THE LONDON OPEN 02-11-2022

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THE LONDON OPEN 02-11-2022

EUROPEAN STOCKS OPENED HIGHER AFTER A POSITIVE ASIAN SESSION; US DATA SHOWED ONCE AGAIN THE STRENGTH OF THE US ECONOMY WHILE THE USD RECOVERED ALL RECENT LOSSES.

European stocks opened this Wednesday in positive territory after the Asian session saw the region’s indexes continue yesterday’s rally. In particular, the ChinaA50 index gained 1.62% and the ASX200 0.14%. The Shanghai and Shenzhen stock exchanges were also positive, while the only one down slightly remained Japan’s, with the Nikkei giving up 0.06 %. The boost to this bullish movement on the Asian exchanges was provided yesterday by growing speculation about new plans for government support to the economy and a possible easing of zero-covid policy in the coming months. However, such news has not been confirmed by official sources.

Volatility remains down, and we are likely to see little decisive movement throughout the day until the FOMC decision in the evening will decide on the US interest rate. Yesterday’s data (new jobs JOLTs and ISM Manufacturing Index) confirmed the strength of the US economy, having both come in above expectations. Of particular importance turns out to be the data on the labour market, the control of which, as we know, falls within the competence of the FED (as opposed to the ECB, whose only objective is price stability and thus inflation control). Finally, tensions between the two Koreas have risen again, with North Korea continuing missile tests in the area, causing the other side’s and the United States’ anger.

Elsewhere, the US data also strongly impacted the currency market, with the US dollar even closing yesterday’s session in the positive after a tough start. Slightly moved but positive finally was WTI, which traded below $90 after a surprising drop in inventories (to be confirmed with today’s data).

As for the macroeconomic calendar, investors’ attention this morning will be on manufacturing PMI data, German unemployment and the European manufacturing PMI. In the afternoon, however, it will be the turn of the ADP nonfarm employment change in the US, crude oil stocks and the FOMC decision.

EURUSD, M15

The EURUSD dropped heavily after yesterday’s US data and is trading around the most significant intraday support, the current weekly VAL. From a technical point of view, as long as the pair remains above the support, the most likely scenario is a rise to the primary intraday resistance, the 0.9896 mark. A breakout of the latter could lead prices to the W-1 VAL. On the flip side, sellers could try to target the W-2 VAH if prices break the support downward.

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: 0.9872, 0.9848, 0.9831.

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: 0.9896, 0.9929.

XAUUSD, M15

The Gold remained above the most significant intraday support yesterday (blue line on the chart) and broke the resistance upward (W-1 VAL), targeting the W-2 POC as expected. As for today, the most significant intraday support area is the W-1 VAL, while the most crucial resistance is the W-2 POC. As long as prices remain above the support, the most likely scenario is a breakout of the resistance and a stretch to the W-1 POC (uncovered). Conversely, a retest of yesterday’s primary support could occur if prices break the support downward.

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: 1648, 1641, 1634.

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: 1653, 1663, 1668.

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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