Trading Plan for the days action 18/05/22

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Charts Marked with anticipated entry setups in YELLOW and ideal setup in GREEN. There will be many possible scenarios shown so it is key to work off major levels once the price action unfolds. All prices refer to the CFD pricing from the charts below.

OVERNIGHT MARKET SNAPSHOT FOR WEDNESDAY 18/05/22 (as at 7:30am AEST)

The US followed on from a positive Asian and European session to open stronger and hold the gains into the close. As we have spoken about, I expect that markets are happy to be risk on as major Indexes bounce back from some heavy selling. Trends are still down but downtrends are being tested. Data out in the US was positive showing a strong consumer while the Fed are happy to raise by 50 basis points at the next meeting but will be more aggressive if inflation remains stubbornly high…which it is. Bond yields rallied to suggest a more aggressive Fed while the USD fell suggesting bulls are content. Safe haven dollar closures will have pressured the USD lower while new longs are awaiting more data/news on rates from the Fed and seem happy for now. Not much is changing in the way of inflation…so I feel that bargain hunters are getting aggressive and things could easily change soon as the US is generally a day late to news…ie from the Fed. Seems that the story is whether growth can continue to flourish under the inflationary environment…which seems to be the case at the moment.

The ASX200 is expected to open UP 70 points as the SPI200 did the heavy lifting again out of regular trading hours.

SPI200 (Jun) overnight futures up 70 pts to 7181
SP500 up 80.84 pts to 4088.85
NASDAQ Composite up 321.73 pts to 11984.52
Dow Jones up 431.17 pts to 32654.59
FTSE100 up 53.55 pts to 7518.35
DAX30 up 221.56 pts to 14185.94
GOLD futures US session (Jun) up $4.90 to $1818.90 an ounce
COPPER futures US session (Comex Jul) up $0.0408 to $4.2323 a pound
OIL futures US Session (Nymex Jun) down $1.80 to $112.40 a barrel
CRB Index down 0.18 pts to 315.40
AUDUSD trading at 0.7028
EURUSD trading at 1.0551
GBPUSD trading at 1.2492
USDJPY trading at 129.3800
USD Index US Session (ICE Jun) down 0.860 to 103.340

CLICK HERE FOR ECONOMIC DATA OUT TODAY (AEST) 18/05/22

The SPI200/ASX200 did all the heavy lifting after regular trading hours in a thin market after prices were held down during the day. The ramp shows that someone wants the action higher or just that we are happy to do nothing until overnight markets open. The bounce of lows remains in force so watching for a flush higher into resistance and either a higher low for continuation or a lower high for a squeeze of recent buyers. The DOW rallied into the US open and held the gains into the close after a flush lower. Traders focused on positive data and brushed aside Powells negative tone on inflation. Watching the 32715 level for some action. Expecting price to continue higher looking to the 33067 level. The US Tech 100 held a higher low into 12540 and looks set to extend on the gains towards 12720 and potentially above if the market remains in a risk on tone. Everyone’s favourite tech stocks will be the focus and I expect bargain hunters still have a little way to go and continue to provide support. Hang Seng eased off the days session highs after a strong rally right from the day sessions open. Price faded off 20700 which will be the key level to watch on the open. The short term trend up remains in tact but we may see some bulls from yesterday lock in some gains. The Nikkei pushed up into 26880 which I expect to be flushed on the open and potentially for the Nikkei to play catch up with the Hang Seng today. Price could easily extend up into 27105 on the opening drive and then may fade. The DAX Index has been relatively strong as buyers ramp price higher. Expecting that price is extended into 14300/14380 and may want to take a breather. Price has been buoyed by better than expected data. Watching to see how price reacts around the 14300 zne which I expect to be tested into the European open. The UK 100 Index moved higher as traders are eying a strong CPI (inflationary) number tonight. Expecting the upward pressure to continue and push into the 7606 level before sellers may take some gains off the table.

Cryptos had a lacklustre session even as Indexes rallied. Either they are sceptical of the rally or are in trouble which means a new test into lows. Bitcoin continues to hover around $30K so I will need to see either a clear lower high or higher low to work off. Ethereum is much the same as price holds between 2160 and 2039…hovering up off 2039.

Spot Gold had an initial flush up through 1828 before failing after the US data release and safe havens were closed. Price moved lower where I may expect to see some bulls look to hold a higher low for another leg up. If not, then a continued push into 1800 is on the cards. Crude Oil flushed above 115 before failing lower. I will be watching to see if a test and hold of the 111.25 zone will lead to another leg up or whether a deeper correction lower is on the cards. USD Index moved lower well ahead of the Powell speech which suggests safe havens closing long positions. The Yen also saw safe havens close so we may expect that the move lower could be a major flush of dollar bulls. Expecting more chop into the USD and for lows to start to hold as traders digest the Feds position and inflation numbers.

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SPI200 Index