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 7pm and DOW and USTech100 at 1:30am .
OVERNIGHT MARKET SNAPSHOT FOR TUESDAY 31/01/23
US Indexes pressed lower to follow on from weak Asian and European sessions. Buyers were happy to stand aside as the major Indexes in the US moved lower from open to close. I expect that many will be happy to sit and wait for the major earnings, ECB and FOMC data release later in the week before adding further risk to portfolios. The Nasdaq also reacted lower off key resistance as traders were happy to lock in some gains from the recent run higher as big tech weighed on the overall market. I expect that there may be more pressure lower in the European session as the DAX and UK100 Futures were relatively buoyant after the underlying indexes closed. Oil took a hit through major support which may be a heads up for more selling and risk off into share markets as demand concerns weigh on Oil on the back of a global economic slowdown. This ties in with the move down in US Bonds and rally into the USD off daily support so it will be interesting to see whether there is follow through in the coming US session. All in all, it remains a hard market to navigate so risk management must be a priority.
(All times AEDT) JPY Unemployment Rate at 10:30am, JPY Industrial Production and Retail Sales at 10:50am, AUD Retail Sales at 11:30am, CNY Manufacturing and Non-Manufacturing PMI at 12:30pm, EUR German Import Prices and Retail Sales at 6pm, EUR German Prelim CPI ALL DAY, EUR German Unemployment Change at 7:55pm, CAD GDP at 12:30am and USD CB Consumer Confidence at 2am.
Asian Markets I expect will be weak on the open to follow on from the US session. The Hang Seng could see another decent selloff while the Nikkei has generally been buoyant on the open so could flush up then fall. The SPI200 saw controlled selling so may have an initial spike up on open.
The ASX200 is expected to open FLAT after the SPI200 gave back early gains late in the US session.
Prices below as at 9am AEDT
SPI200 (Mar) overnight futures down 10 pts to 7417
SP500 down 52.79 pts to 4017.77
NASDAQ Composite down 227.89 pts to 11393.82
Dow Jones down 260.99 pts to 33717.09
FTSE100 up 19.72 pts to 7784.87
DAX40 down 23.95 pts to 15126.08
GOLD (Spot) down $4.53 to $1923.20 an ounce
COPPER futures US session (Comex Mar) down $0.0407 to $4.1818 a pound
OIL futures US Session (Nymex Mar) down $1.78 to $77.90
CRB Index down 3.24 pts to 274.43
AUDUSD trading at 0.7056
EURUSD trading at 1.0850
GBPUSD trading at 1.2346
USDJPY trading at 130.4300
USD Index US Session (ICE Mar) up 0.314 to 102.035
The SPI200/ASX200 was relatively buoyant during the European session before spiking up into 7445 at the start of the US session. I feel that this was a ramp to keep the ASX index open higher (the ASX has held between Wednesdays high/low for the past two sessions showing uncertainty). If so, then I expect to see an initial rally to flush out some sellers and then a lower high for a late move down. (Refer to the Trade The Structure members area for weekly updated ASX200 charts) The DOW initially rallied to close the gap down on the underlying Index and then sold off into the close. If price can not hold above 33670 then I expect to see a good selloff. In saying that, I do not feel that the market wants to go down until data comes out Thursday so would expect to see a higher low off 33670. The US Tech 100 move down off a key resistance zone around 12180. Price has pushed down into 11915 potential support but I do expect to see a flush lower to squeeze out more buyers and potentially trap shorts before a higher low holds to resume the uptrend. Like the DOW, I do not expect a major unwind of longs ahead of key Tech earnings Thursday. The Hang Seng had a good selloff during the day session and then consolidated above the days lows during overnight trade. Price looks set for a flush lower on the open to test longs again so watching for a lower high hopefully above 22050 or around the level. If 22050 holds, then expecting to see a squeeze higher early. The Nikkei like the SPI200, was supported through European trade before spiking into highs at the start of the US session. Price then edged lower into the US close which does not show a lot of conviction or fear from sellers. I will be watching for a squeeze higher to clear out some sellers ideally off 27425 and then may look for a move lower if the Hang Seng finds weakness. The DAX was hit hard on the open but supported into 15027 then 14988. Price then ran straight up off the level in a show of strength as the underlying index closed. I expect that bulls wanted to fend off a selloff so expecting more chop in the coming European session. Looking for a flush into 15150 and then another move lower off a lower high….generally remain with the previous sessions range. The UK100 was much the same as the DAX with a move down to trap sellers and then use that liquidity to engineer a move back up. I expect more chop in the coming session so looking for a move down off 7781 but then buyers to again provide support.
Key Cryptos Bitcoin and Ethereum were lower from the Asian market open after gapping up into resistance levels. The risk off mood into major share markets weighed on BTC and ETH so we may see further selling today if Asian markets unwind. Watching both Bitcoin and Ethereum for a lower high and another squeeze on bulls.
Spot Gold was choppy under the pressure of the USD rally. Still, bulls were adamant that price should hold 1920 which only makes the case for a stop loss hunt below the level even greater. AS long as price action holds below 1934, I feel that further buying may trigger an unwind into Gold longs. Crude Oil was hit hard ahead of expected rate hikes by central banks and signals of strong Russian exports. Price dumped below 7.55 and looks set to target support around 77.05. Watching for a test into 78.55 before a move lower. USD Index again edged higher off Daily support as shorts looked to cover positions as US bond yields rallied. I expect that the major support level will continue to hold into FOMC as it is uncertain what the Fed will signal with regards to future rate rises/pivoting. Expecting a grind higher today.
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US Tech 100 Index
Hang Seng Index
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