Matteo Marchetti
Market strategist

EUROPEAN STOCKS REMAIN DIFFERENT AHEAD OF US OPEN; PMI DATA DISAPPOINTED EXPECTATIONS WHILE US DOLLAR ATTEMPTS TO RECOVER FROM RECENT LOSSES.

The main European indices remain in the red on the eve of the opening of the American session: Dax fell by 0.73%, Cac40 – by 0.71%, Eurostoxx – by 0.88%. In the morning, European PMI data largely met expectations. The German composite PMI came in at 45.7 vs. 45.9 expected, while the services PMI came in at 45 vs. 45.4. Similarly, these two data also disappointed expectations in Italy, France and Spain, while in the United Kingdom they were above expectations. Market volatility remains high, but still below the 30 level (both in terms of Vix and Vstoxx). As long as it stays within this range, you can even expect this rally to continue in what is still a bear market. Much of today’s intraday movement is likely to be driven by the US opening anyway, as after yesterday’s negative labor market data, investors eagerly await the ADP data (which is usually a good predictor of NFP) to see if there is more concrete signs that the Fed’s monetary policy is certainly beginning to show its first effects on the economy.

In the foreign exchange market, the dollar is trying to recover the losses of the last few days, while on the commodity front, the two major precious metals, gold and silver, should be reported as falling after a steady rise in the last two sessions. On the other hand, oil continues to rise and significant volatility in the instrument is expected at the end of today’s OPEC+ meeting.

As for the macroeconomic calendar, as already mentioned, the most important data of the day will be changes in non-farm employment, the ISM non-manufacturing employment index and US crude oil inventories.


EURUSD, M15

EURUSD failed to consolidate above the main intraday support (near W-2 VAH) and after breaking the area down, started to fall to LVN near 0.9907. Currently, the LVN has become the most interesting support zone for the rest of the day. In contrast, the most significant area of ​​resistance right now is the W-2 VAH. From a technical point of view, if prices break below the LVN, the downward trend of the LVN is expected to continue. On the other hand, a bounce to retest resistance becomes the most likely scenario if the pair posts a bullish candlestick around support.

Main areas of intraday support where to look for long trades in the case of a bullish candlestick or short trades in the case of a bearish candlestick: 0.9907, 0.9866.

Major intraday resistances areas to look for short trades in the case of a bearish candlestick pattern or long trades in the case of a bullish candlestick pattern: 0.9967, 1.0007, 1.0029.

S&P500, M30

The S&P500 broke through the most critical resistance zone on the upside yesterday and anchored above it, not falling below the LVN until the end of the session. Even if this move could be considered positive bias for today, in order for the index to stretch to higher resistance (weekly LVN around 3829), it would need to hold above the support between 3763 and 3749 during the cash opening phase of US money. On the other hand, if prices break the LVN near the 3749 mark on the downside, a drop to retest the W-1 VAH would be the most likely scenario.

Main areas of intraday support where to look for long trades in the case of a bullish candlestick or short trades in the case of a bearish candlestick: 3749-3763, 3689.

Major intraday resistances areas to look for short trades in the case of a bearish candlestick pattern or long trades in the case of a bullish candlestick pattern: 3829, 3876.

Key:

POC= Point of Control
VAH = High value zone
VAL= Low value area
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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