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 FRIDAY 16/12/22
US Indexes took a hit right from the open after both the ECB and BOE raised rates as expected and signalled more to come. It seems that the Fed comments sank in with traders who now feel that a recession is imminent with inflation expected to be ‘stronger for longer’. With inflation expected to remain elevated, expectations are now for GDP to slow and unemployment claims to rise as companies look to support their bottom lines via job cuts. The USD rallied more on safe haven buying than a change in tone, and bond yields were range bound with bonds potentially looking to head higher also on safe haven buying if the share market melts down further. I do feel that this is the start of another leg down into the Share markets as traders again assess higher rates rises. USD denominated assets were lower with Gold and Oil leading the charge while the FX majors all took a hit although the EURO buying after the rate rise did provide some support to offset the dollar rally. ( Check out my daily view of key indexes here ) (All times AEDT) GBP Retail Sales at 6pm, EUR French Flash Manufacturing and Services PMI at 7:15pm, EUR German Flash Manufacturing and Services PMI at 7:30pm, GBP Flash Manufacturing and Services PMI at 8:30pm and USD Flash Manufacturing and Services PMI at 1:45am.
Asian Markets will see a weak open and extended to the downside. Shorts may be difficult and require patients while longs will be much the same as I expect there will be a lack of buying interest for the most part of today.
The ASX200 is expected to open DOWN 80 points after SPI200 took a beating from the open along with other major Indexes in Europe and the US.
Prices below as at 9am AEDT
SPI200 (Dec) overnight futures down 83 pts to 7078
SP500 down 99.57 pts to 3895.75
NASDAQ Composite down 360.36 pts to 10810.53
Dow Jones down 764.13 pts to 33202.22
FTSE100 down 69.76 pts to 7426.17
DAX40 down 473.97 pts to 13986.23
GOLD (Spot) down $30.56 to $1776.87 an ounce
COPPER futures US session (Comex Mar) down $0.1010 to $3.7770 a pound
OIL futures US Session (Nymex Jan) down $1.17 to $76.11
CRB Index down 1.91 pts to 274.72
AUDUSD trading at 0.6702
EURUSD trading at 1.0625
GBPUSD trading at 1.2185
USDJPY trading at 137.7900
USD Index US Session (ICE Mar) up 0.800 to 104.213
The SPI200/ASX200 moved lower at the start of the overnight session after a very strangely choppy day. Price pushed down through 7107 support and held lower highs into the close. The price action again looks weak but an opening rally should not be discounted. Looking for a flush lower and then early squeeze higher to clear out some longs…it may just depend on how negative bulls are into the weekend. (Refer to the Trade The Structure members area for weekly updated ASX200 charts) The DOW was under pressure all session after price action pushed below 33925. Price is extended after a move below 33290 so I expect to see some ‘back and fill’ up to clear out some sellers ahead of the US open. If 33290 holds a retest, then we may be in for another negative US session. The US Tech 100 also took a hit through key support and is very extended. Longer term I feel that the Nasdaq has issues and is going lower but shorter term may need to squeeze out some sellers with a move back up into 11492. The Hang Seng saw some strange movements in overnight trade with a 500 point spike as the DOW dumped and then it turned to then dump 550 into the close and into support…it seems that someone is trying to keep the price relatively high. Still, the underlying index is set to hold a lower high so I expect to see an early spike to trap some buyers prior to a move lower. The Nikkei was all one way action down in the overnight session. Price broke below 27760 and the started to show signs of consolidation as the selloff eased. Looking for a flush up to test 27790 and drag in buyers before another leg down off a lower high potentially into 27400. There is the option for price action to chop around 27760 and then squeeze high into 27912 so in that case I will be looking for a higher low. The DAX sank like a stone prior and after the ECB raised interest rates. Price is extended into 13972 where I would expect bargain hunters to be tempted and trigger a short squeeze higher. If the selling remains, then I am watching for chop around the level, or possibly a grind up then lower high, and then another leg lower. The UK100 was well supported considering the DAX and US market selloff. Price held multiple pushes down into 7428 which is interesting considering the cost of living crisis. Investors seemed to be happy with the BOEs stance that inflation has peaked…what else would they likely day with double digit inflation…would not want to spook the market. I expect that the action will continue to be bearish in the coming European session for a move below 7428.
Key Cryptos came under pressure off highs as recent buyers unwound bullish bets. Bitcoin and Ethereum moved lower on the USD strength and share market selloff so I feel that, like the share market, there is more to come longer term for the downside. In the near term, I am looking for BTC to flush up into 17470 and then move lower while ETH to react up off 1258 before another leg lower.
Spot Gold moved down below 1780 and spent all of the European and US sessions consolidating below the level. Price action looks set to flush lower again and test into 1762 so I am watching for a minor lower high. If the lower high fails, then expect that there will be a lot of sellers trapped and a move higher is on the cards. Crude Oil reacted down off 77.82 highs but did find buyers into 75.45. With the EMAs rolling down, I am looking for a lower high to hold for a move down and squeeze on the buyers from the move up off 70.30. USD Index had a choppy session as price seemed to have found some safe haven buying off 103.802. Watching now for buyers to run into resistance and for price to move down off 104.913 as more longer term buyers unwind positions but this will depend on if we see a further safe haven bid.
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US Tech 100 Index
Hang Seng Index
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