely scenario is a continuation of the trend toward the support. If prices break the support downward, they could target the W-2 VAH. On the flip side, a stretch to the W-1 POC is expected if prices can retrieve the resistance area.

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: 1.1007, 1.0905.

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: 1.1151-1.1195, 1.1325.

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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