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.
PROCESS IS KEY….DEFINE LEVELS – MARK EXPECTED PRICE ACTION – TRADE THE SETUPS
All prices refer to the CFD pricing from the charts below. Opening times (AEST) are 10am SPI/N225, 11:15/30am HSI, 4/5pm DAX and UK100 and 10:30/11:30pm DOW and USTech100.
OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 7/07/22
US Indexes edged higher as the Fed minutes show a consensus to fight high inflation as Fed fears that inflation may become entrenched. The cost of debt is increasing as corporate bond spreads widen which points to an economic slowdown and recession which is not what market bulls want to see. US Bond yields rallied overnight as the Fed minutes point to more aggressive rate hikes from the Fed to battle high inflation. Job data out showed a resilient labour market ahead of the key employment release Friday which took some heat out of the recession narrative for now. Still, higher yields and Bond spreads do not bode well for company growth with a labour market that is at capacity…remembering that share markets are forward looking. Aussie Trade Balance at 11:30am AEST, ECB Monetary Policy Meeting Accounts at 9:30pm AEST and US Unemployment Claims at 10:30pm AEST.
Expect that the US will start to focus on the coming earnings reports with a big focus on forward guidance as profit margins take a hit from higher inflation.
The ASX200 is expected to open UP 25 points after the SPI200 held higher levels in overnight trading.
SPI200 (Sep) overnight futures up 35 pts to 6528
SP500 up 13.69 pts to 3845.08
NASDAQ Composite up 39.61 pts to 11361.85
Dow Jones up 69.86 pts to 31038.68
FTSE100 up 82.30 pts to 7107.77
DAX30 up 193.32 pts to 12594.52
GOLD futures US session (Aug) down $27.40 to $1736.50 an ounce
COPPER futures US session (Comex Sep) up $0.0230 to $3.4380 a pound
OIL futures US Session (Nymex Aug) down $0.97 to $98.53 a barrel
CRB Index down 2.03 pts to 276.13
AUDUSD trading at 0.6782
EURUSD trading at 1.0183
GBPUSD trading at 1.1920
USDJPY trading at 135.9200
USD Index US Session (ICE Sep) up 0.565 to 106.885
The SPI200/ASX200 held a higher level around 6483 on the SPI200 and broke up through 6525 during US trade. The overall price action sets the scene for a move up but we may need to squeeze lower first to clear out some buyers. Bulls will be hoping that the ASX200 can clear 6643 and test into 6675 which could be the trigger for a larger move up. I feel that the market is at a crossroads at the moment as both bulls and bears have a strong argument with respect to price action and the next key move. (Refer to the members area for updated ASX200 charts). The DOW flushed down into support around 30800 before turning higher after the FOMC minutes were released. Although I do expect price to hold below 31223 tonight, price action does look set for a leg higher which could take us to the 31700 or 32500 zones in the near term. The US Tech 100 struggled but did hold above the 11745 area which suggests a move up off another higher low. As long as momentum does not stall, we could see an extended move up into 12115. The Hang Seng rallied right on the open yesterday only to again fail lower in the day session. In overnight trading, the HSI basically held and consolidated the lows below 21570. Watching to see if bulls defend 21295 or bears defend 21570. The opening drive will be key but biased for a flush higher and then drop….but that may be a tough ask for three days in a row. The Nikkei held higher lows in the overnight session and ended above 26275…day session resistance. Watching to see if bulls can keep the momentum up to continue and push price up into 26510 or whether we fail back down through the 26275. The DAX Index grinded its way back up off 12490 and into 12680 to make back some of the losses from the previous session. The price action up is not convincing so I will be on guard for a any sign of weakness although expecting a continued grind up. UK 100 Index rallied up off 7110 to also make back more lost ground from the previous sessions selloff. Expecting to see sellers defend 7172 but this will depend on the ECB statement at 9:30pm AEST.
Cryptos moved higher after holding a higher level through Asian market trading yesterday. The price action on both Ethereum and Bitcoin was a grind with Ethereum only now spiking through 1169 which I expect will drag in more bulls for a move up off the level. Bitcoin is holding below 20650 for now so I will be looking for a flush higher followed by a squeeze down.
Spot Gold continues to break the hearts of gold bugs as price pushes below a daily level convincingly. I expect to see some back and fill back up but not if the USD holds highs. Price has extended lower but could easily go further if the USD rallies again. Crude Oil flushed below 97.52 before moving back above the level into the US close. It seems that there is a risk off move on the back of recession fears which is unwinding longs. Watching to see if 95.52 can be retested and hold for a squeeze higher as momentum down is slowing. USD Index continues to move higher as data out shows a resilient economy for now pointing traders to a more aggressive Fed and a faster rate rise cycle. The Dollar is hovering above the 106.760 level which I expect to see it stay above with Payrolls out tomorrow and the ECB tonight. If Payrolls come out stronger than expected, then expecting USD to pressure higher.
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US Tech 100 Index
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