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

THE LONDON OPENING 05-07-2022

EUROPEAN EQUITIES EDGE HIGHER AFTER A MIXED ASIAN SESSION; RBA HIKES INTEREST RATE BY 50BPS AS EXPECTED

European stocks opened higher this morning after a mixed Asian session, where China A50 lost 0.60% while Nikkei gained 1.03% and ASX200 0.25%. Markets are looking for some good news to stem at least some of the recent declines due to concerns of a global recession and inflationary pressures. Today, what probably initially pushed Asian stocks up was the news that President Biden is considering easing some tariffs on Chinese goods.

The RBA hiked interest rates as expected by 50bps. This is the first time the central bank raised interest rates by 50bps in two consecutive meetings. The Australian central bank is following other major central banks fighting against inflation. The statement concluded, “The board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time”.

Regarding the macroeconomic data, today’s focus will be on European countries’ PMI data and British PMI data, which are due to be released this morning.


EURUSD, M15

After the closing day in the US yesterday, the EURUSD setup is almost unchanged. Prices range between the two most important intraday support and resistance areas, the W-3 VAL and the one between the D-2 POC and the 1.0454 mark, respectively. From a technical point of view, the sideways trend is expected to continue as long as prices remain in this range. However, the pair is still trading below the W-1 POC, which could be considered a negative bias for today. Should prices break the resistance area upward, the most likely scenario is a rise to target the W-3 VAH. On the other hand, if prices break the support downward, a drop to the stronger support area between the W-1 VAL and the LVN 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: 1.0415, 1.0383-1.0376.

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: 1.0454-1.0460, 1.0498.

WTI, M15

The WTI started to slide during the Asian session after posting a bearish engulfing close to the W-1 POC and is currently trading below the current weekly POC, which could be considered a negative bias for today. From a technical point of view, as long as prices remain below the current weekly POC, the most likely scenario is a deeper pullback to target the main intraday support, given by the W-2 VAH & LVN. If prices break this support downwards, the next target could be the W-1 VAL. On the other hand, should prices come back above the current weekly POC, a continuation of the recent uptrend is expected until the W-1 POC and the W-1 VAH.

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: 107.01, 105.5, 102.67.

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: 108.26, 109.62, 110.37.

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