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 FRIDAY 8/07/22
US Indexes were dominated by bargain hunters as growth stocks rallied and there was a general tone that growth is still lingering around in the economy. US Bond yields were generally ranging for the session and showing signs that the Feds rate hike cycle may not be the start of economic contraction that many have feared (ie the recession headlines that news outlets have been pumping) as yields hold down off previous highs. Still, there will be focus on coming earnings and what the picture looks like going forward and I expect that it will be different than the previous years with the ‘easy money’ gone. The longer term trend remains down and I expect that there will be more support from bargain hunters ahead of reports which will not be sustainable. Major Indexes need to show signs of basing and holding support before bigger money is happy to flow back into the market. This to me means a more sustainable move up rather than just a bounce before another move lower. Either way, higher rates mean less spare money flowing in the economy for spending and also higher costs for companies…so the question is whether the recent selloff has brought the market to fair value or not but I feel it is too early to say now. ECB President Lagarde Speaks 9:55pm AEST and CAD and Key US employment Data 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 60 points as the SPI200 was ramped higher in overnight trade.
SPI200 (Sep) overnight futures up 49 pts to 6603
SP500 up 57.54 pts to 3902.62
NASDAQ Composite up 259.50 pts to 11621.35
Dow Jones up 346.87 pts to 31384.55
FTSE100 up 81.31 pts to 7189.08
DAX30 up 248.70 pts to 12843.22
GOLD futures US session (Aug) up $3.20 to $1739.70 an ounce
COPPER futures US session (Comex Sep) up $0.1338 to $3.5418 a pound
OIL futures US Session (Nymex Aug) up $4.20 to $102.73 a barrel
CRB Index up 8.95 pts to 285.08
AUDUSD trading at 0.6839
EURUSD trading at 1.0163
GBPUSD trading at 1.2022
USDJPY trading at 136.0200
USD Index US Session (ICE Sep) up 0.007 to 106.905
The SPI200/ASX200 was all one way action higher from the start of the overnight session. Price extended on the days gains into 6612 before consolidating into the US close. I expect there will be a few excited retail bulls on the open so we could see a flush higher into 6626 but I do expect that the bullish action will be contained into the weekend and the US employment data release. (Refer to the members area for updated ASX200 charts). The DOW was already in a bullish mood from the European session into the US open and buyers added to the gains. Price pushed into 31360 which I expect bulls will want to see tested and hold prior to another leg up. The 30min price action looks strong which could see more buyers flow in to take price up to test into 31700 and higher longer term. Much of the coming action will depend on payrolls ahead of the US open tonight so I am not getting to excited yet. The US Tech 100 was also all one way action higher into 12115. Price grinded its way up into the close but I expect to see some profit taking from buyers ahead of the data release. Watching for a lower high and short entry potentially in the European session. If price has chopped around prior to the release, then I would prefer to hold off on any trades and see how price reacts over the number. The Hang Seng initially flushed lower and then rallied through the day session and then the overnight session. Price pushed up through 21815 before consolidating the gains into the US close. Price is in between levels so the opening flush will be key to be able to work off a level. Watching for a flush up and then fail lower off 22080. The Nikkei is also trending higher but is in between levels like the Hang Seng. Momentum up is running out of steam so we could expect some profit taking today from the buyers off support. The DAX Index continued its push up to make back all the losses from Tuesdays selloff. Momentum up is running out of steam suggesting buyers are waning so we may expect a flush lower prior to any further move up. UK 100 Index seemed to be happy with Boris’s resignation as price was continually supported although struggled to break up through the 7205 zone. Like the DAX, I am looking for a flush lower to clear out some buyers before any further rally higher.
Cryptos had a good move higher with both Bitcoin and Ethereum spiking higher at the start of the US session. Buyers were happy to support pullbacks but have run up into resistance where I would expect to see some profit taking. In the longer term, the holding up off major lows is a good sign that bulls are tentatively coming back into the market….which of course does not mean that there is no chance of further downside. Bitcoin on the Daily chart is still under pressure and could be squeezing out some shorts or dragging in buyers before a move below $19K.
Spot Gold was tightly held and range bound for the session between 1747 and 1737 as the USD held the recent gains. Price for gold will be dependant on the USD move which will be dependant on Employment data tonight. Expecting to see a flush lower of 1737 and then a short squeeze and move higher. Crude Oil supposedly bounced as traders refocused on supply although US inventory data showed an unexpected jump in oil inventories. This was a case of buy the rumour sell the fact…or just a squeeze on longs over the last few days ahead of the data release…now that’s a good argument for technical trading over fundamentals. Watching for a move up off 102.37. USD Index held highs around 107.240 and was well contained heading into the Employment data release. If the number comes out weaker or in line with expectations, I expect to see the Dollar move lower. If the number is stronger, which may be a tough ask, I expect that we will see a flush of the highs and then pullback as rate rises are generally factored into the price already.
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US Tech 100 Index
Hang Seng Index
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