Charts Marked with anticipated entry setups in YELLOW and ideal setup in GREEN on market opens. 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 off TD365.com. Opening times (AEST) are SPI/N225 at 10am, HSI at 11:15/30am, DAX and UK100 at 4/5pm and DOW and USTech100 at 10:30/11:30pm .
OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 18/08/22
US Indexes gapped lower on the open following on from a weak European session lead but managed to make back a lot of the losses into the close. Traders were supported by the FOMC minutes that showed officials are set to slow the pace of rate rises if coming economic data shows weakness. The problem to me is that inflation data continues to come out strong and is not showing any easing. UK CPI came out above expectations as they still face inflation problems, and sent Europe lower from the open. US Retail sales remain strong so hard to see inflation data easing if consumers are still happy to spend at higher prices. US Bond yields were mixed but continue to point higher suggesting that inflation is not under control yet. It also shows the divergence of opinions between the bulls and bears…bulls expecting that rate rises will slow and we are headed for a soft landing while bears expect different. The USD also remains high am I expect to edge higher until economic data shows some easing and peak in inflation. For now, I feel it is too early and expect to see some profit taking into share markets. AUS Employment Data at 11:30am AEST, US Philly Fed Manufacturing Index and Unemployment Claims at 10:30pm AEST then US Existing Home Sales at 12am AEST.
Market Price Action continues to be supported especially the US and the Nikkei but we may seen the first bearish cracks appear. We are at the stage where markets are getting extended so buyers may take profits and intraday action will get more volatile.
The ASX200 is expected to open DOWN 20 points as the SPI200 gave back some of the gains from the day session.
SPI200 (Sep) overnight futures down 13 pts to 7019
SP500 down 31.16 pts to 4274.04
NASDAQ Composite down 164.42 pts to 12938.13
Dow Jones down 171.69 pts to 33980.32
FTSE100 down 20.31 pts to 7515.75
DAX30 down 283.41 pts to 13626.71
GOLD futures US session (Spot) down $13.31 to $1762.16 an ounce
COPPER futures US session (Comex Sep) down $0.0368 to $3.5877 a pound
OIL futures US Session (Nymex Sep) up $1.58 to $88.11 a barrel
CRB Index up 1.20 pts to 288.87
AUDUSD trading at 0.6937
EURUSD trading at 1.0177
GBPUSD trading at 1.2050
USDJPY trading at 135.1000
USD Index US Session (ICE Sep) up 0.152 to 106.540
The SPI200/ASX200 initially sold off along with Europe after higher than expected UK inflationary data. Price later retested into the day sessions highs before easing lower. I expect that the CPI release was not what a lot of traders expected and we may have overshot the mark on the upside…therefore, I am looking for some selling pressure today and a lower high to hold. (Refer to the Trade The Structure members area for weekly updated ASX200 charts) The DOW initially failed off 34155 and then held a retest of the level after the FOMC minutes were released. Expecting to see some unwind of buyers and a move down off the level into or through 33829. The US Tech 100 held a lower high around 13573 so I expect to see an unwind of buyers like the DOW. The question again becomes ‘is inflation under control or not’ which I expect will pressure markets lower. The Hang Seng held some support at 18805 and then a minor higher low at 19860. Watching for a test into 20050 and then a lower high to hold for another flush lower. The underlying index remains under pressure so expecting this ‘sell the spike’ theme to continue. If not, then watching for a minor higher low up off/above 19860. The Nikkei had a choppy session but saw the first real selling pressure come in, and lack of buying, we have seen for a while. Price gave up all the days gains and looks set to move lower. There is the potential for a good unwind of longs as the recent strength has been up…so watching for a lower high to hold into 28912. The DAX took a big hit straight from the European open. Price smashed straight through support levels and into 13635 which is the key level for the coming European session. I expect that buyers will try to put the squeeze on shorts for a move up so I will be looking for a higher low off 13635…but this will be dependant on the Asian session. The UK100 faired better than the DAX but did hold a lower high off 7542. Watching for some continuation from sellers through the Asian session and the start of the European session.
Cryptos had a well timed and engineered flush higher into the European open to trap some buyers before heading lower. Bitcoin pushed below 23450 so watching to see if this level can hold the action down today for a continuation move lower. Ethereum held below 1862 but up off 1810 so the 1810 level I expect will be key today for either a short after a break below or long after a flush of the level.
Spot Gold continues to move lower and brush aside traditional safe haven and inflation bulls. Price held below 1764 so I expect to see a push down into 1754 before buyers will be willing to step in to support the action. Crude Oil chopped around below 87.00 as more longs were cleared out. The price action continues to look heavy but will need to get back below 87.00 for a continuation trade lower. If price can hold above then level, then a short squeeze is on the cards but I expect that this may be tough considering the current demand concerns. USD Index continued to hold above 106.415 support and is showing signs of going higher. In saying that, resistance at 106.810 is holding but the bias is up. I feel that the focus will be squarely on economic data to see if the Fed needs to lift its game or not with regards to interest rate rises. USDJPY continues to ‘not’ play ball on the back of inflation concerns and USD strength. I still see potential for a big move lower over the longer term but have to put up with some short term bullish action…still on watch for now.
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US Tech 100 Index
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