THE LONDON OPEN 19-10-2022

[PocketOption]

THE LONDON OPEN 19-10-2022

EUROPEAN EQUITIES TRY TO STAY ABOVE THE PARITY AT THE OPENING; UK INFLATION REMAINS ABOVE EXPECTATIONS AS HAWKISH COMMENTS FROM FED OFFICIALS CONTINUE.

European stocks are trying to stay above parity this morning after a mixed Asian session, with Chinese indices Shanghai and Shenzhen trading in negative territory. At the same time, the ASX200 and Nikkei gained 0.31% and 0.40%, respectively. Market sentiment remains mixed: on the one hand, there are the excellent results of the first US quarters, which so far have primarily beaten analysts’ estimates despite being down on previous readings (thus indicating that the economic slowdown has impacted corporate accounts, but not in such a negative way), on the other hand, there are the macro data that continue to give no certainty as to whether the famous inflation peak has now been passed; Added to this are the continued hawkish comments of the Fed’s exponents, who even last night reiterated that there is no reason to slow down in raising rates until there is clear evidence that inflation is returning towards the 2% target. This morning the CPI data in the UK was better than expected: the annual figure (10.1% vs 10%) matched the July peak, while the monthly figure also beat expectations (0.5% vs 0.4%).

Elsewhere, WTI continued its bearish run in the wake of yesterday’s news of the US administration selling 15 million barrels of the strategic reserve on the market to repurchase it in the $67-$72 per barrel area; low volatility continued in the cryptocurrency market.

As for today’s macroeconomic calendar, European inflation is the main data investors will look at. Other significant data will be building permits and crude oil stocks in the US, which the Canadian inflation figure will follow.

EURUSD, M15

The EURUSD is trading this morning around the most significant intraday support area, between the weekly LVN and the W-2 POC. From a technical point of view, the most likely scenario is an attempt to break the support downward; then, most of today’s trend will depend on the breakout. If the pair can actually break the support, the most likely scenario is a continuation of the drop to the 0.9750 mark. On the other hand, if the pair posts a false breakout, another rise towards the W-2 VAH 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: 0.9820-0.9800, 0.9749.

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: 0.9904.

WTI, M15

The WTI continues its drop but started to post higher highs (and lower lows) yesterday afternoon, which usually indicates an upcoming volatility spike. Currently, it is trading below the most significant intraday resistance area, the weekly LVN around the 83.48 mark. In contrast, the most important support is the W-3 VAH. From a technical point of view, as long as prices remain below the resistance, the most likely scenario is a continuation of the trend toward the support. On the other hand, if prices break the LVN upward, a stretch to the 85 mark 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: 81.09.

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: 83.48, 84.99, 85.96-86.25.

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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