THE LONDON OPEN 31-10-2022

[PocketOption]

THE LONDON OPEN 31-10-2022

EUROPEAN EQUITIES OPENED LOWER AFTER A MIXED ASIAN SESSION; CHINA’S MANUFACTURING SECTOR SHRUNK, WHILE THE US DOLLAR RECOVERED SOME OF THE RECENT LOSSES.

The major European indices opened lower this week after a contrasting Asian session, where the Nikkei and ASX200 indices gained 1.78% and 1.15%, respectively. At the same time, the Chinese stock exchanges declined, weighed down by the unexpected contraction in the manufacturing sector, whose data was released this morning. Specifically, the manufacturing PMI came in at 49.2 against expectations of 50, while the non-manufacturing PMI came in at 48.7 against expectations of 50.2. This data only confirms how international investors continue to be spooked by the Asian country, which is still struggling with the zero-covid policy followed by the government, which frequently leads to various and extensive lockdowns in many of the country’s major cities. In the meantime, the US dollar continues to retrace, and after the last two weeks in which it has given up 2.34% (dollar index), it is trying to make a good rebound by moving back towards 111. Investors’ attention in this respect is already focused on the next Fed meeting this week and especially the next one scheduled for December. If the market has already discounted a 75 bp rate hike for this meeting, the same is not valid for the next one, towards which there is more uncertainty. Currently, the CME FED Watch Tool estimates the probability of a further 75 bp rise at around 50%. The other 50% is for a lower 50bp rise. Inflation continues to run, but the market is increasingly questioning when the FED’s monetary policy change will come.

Elsewhere, on the commodities front, crude oil declined, aided by a drop in China’s manufacturing sector. In contrast, BTC and ETH continued to rally on the cryptocurrency front, now close to interesting medium-term resistance levels (especially ETH near USD 1600).

As for the macroeconomic calendar, investors will mainly focus on the European CPI, which is expected to rise again despite the central banks’ action to limit its run.

EURUSD, M15

The EURUSD continues its sideways trend between the W-1 POC and the W-1 VAL. From a technical point of view, the latter is the most significant intraday support area, while the 0.9968 mark is the most critical intraday resistance area. If prices break the support downward, the most likely scenario is a continuation of the downtrend toward the LVN around the 0.9903 mark and to the W-2 VAH in extension. On the flip side, if prices remain above the support, a stretch and an upside breakout of the resistance could lead the pair to test the higher LVN around the 1.0017 mark.

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: 0.9929,0.9903, 0.9848.

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: 0.9968, 1.0017, 1.0084.

GBPUSD, M15

The Cable continues its rise. Currently, it is trading around the most significant intraday support area, the W-1 POC. In contrast, the most critical intraday resistance area is the W-1 VAH. From a technical point of view, as long as prices remain above the LVN, the trend remains bullish, but if prices break the support downward, a drop to the primary support is expected. On the other hand, if the pair can retrieve the support, a stretch to the W-1 VAH becomes the most likely scenario for today.

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: 1.1571, 1.1504, 1.1409.

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: 1.1640.

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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