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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 THURSDAY 2/02/23
US Indexes ramped higher after the Fed Reserve raised rates by 0.25% as expected. The statement highlighted more rises are to come but investors are happy to see inflation ease and the pace of rate rises slow…they are now focused on the light at the end of the tunnel. Powell remains adamant that further rate rises are to come as he said that “Inflation has eased somewhat but remains elevated” and the Fed sees the economy enjoying ‘modest growth’ and ‘robust job gains’ but still needs to be attentive to inflation risks. The key that will be supportive to markets is that Powell sees ‘a path back to the Fed’s 2% inflation target without a significant economic downturn’….so news will have to find something else to talk about! Markets may have been expecting a more negative tone but now see a more bullish outlook. Of course we could see a delayed reaction but I feel that the support is in and markets want to go higher. The USD has broken below a daily zone which may be significant if it holds as resistance while the reaction saw a drop in yields. Interesting to see Oil being sold lower with the USD as traders expecting demand to ease further. The ASX looks set to push to new all time highs and I expect will move up through yesterdays highs on the open today. All in all, it remains a hard market to navigate so risk management must be a priority.
(All times AEDT) JPY Monetary Base at 10:50am, AUD Building Approvals and Business Confidence at 11:30am, EUR German Trade Balance at 6pm, EUR French Gov Budgent Balance at 6:45pm, GBP BOE Official Bank Rate and Monetary Policy Summary at 11pm, EUR Main Refinancing Rate and Monetary Policy Statement at 12:15am, USD Unemployment Claims at 12:30am, EUR ECB Press Conference at 12:45am and EUR ECB President Lagarde Speaks at 2:15am.
CLICK HERE FOR FULL ECONOMIC DATA OUT TODAY (AEDT) 2/02/23
Asian Markets will be hard to short as I expect to be extended on the open. Any short setups need to be clear off lower highs otherwise longs off levels. Will need to let the HSI settle on open as it has some catching up to do.
The ASX200 is expected to open UP 25/30 points thanks to a spike up off 7404 support on the SPI200.
Prices below as at 9am AEDT
SPI200 (Mar) overnight futures up 23 pts to 7464
SP500 up 42.61 pts to 4119.21
NASDAQ Composite up 231.77 pts to 11816.32
Dow Jones up 6.92 pts to 34092.96
FTSE100 down 10.59 pts to 7761.11
DAX40 up 52.47 pts to 15180.74
GOLD (Spot) up $21.91 to $1950.14 an ounce
COPPER futures US session (Comex Mar) down $0.0455 to $4.1805 a pound
OIL futures US Session (Nymex Mar) down $2.46 to $76.41
CRB Index down 6.29 pts to 271.80
AUDUSD trading at 0.7133
EURUSD trading at 1.0987
GBPUSD trading at 1.2373
USDJPY trading at 128.9500
USD Index US Session (ICE Mar) down 0.958 to 100.957
The SPI200/ASX200 ripped 1.2% after the FOMC release with very little pullback. Price held 7404 support and ran straight up to take out the days highs through 7476 before some profit taking into the close. Would like to see a flush lower on open to trap some sellers prior to a run higher. If price again opens strong, then will need to be patient for a lower high short setup. (Refer to the Trade The Structure members area for weekly updated ASX200 charts) The DOW spiked up into major resistance at 34265 before retreating into the close. I feel that it is too early to say we are seeing higher prices but will be looking for a higher low to hold for another push up. We have ECB and BOE tonight which may cap bulls so could see a good squeeze lower first. The US Tech 100 spiked to clear through a key resistance zone. Meta earnings came out inline with expectations or slightly better which supported price after close. With other big earnings to come, I expect price to consolidate above 12180 potentially for another push higher. In saying that, price may need to clear out some buyers so looking for an intraday lower high as there is more than enough room to move down and hold the uptrend. The Hang Seng has some catching up to do with FOMC released after the HSI close. Expecting a strong open but will need to see price action settle down prior to any setup. Focusing on levels above around 22243,22350 and potentially higher. The Nikkei ramped up off lows around 27175 and into the days highs around 27540. Expecting a flush into highs on the open and expect I will have to be patient for any short setup potentially off 27589 or higher. The DAX spiked along with other Indexes and held gains above resistance at 15270. Traders will be focused on ECB rate release so may look to squeeze out some buyers first so looking for a lower high. The UK100 held support at 7745 and spiked up through 7784 resistance. I expect to see higher prices but, like the DAX, the BOE rate release may see a squeeze lower first to clear out some longs. If price holds these highs, then looking for a higher low for a deeper push up into the major daily resistance zone above 7814..
Key Cryptos Bitcoin and Ethereum took out some sell stops prior to the rip higher after the FOMC release. Bothe BTC and ETH have extended up into resistance levels without a pullback so will be a hard buy for new bulls at these extended levels. Looking for a squeeze lower and a lower high for a short opportunity. If we see an extension up from here, then looking for consolidation above the levels for a potential long setup.
Spot Gold reacted higher as the USD was sold lower after FOMC. Gold spiked up into 1950 after bulls again held the 1920 support area. Price is very extended into the level so for any long I would like to see a flush lower first otherwise looking for a lower high short setup. Crude Oil flushed lower ahead of FOMC but did not recover the losses on the USD unwind. Price extended through lows which my be to trap retail sellers for a squeeze higher. Looking for a higher low to hold and a move up. USD Index has now broken below the Daily support zone which may see a bigger unwind into the USD which would be good for commodities. Looking to see if price action can hold below the level with key employment data due Friday in the US.
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US Tech 100 Index
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