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 (AEDT) for underlying indexes are SPI200 at 10am, N225 at 11am, HSI at 12:30am, DAX and UK100 at 6pm and DOW and USTech100 at 12:30am .
OVERNIGHT MARKET SNAPSHOT FOR THURSDAY 20/10/22
US Indexes ended the session lower after higher inflation readings out of the UK spooked investors along with some negative company outlooks. UK CPI came out above consensus at 10.1% which triggered the sellers into the open of the European session. The concern overflowed into the US session where bulls had their work cut out to support the price action. US Bond yields spiked and send bond prices to new lows while the USD rallied hard up off support. It seems that there is a general bid into major indexes which can been seen from the price action into the close. Major Indexes are generally contracting off the highs which suggests a move up but they also generally lag the Bond market which is pointing to weaker share prices. Thanks to the UK having problems bringing down inflation, US investors remain concerned as to whether the Fed will continue to have the same problems. It will be interesting to see how the major indexes react to Bond yields and whether earnings can continue to provide some support. (All times AEDT) AUD Employment Change and Unemployment Rate at 11:30am, CNY GDP and Retail Sales Tentative, EUR German PPI Data at 5pm, USD Philly Fed Manufacturing Index and Unemployment Claims at 11:30pm and USD Existing Home Sales at 1am.
Asian markets will open weaker with the Indexes all gapping lower on the open. With the major Indexes in Europe and the US contracting off highs, I feel that shorts should be careful as the US could kick higher in coming sessions meaing choppy action intraday.
The ASX200 is expected to open DOWN 55 points after the SPI200 sank in overnight trading.
Prices below as at 8am AEDT
SPI200 (Dec) overnight futures down 47 pts to 6744
SP500 down 24.82 pts to 3695.16
NASDAQ Composite down 91.89 pts to 10680.51
Dow Jones down 99.99 pts to 30423.81
FTSE100 down 11.75 pts to 6924.99
DAX40 down 24.20 pts to 12741.41
GOLD (Spot) down $22.98 to $1629.13 an ounce
COPPER futures US session (Comex Dec) down $0.0373 to $3.3247 a pound
OIL futures US Session (Nymex Dec) up $2.70 to $84.77
CRB Index down 0.20 pts to 271.35
AUDUSD trading at 0.6269
EURUSD trading at 0.9773
GBPUSD trading at 1.1215
USDJPY trading at 149.8900
USD Index US Session (ICE Dec) up 0.846 to 112.840
The SPI200/ASX200 was sold off from the open of the European session before seeing a minor short squeeze into the US close. Watching the 6749 level to see what happens on the open ramp (as with previous few sessions). I expect that the sentiment towards inflation will keep buyers in check today and potentially weigh on the action into the close. (Refer to the Trade The Structure members area for weekly updated ASX200 charts) The DOW is correcting off highs around 30830 as bulls lock in some gains from the run up. The way the price action has been into the close the previous few sessions suggests bulls are wanting to see higher prices. The idea of high inflation and rate rises may cool buyers for now so expecting to see a grind lower today. The US Tech 100 is also correcting down off recent highs so expecting to see a grind lower. The key level today will be 11050 as buyers have been happy to defend it so far. Hang Seng was all one way action lower from the start of the day session into the US close. The index is under serious pressure so expecting to see a flush lower on the open. Watching the 16150 level to see how buyers react and whether or not they can provide some support. The Nikkei was more of a controlled move down compared to the Hang Seng. Price found buyers into the close at 26935 support and I expect this level will be tested if buyers want to see higher prices. If lower highs continue, then looking for a move down into 26750. The DAX was sharply lower early in the European session before buyers started stepping into the action above 12672 support. Watching to see how buyers continue to react around 12672 to see whether the level will break or hold for another leg higher. Price action, like the DOW and Tech100, is contracting off highs but in a controlled manner suggesting another leg up sometime soon. The UK100 found sellers to continue to grind lower. Buyers look to be trying to defend 6926 but sellers are also holding a lower level at 6956. Momentum down is slowing so I will be watching to see if buyers can break up through 6956 and hold a higher low for a long entry setup.
Cryptos were generally range bound with Bitcoin and Ethereum holding support levels. ETH kept pressing into 1296 but the selling was soaked up while BTC held flushes into 19110. For any long, I want to see a spike higher followed by a higher low. For shorts, I want to see the stop losses below the support areas attacked and then a lower high.
Spot Gold once again disappointed any gold bugs with a big move lower. This just confirms that the daily trend lower still has more to go and the focus remains on the USD strength. Watching to see if buyers can provide support at 1620 or whether lower highs continue. Crude Oil rallied up off support on prospects of tighter supply concerns after Bidens plans to release oil from US strategic reserves…which at some stage has to be replenished. Watching to see if higher lows continue to press prices higher. USD Index had a good run up to squeeze out some sellers while ending below resistance at 113.120. Momentum up is slowing so watching to see if price grinds lower to hold a higher low. With the continued high inflation readings, I expect pullbacks to be supported above 112.070 for now.
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US Tech 100 Index
Hang Seng Index
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