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Matteo Marchetti Market Strategist
Analysis, Market Analysis | December 5, 2022

THE LONDON OPEN 05-12-2022

EUROPEAN SHARES OPENED AROUND PARITY FOLLOWING A POSITIVE ASIAN SESSION; THE G7 PRICE CAP ON RUSSIAN OIL KICKS IN TODAY WHILE OPEC+ DECIDED TO MAINTAIN ITS EXISTING POLICY.

The major European indices opened slightly higher and are trading around parity. This opening followed the positive Asian session, where the Chinese A50 index gained 2.02%, the ASX200 0.33% and the Nikkei 0.15%.

Market sentiment continued to be driven by renewed optimism over the easing of anti-covid policies in China. There are still several protests in various parts of the country. Still, the authorities are starting to loosen constraints and grant citizens more freedom, which is enough to confirm confidence across Asia.

In the meantime, the European and G7 price cap on Russian oil will be triggered today (Australia and other countries will also participate). It is unclear what impact this measure will have on the price of crude oil, as Russia has already warned that it will not comply with the cap even if this means cutting production. In any case, this price cap means that Russia will only be able to ship Russian oil to third countries using G7 and EU tankers, insurance companies and credit institutions if the cargo is purchased at or below the price cap.

OPEC+, for its part, decided at yesterday’s meeting to stick to its plans, i.e. to continue reducing production by two mln barrels per day from November until the end of the year.

As far as the macroeconomic calendar is concerned, today, investors will focus on European and UK PMI data and (European) retail sales. In the afternoon, it will be the turn of the ISM non-manufacturing index in the States.


EURUSD, M15

The EURUSD continued its rise and recovered all of Friday’s post-NFP losses. It is still trading in the most critical resistance area between the 1.0525 and the 1.0587 marks. As for today, the most significant intraday support area is between the D-1 POC and the 1.0516 mark. From a technical point of view, as long as prices remain above the support, the most likely scenario is a continuation of the rise to overcome the resistance and a stretch toward the yearly LVN. On the flip side, if the pair breaks the support downward,  a drop to the W-1 VAH is expected.

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: 1.0530-1.0516, 1.0483, 1.0429.

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: 1.0587, 1.0640.

WTI, M15

The WTI is trading around the most significant intraday support, between the blue line on the chart and the 80.47 mark. In contrast, the most important intraday resistance area is the W-3 VAL. From a technical point of view, as long as prices remain above the support, the most likely scenario is an upward movement toward the resistance. However, a downward breakout of the support could lead the black gold to the LVN around the 79.65 mark 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: 80.47-80.27, 79.65, 78.17.

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: 81.84, 83.14.

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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