Trading Plan for the days action 26/05/22

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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 and higher lows/lower highs once the price action unfolds. All prices refer to the CFD pricing from the charts below.

OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 26/05/22 (as at 7:30am AEST)

The US markets were buoyant from the open but tentative ahead of the FOMC minutes where the Fed gave bulls the green light (they would not say anything else). The FOMC minutes met expectations as the Fed said that the economy remains strong as they deal with high inflation. I expect that the Fed has no choice than talk up the economy…which is strong but showing signs of slowing. The DOW and Nasdaq seem to be supported and wanting to go higher but it also seems that sellers are not done yet. The longer term bias remains down for now and the USD started to head back up so it comes down to economic data from here and whether the economy is slowing or not. German and French Bank Holiday tonight while US GDP is released.

Many expect that the Fed is out of ammo to fend off another selloff…QE I expect is out of the question with high inflation which is causing a broad slow down as consumers have to pay higher prices and are forced to cut spending. This could cause a slowdown in growth which, coupled with the high inflation and rate rises, will not be good for shares which are ‘forward looking’.

The ASX200 is expected to open UP 5 points after a rather choppy session for the SPI200. The SPI200 started the European session on the back foot before finding support to make back the early losses.

SPI200 (Jun) overnight futures up 13 pts to 7157
SP500 up 37.25 pts to 3978.73
NASDAQ Composite up 170.29 pts to 11434.74
Dow Jones up 191.66 pts to 32120.28
FTSE100 up 38.40 pts to 7522.75
DAX30 up 88.18 pts to 14007.93
GOLD futures US session (Aug) down $18.90 to $1852.50 an ounce
COPPER futures US session (Comex Jul) down $0.0358 to $4.2692 a pound
OIL futures US Session (Nymex Jul) up 0.56 to $110.33 a barrel
CRB Index up 0.82 pts to 314.57
AUDUSD trading at 0.7086
EURUSD trading at 1.0683
GBPUSD trading at 1.2578
USDJPY trading at 127.2800
USD Index US Session (ICE Jun) up 0.260 to 102.130

CLICK HERE FOR ECONOMIC DATA OUT TODAY (AEST) 26/05/22

The SPI200/ASX200 had an early flush higher along with the European open but was then able to make its way back up as the US opened stronger. Price action has key resistance at 7195 that I expect will hold us down today. Price may ramp up into the resistance level today before fading into the close. Any further strength into the USD will not help commodities and leave investors uncertain. The DOW has been supported for the last few sessions as buyers soak up selloffs. Price held a higher low around 31750 which could see the DOW push towards the 32720 zone. For now the short term trend is up and searching for a high. The US Tech 100 has also been relatively buoyant and looking to test into recent major lower highs or resistance. Expecting 11790 to hold as traders will be watching the GDP release tonight for any signs that the economy is slowing which I expect will bring in sellers. Hang Seng had a choppy session and did not seem to know which way to go. Algos had fun yesterday in the choppy price action and we could see more today. Price held below 20302 and found support at 20045. Watching for either a flush up into resistance and then fade or down into support and rally…but generally for the market to again range. The Nikkei is holding a higher low around 26675 and trading up into 26855. Expect to see 26855 flushed and if price can hold a higher low, a rally to 27105 is on the cards. Of course the opening drive could see a straight ramp which would see a short opportunity at resistance. The DAX Index fended off an early selloff into 13855 before rallying back up to test 14102. Buyers were strong but I do expect an early selloff before another leg higher. We will have to wait though as the DAX will be closed for a bank holiday tonight. UK 100 Index held up well and found buyers to provide support at 7494. Price was held down by resistance at 7535 which I expect could be the theme tonight. If price breaks down below 7494, then an unwind of bulls is on the cards.

Cryptos remain looking heavy and do not seem to be sharing the same enthusiasm as previously. This to me suggests a lack of buyers willing to jump back into the market which also means it will only be time until current holders think about getting out and selling into the market. With Bitcoin, a move below 29330 will see an attack on 26680. Ethereum is holding 1981 and could easily push into test support (or break below) at 1909. The big issue is margin if we do see a selloff into the two major cryptos. The crypto community (who are also into NFTs) are feeling the pressure so I feel it is only time before they crack.

Spot Gold traded as expected with the rally back into the USD. Price worked down off 1864 and could easily hold a lower high to break down below 1848. Again, focus will be on the USD movements into the GDP release tonight ahead of the US open. Crude Oil held between 111.40 and 109.24 in a ranging session. The price action could break out either way so watching the 111.40 and 109.24 levels will be the focus. I expect that any selloff into share markets will lead to a USD rally and Oil selloff. USD Index moved its way back above the 102 level into 102.38 before fading into the US close. I expect that bulls will be watching the data releases closely; ie GDP and Unemployment claims tonight; which could trigger buying back into the USD.

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SPI200 Index