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Andreas Zanin
Analysis, Market Analysis | December 20, 2022

US OPENING BELL 20-12-2022

GLOBAL EQUITIES TRY TO RECOVER TONIGHT’S LOSSES AFTER THE BOJ SHOCK; THE JPY RALLIED, WHILE THE GERMAN PPI CAME IN LOWER THAN EXPECTED.

The major European indices are trying to return to parity ahead of the US session after the heavy shock from the BoJ’s intervention overnight. Currently, the Dax is giving up 0.16%, the Cac40 0.18%, and the Eurostoxx is advancing 0.05%.

Returning to the BoJ’s intervention, the central bank, although it kept the interest rate at the expected level of -0.10%, decided to change the threshold for 10-year government bond yields from +/- 0.25% to +/- 0.50%. This surprise move to change the YCC (yield curve control) mechanism was read by the market as hawkish and as a prelude to an end of the ultra-expansive policy of Governor Kuroda, whose term of office ends in April.

The market response was not long in coming, with global equity falling heavily overnight before recovering, with the JPY gaining over 3% and Japanese 10-year government bond yields jumping immediately from 0.255% to over 0.42%.

Another positive figure came from Germany in the morning, where the PPI came in lower than expected. Specifically, the annual figure came in at 28.2% (against 30.6% expected) and the monthly figure at -3.9% (against -2.5% expected). This figure creates investor confidence, as it theoretically signals declining inflationary pressures.

As far as the macroeconomic calendar is concerned, investors will mainly focus on US housing market data and Canadian retail sales today.


EURUSD, M15

The EURUSD, as per yesterday’s analysis, continues to trade in the horizontal channel between the most significant support and resistance. In particular, the most critical intraday resistance area is the W-1 VAH. In contrast, the most considerable support area is between the 1.0612 mark and the W-1 POC. From a technical standpoint, we could assist in a bullish or bearish stretch if prices break the resistance or the support, respectively. On the upside, the following resistance could be the yearly HVN, while on the downside, the next support could be the W-1 VAL.

Main intraday support areas where to look for long trades in case of a bullish candlestick pattern or short trades in case of a bearish candlestick pattern: 1.0612-1.0588, 1.0545.

Main intraday resistances areas where to look for short trades in case of a bearish candlestick pattern or long trades in case of a bullish candlestick pattern: 1.0650, 1.0730.

S&P500, M30

The S&P trades below the most significant intraday resistance area, between the 3835 and the 3819 marks. In contrast, the most crucial intraday support is the uncovered POC around the 3765 mark. From a technical point of view, As long as prices remain below the resistance, the most likely scenario is a drop toward the support. On the flip side, a breakout of the resistance could lead prices toward yesterday’s highs and the W-1 VAL in extension.

Main intraday support areas where to look for long trades in case of a bullish candlestick pattern or short trades in case of a bearish candlestick pattern: 3765.

Main intraday resistances areas where to look for short trades in case of a bearish candlestick pattern or long trades in case of a bullish candlestick pattern: 3819-3835, 3869, 3892.

Key:

POC= Point of Control
VAH= Value Area High
VAL= Value Area Low
LVN= Low Volume Node
HVN= High Volume Node
W-1= last week
W-2= two weeks ago
W-3= three weeks ago
D-1= yesterday
D-2= two days ago
D-3= three days ago

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