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Matteo Marchetti Market Strategist
Analysis, Market Analysis | September 28, 2022

US OPENING BELL 28-09-2022

EUROPEAN EQUITIES ARE IN DEEP RED AHEAD OF THE US OPENING BELL; THE BOE TEMPORARILY INTERVENES IN THE BOND MARKET; THE CHINESE YUAN HIT A FRESH LOW.

After a challenging morning with losses in the range of 2%, European equities remain deep in the red at mid-session and await the US opening. Currently, the Dax is giving up 0.95%, the Cac40 0.84% and the Eurostoxx 1%. The stock exchanges had attempted an even substantial recovery just after the BoE’s statement issued a short while ago, in which the central bank said that due to recent market events, it is ready to intervene in an unlimited manner with the purchase of long-dated bonds from today until 14 October. The price of long-dated gilts jumped, and the pound and shares also tried a recovery, which was promptly cancelled a few minutes later. Uncertainty reigns supreme, with the central bank effectively combining a restrictive monetary policy (raising rates) with an expansive one (buying bonds) and an expansive fiscal policy. And we know that markets do not like uncertainty.

Elsewhere, the Chinese Yuan hit a new all-time low on the currency front, with the exchange rate reaching 7.26 against the US dollar. Investors are therefore wondering whether China will now be the next major world power to intervene in the exchange rate after Japan. There is nothing particularly significant to report on the commodities front and the major cryptos, which remain little moved for the time being.

As for the macroeconomic calendar, investors will focus on Powell’s speech and US data on crude oil stocks and pending home sales in the afternoon.


EURUSD, M15

The EURUSD setup remains more or less the same. The pair created a notable spike towards the resistance area between the current weekly POC and the weekly VAL. Then it fell back to the support and now is trading around it. From a technical point of view, as long as prices remain below the main resistance, further drops are expected towards the lower support around the 0.9450 mark. On the other hand, if prices break the resistance upward, a stretch to the W-1 VAL becomes the most likely scenario.

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: 0.9549, 0.9450.

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: 0.96, 0.9625, 0.9689.

S&P500, M15

The S&P500 dropped heavily and posted a yearly low of around 3600. From a technical point of view, the most significant intraday resistance area is the 3635 mark. Another notable resistance area is the LVN around the 3660 mark. As long as prices remain below these two resistances, the most likely scenario is a continuation of the drop to target lower support, around the 3550 mark. Conversely, a stretch to the higher weekly LVN is expected if prices break the resistance upward (especially the LVN).

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: 3550.

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: 3635, 3660, 3703.

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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