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Matteo Marchetti Market Strategist
Analysis, Market Analysis | September 30, 2022

THE LONDON OPEN 30-09-2022

EUROPEAN EQUITIES OPENED HIGHER DESPITE ANOTHER NEGATIVE ASIAN SESSION; THE USD CONTINUED ITS PULLBACK FROM RECENT HEIGHTS, WHILE CHINESE PMI DATA CAME IN MIXED ON A DAY PACKED WITH MACROECONOMIC EVENTS.

European shares opened this Friday higher despite a negative Asian session, where the ChinaA50 index lost 0.05%, the ASX200 1.44% and the Nikkei 2.09%. This morning Chinese PMI data came out, which were mixed: the Manufacturing PMI index came out at 50.1, higher than the 49.6 expected and above the 50 threshold that typically separates expansion from contraction; in contrast, the Caixin Manufacturing PMI came out at 48.9 against the 49.5 expected and down for the third consecutive month. Investors remain concerned about continued interest rate hikes by central banks (this morning, India also raised its interest rate by 50bp, bringing the cost of money to 5.90%) due to inflationary pressures that do not seem to be abating, coupled with rising geopolitical tensions, with Russia expected to hold its annexation ceremony for the ukrainian territories this afternoon.

Elsewhere, on the currency front, of note was the continuation of the US dollar’s retracement, which allowed sterling and the euro to reverse the heavy losses recorded since last Friday; it remains to be seen now whether this movement is a simple pullback and then continue with the previous movement or whether a trend reversal may emerge from here. However, this second hypothesis remains the least likely. On the other hand, the main commodities were stable, with WTI moving back above $81 per barrel.

As far as the macroeconomic calendar is concerned, today is a day full of appointments and data. In the morning, Italian, French and European inflation and German unemployment data will be released; in the afternoon, the Core PCE Price Index and the US PCE Price Index will be released.


EURUSD, M15

The EURUSD posted a strong pullback and erased all losses since last Friday. The pair is currently trading above the current weekly Value Area, which can be considered a positive bias. From a technical point of view, the most critical intraday resistance area is the W-1 POC, while the most significant support area is the weekly LVN. As long as prices remain above the support, the most likely scenario is a continuation of the current short-term long trend to target the resistance and the W-3 VAL in extension. On the flip side, if prices break the support, a drop toward the lower support area between the current weekly VAH and the W-1 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: 0.9790, 0.9707-0.9689.

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: 0.9838, 0.9893.

GBPUSD, M15

The Cable is currently trading above the current weekly Value area, which can be considered a positive bias. From a technical point of view, the most significant intraday resistance area is the W-1 VAL, while the most significant intraday support area is the 1.1073 mark (a weekly LVN). As long as prices remain below the resistance, the most likely scenario is a drop toward the support and the other weekly LVN around the 1.0944 mark. On the flip side, a stretch to the W-1 POC is expected if prices break the resistance upward.

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: 1.1073, 1.0944.

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: 1.1203, 1.1350.

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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