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 WEDNESDAY 1/02/23
US Indexes rallied from the open to reverse the previous sessions losses. Markets were ‘risk off’ during Asian and European trade and then turned on a dime to be risk on again and trap many short sellers. Prices were manipulated into the close on a final short squeeze so expecting a drift lower in Asian trade. The choppiness of the price action can be expected ahead of all the KEY data releases into the end of the week. Longs will be reluctant to close and shorts will be reluctant to hold…until there is a clearer direction from the US Fed Reserve. The USD was up, which pressured Gold, Copper and Oil lower, and then US traders decided to flick the switch to buy and sent the dollar down and commodities up to reverse all the losses plus some. US Bonds reversed previous sessions losses as yields fell which, to me, is just intraday traders playing ahead of FOMC. Expect to see the volatility increase in the US session into and after FOMC. All in all, it remains a hard market to navigate so risk management must be a priority.
(All times AEDT) JPY Final Manufacturing PMI at 11:30am, CNY Caixin Manufacturing PMI at 12:45pm, EUR German Final Manufacturing PMI at 7:55pm, EUR CPI Flash Estimate Data at 9pm, All OPEC Meetings ALL DAY, USD ADP Non-Farm Employment Change at 12:15am and USD ISM Manufacturing PMI and JOLTS Job Openings at 2am, USD Crude Oil Inventories at 2:30am, USD FOMC Statement and Fed Funds Rate at 6am and FOMC Press Conference at 6:30am.
Asian Markets expected to have a choppy session after the overnight rally. Traders will find it hard to commit to either direction ahead of the US session. I expect that we may see some retail buying on open then give way to risk off later in the session.
The ASX200 is expected to open UP 50 points after the SPI200 was ramped higher in overnight trade to clear out all the short sellers from the day session.
Prices below as at 9am AEDT
SPI200 (Mar) overnight futures up 44 pts to 7469
SP500 up 58.83 pts to 4076.80
NASDAQ Composite up 190.74 pts to 11584.55
Dow Jones up 368.95 pts to 34086.04
FTSE100 down 13.17 pts to 7771.70
DAX40 up 2.19 pts to 15128.27
GOLD (Spot) up $5.03 to $1928.23 an ounce
COPPER futures US session (Comex Mar) down $0.0005 to $4.2225 a pound
OIL futures US Session (Nymex Mar) up $0.97 to $78.87
CRB Index up 3.66 pts to 278.09
AUDUSD trading at 0.7052
EURUSD trading at 1.0865
GBPUSD trading at 1.2322
USDJPY trading at 130.0700
USD Index US Session (ICE Mar) down 0.146 to 101.940
The SPI200/ASX200 initially flushed support around 7404 and then was all one way action up through to new highs. I would be very reluctant to buy into and extended market and expect retail traders to be enthusiastic on the open so watching for a lower high and squeeze on overnight buyers. (Refer to the Trade The Structure members area for weekly updated ASX200 charts) The DOW flushed and then ripped in a bullish move to brush aside the previous sessions losses. Price extended higher through 34020 where I would expect to see some sellers so looking for a grind back down and a lower high. We could see a ramp higher into the 34250 area ahead of the US open for a risk off move ahead of FOMC, but to get long I would like to see a clear higher low hold. The US Tech 100 has extended back up into major resistance around 12180. The trend up remains in tact with many hoping for a bullish FOMC statement. Hard to see another strong leg higher so watching for a lower high and grind back into 11918/11854. The Hang Seng looks set for another leg down through 21790 but for that to play out I would like to see an opening flush higher to trap some longs and a lower high potentially off 22050. We now have had two days of selling which means some shorts have ben built up so we could see and early move into 21790 and then buyers provide some support for a higher low and move up…the open will be key. The Nikkei also ramped higher to reverse the day sessions move down. I expect an early spike higher to trap some buyers but feel that major bulls will be reluctant to buy into an extended market ahead of all the key data so I am looking for a lower high short setup early. The DAX flushed lower to trap shorts before spiking straight back up off 14988…the previous sessions lows. Price is being contained as traders await FOMC and then ECB where the ECB are expected to again raise rates. Price action is extended so hard to get long without a good flush lower first so looking for a lower high off 15185. The UK100 also reversed sharply to brush aside early weakness and rally into the US close. Price is also extended so longs are off the cards until a clear flush lower to clear out some buyers. Watching for a short setup off 7784 for now.
Key Cryptos Bitcoin and Ethereum edged up into minor resistance before being sold down after the US close. Looking for BTC to hold a lower high under 23150 as momentum up rolls over. ETH is much the same and looking for a bigger squeeze lower and lower high below 1596 as longs get nervous.
Spot Gold took out all the stop losses below 1920 which sent price into 1901 before a sharp reversal. I feel that the move was engineered to flush the market of longs as traders await FOMC and the USD move for clearer direction. I am looking for a test back into 1920 and expect it to hold for a scalp long. For me, price is in no mans land now between 1920 and 1934. Crude Oil was hit down into 77.05 before buyers sent price action straight back up. I would like to see a further squeeze higher into 79.88 for either a long after some consolidation or, ideally, a short back down. USD Index had a seasaw session as price kicked higher through 102.230 and then moved back below the level. I expect price action to be relatively contained until the action heats up into the US session and then FOMC….generally chop around 102.230.
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US Tech 100 Index
Hang Seng Index
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