Most European indices trade slightly higher this Thursday before the US session, with the Dax currently gaining 0.25%, the Cac40 0.69% and the Eurostoxx 0.56%.
Investor sentiment continues to improve after yesterday’s strong recovery of the US stock markets, which had started the day on a solid negative note and substantially recovered all their losses after the opening of cash. The strong recovery also coincided with the BOC interest rate announcement, which, as expected, raised rates by 25 bp. In the subsequent press conference, however, it was made clear that the bank was considering a pause in restrictive monetary policy. Investors began to wonder whether this might be a prelude to what the Fed will do at its next meeting.
For today, however, investors’ focus is shifting to key US data. In particular, the fourth-quarter GDP will be released, which is seen falling to 2.6% from 3.2% in the previous survey. According to analysts’ forecasts, the US economy is expected to grow by a total of 2.1 % this year, well below the 5.9 % in 2021 and 2.3 % in 2019 (pre-Covid). The interesting thing will now be to see the 2023 data, where the full effects of the Fed’s largest and fastest rate hike should manifest themselves.
Elsewhere, gold has reached the critical threshold of $1,950 an ounce, from which it may begin a slight reversal and then try its final stretch towards $2,000.
Regarding the economic calendar, it will be essential to follow today’s initial jobless claims and the main US core durable goods orders (in addition to the already mentioned GDP).
The EURUSD keeps rising and trades above the most critical intraday support, the D-1 POC. Below it, a more important support area is between the 1.0871 mark and the W-1 VAH. In contrast, the most significant intraday resistance area is the yearly LVN. From a technical point of view, as long as prices remain above the support, the most likely scenario is a continuation toward the LVN. An upward breakout of the LVN could lead prices toward the yearly HVN. On the other hand, a downward breakout of the D-1 POC could lead to the more critical support below.
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: 1.0899, 1.0871-1.0859, 1.0830-1.0822.
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: 1.0945, 1.0992.
The S&P500 posted a huge v-shaped recovery yesterday, retrieving all the significant resistances. This is a sign that sellers are still unable to take control of the market. As for today, the most critical support is the area between the W-2 VAH and the W-1 POC. Other important supports are the 3987 (the blue dashed line on the chart) and the 3972 marks. From a technical standpoint, as long as prices remain above the primary support, the most likely outlook is a continuation of the rise toward the LVN around the 4054 mark. On the flip side, a downward breakout of the support could lead the index close to yesterday’s lows.
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: 4018, 4000-3999, 3987, 3972.
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: 4054.
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-2= two days ago
D-3= three days ago