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Andreas Zanin
Analysis, Market Analysis | January 9, 2023

THE LONDON OPEN 09-01-2023

EUROPEAN EQUITIES OPENED HIGHER IN THE FIRST SESSION OF THE YEAR AFTER THE CHRISTMAS HOLIDAYS; ASIAN SHARES SURGED ON HOPES OF A RECOVERY IN THE CHINESE ECONOMY; THE US LABOUR MARKET REMAINED TIGHT,  BUT MIXED DATA BOOSTED CONFIDENCE IN THE MARKET.

The major European indices opened higher this week after a positive Asian session, where the ChinaA50 index gained 0.92%, and the ASX200 and Nikkei gained 0.59%. This week will be the real first week of the New Year, with most traders returning to work after the Christmas holidays, and volumes are expected to rise sharply, as is general liquidity.

Market sentiment remains driven by two main factors. On the one hand, the hope for a strong recovery in the Chinese market after the government’s reopening against the zero-covid policy was maintained until a few weeks ago. On the other hand, US labour market data released last Friday showed that the latter remains relatively strong, although not as strong as a few months ago, raising hopes of a near pivot by the Fed.

European inflation, which continues to fall, albeit slightly, also contributed to the momentum of the stock markets, especially the European ones, which have been outperforming the American ones for some time now.

Elsewhere, the US dollar has continued to trade at significant lows since June 2022 in the 103.50 area (dollar index). In the commodities market, mixed trends are noted between energy commodities and precious metals. The former continues to fall, while the last trade at period highs.

Regarding the macroeconomic calendar, no significant data are expected today, except for European unemployment and some scheduled speeches by BOE members.


EURUSD, M15

The EURUSD posted a bearish engulfing pattern around the most significant intraday resistance area, the W-2 VAH. In contrast, the most crucial intraday support area is between the W-2 POC and the W-3 VAH. From a technical standpoint, as long as prices remain below the resistance, the most likely scenario is a continuation of the drop toward the support. On the other hand, a breakout of the resistance could lead prices toward the 1.0730 mark.

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: 1.0661-1.0656, 1.0642, 1.0631.

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: 1.0690, 1.0730.

WTI, M15

The WTI is trying to recover recent losses and is trading above the most critical resistance intraday area around the daily LVN. From a technical point of view, as long as prices remain above the resistance, which is now a support, the most likely scenario is a continuation of the rise toward the W-1 VAH and the higher LVNs. On the flip side, if prices come back below the 75.46 mark, a drop to the W-1 POC is expected, with minor supports around the 75-75.10 area.

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: 75.46, 75.10-75, 73.84.

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: 75.98, 76.37, 76.79.

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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