THE LONDON OPENING 06-07-2022
EUROPEAN EQUITIES OPENED HIGHER IN THE WAKE OF YESTERDAY’S STRONG RECOVERY IN THE US INDICES AT THE END OF THE SESSION, AND DESPITE A LARGELY NEGATIVE ASIAN SESSION; THE DOLLAR REMAINS AT MULTI-YEAR HIGHS
European equities are up this morning despite a negative Asian session, thanks to Wall Street’s robust recovery in yesterday’s closing session. However, the rebound does not look to last, with investors increasingly concerned about a global recession triggered by aggressive central bank policies. In this sense, the US treasury curve inverted again, with the 2-year yield outperforming its 10-year counterpart.
Oil continued to fall yesterday, losing more than 8%, again on fears that a possible recession could sharply decrease demand for crude oil. However, the biggest concern in Europe is gas, whose price shows no sign of falling due to negative news from Russia and the recent strikes in Norway further reducing supply.
Regarding the macroeconomic calendar, investors will focus on FOMC meeting minutes which are due to be released this evening. In contrast, EU Retail Sales, British Construction PMI and US PMI data will be released earlier today.
EURUSD, M15
The EURUSD dropped heavily yesterday to a 20-year low around 1.0235 but posted a double bottom pattern around that area. The trend remains heavily bearish in the long term, with no other significant support until the parity. However, the pair is trading above the current weekly POC (around 1.0264), which could be considered a positive bias for today. From a technical point of view, the main intraday support is the current weekly VAL, while the main intraday resistance is between the D-1 VAL and the 1.0284 mark. Should prices break the resistance upward, the most likely scenario is a rebound until the LVN. The area around the LVN could become significant because if prices break it, they could stretch quickly up to the medium-term resistance between the W-1 VAL and the current weekly VAH due to the highlighted low-volume area. On the other hand, as long as prices remain below the main intraday resistance, a continuation of the drop until the 1.0235 mark is expected.
Main intraday support areas where to look for long trades in case of bullish candlestick pattern or short trades in case of bearish candlestick pattern: 1.0235.
Main intraday resistances areas where to look for short trades in case of bearish candlestick pattern or long trades in case of bullish candlestick pattern: 1.0273-1.0284, 1.0319, 1.0383-1.0387.
WTI, M15
The WTI dropped yesterday, losing more than 8%, but today posted a higher low (123- pattern), and it is trading above the current weekly POC. From a technical point of view, the latter is the main intraday support, while the most significant resistance is between the 100.48 mark and the W-2 VAL. As long as prices remain above the support, the most likely scenario is a continuation of the rebound until the main resistance area; on the flip side, should prices break the current weekly POC downward, another drop to the current weekly VAL is expected.
Main intraday support areas where to look for long trades in case of bullish candlestick pattern or short trades in case of bearish candlestick pattern: 97.68, 95.70.
Main intraday resistances areas where to look for short trades in case of bearish candlestick pattern or long trades in case of bullish candlestick pattern: 100.48, 101.45.
