The IndeX Files 14-02-2023

Equities Firmer Ahead of US CPI Global equities benchmarks have seen a mostly positive start to the week ahead of today’s headline US inflation data. Markets came under pressure at the open yesterday as traders reacted to forecasts of an increase in monthly inflation, projected at 0.5% from -0.1% prior. However, annual inflation forecast to cool further to 6.2% from 6.5%, initial concerns were dampened down. On the back of the recent bumper US jobs report, however, and subsequent stream of hawkish Fed commentary, any surprise strength today will likely see a sharp unwinding of stock prices globally as traders look towards the March FOMC with increasingly hawkish expectations.The FTSE has been the best performer again this week so far with the index breaking out to fresh all-time highs yesterday. Weaker-than-forecast UK wage growth data today should help keep the index supported ahead of UK CPI tomorrow, supporting the view that inflation has likely cooled again and thus taking a little pressure off the BOE.In Europe, plunging gas prices are being welcomed by businesses and consumers alike, helping support economic sentiment there. Traders are already beginning to look ahead to a potential ECB pivot on the back of the March meeting which should help keep asset prices underpinned while that narrative remains in place.Technical ViewsDAXThe rally in the DAX, framed by the rising wedge formation off last year’s lows, has stalled for now into a test of the 15642.76 level. While 15163.41 holds, however, the focus remains on a continuation lower. However, bearish divergence in momentum studies is worth noting and any break of the current support and rising wedge lows will open the way for a move down to 14703.98 next.S&P 500The rally in the S&P, framed by the bull channel off last year’s lows, has stalled for now into a test of the 4153.50 level. This area has held as resistance since later 2022 and with momentum studies weakening, risks of a drop back down towards 3910 are seen unless bulls can quickly breach the level, putting focus back on 4305 next.FTSEThe index continues to break new ground this week with price breaking out above the prior highs at 7904.7. We are seeing bearish divergence into these highs though while above the 7678.8 level the focus is on a continuation higher, in line with the bull channel.NIKKEIFor now, the index continues to hold around the 27422.9 level just ahead of the intersection between the bearish trend line from highs and the retest of the broke bull trend line. While this area holds as resistance, a correction lower cannot be ruled out.

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NZDUSD Potential for Bearish Drop to recent swing low

To discuss this trading idea, head over to Tickmill Traders Club where you can get direct access to our team of world-class analysts.TitleNZDUSD, H4 | Potential for Bearish Drop to recent swing low TypeBearish ReversalPreference:Looking at the H4 chart, my overall bias is bearish as there is a key resistance level. Looking for a sell entry at 0.63642, take profit at 0.62732 which is the recent swing low.

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CHFJPY Potential for bullish rise towards overlap resistance

To discuss this trading idea, head over to Tickmill Traders Club where you can get direct access to our team of world-class analysts.TitleCHFJPY Potential for bullish rise towards overlap resistanceTypeBullish BouncePreference:Looking at the H4 chart, my overall bias for CHFJPY is bullish due to the current price being above the Ichimoku cloud, indicating a bullish market.Expecting price to possibly retest the pivot before heading towards the overlap resistance.It's worthy to note that there is an intermediate resistance level where the previous swing high is. Price might struggle to break through that.

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Market Spotlight: Kape Shares Soar on Takeover Bid News

Kape Higher on MondayShares in Kape Technologies are trading sharply today as the stock gapped higher at the London open on news of a takeover bid. Majority shareholder Unikmind Holdings has reportedly offered $1.51 billion to purchase all remaining shares in the company ($3.44 per share). Unikmind, owned by Teddy Sagi, is unable to purchase further shares in Kape until March 31st or the release of full-year 2022 results. However, Kape is pushing for Unikmind to be released from the agreement so that the offer can be put to shareholders.Correction Offers Buying OpportunityKape shares are currently down around 35% from their all-time highs, falling as part of the broader sell off in tech over the last year. However, with sentiment quickly shifting back towards bullishness, Unikmind are looking to benefit from the projected rally by taking over Kape. The digital security software provider has seen a strong shift in performance over recent years moving out of net annual losses into profitability and as such the recent decline likely looks like an attractive discount to buy at for Unikmind. Notably, Unikmind (which owns roughly 55%) is seeking a delisting of Kape from AIM regardless of whether the offer is accepted.Technical ViewsKAPEFollowing the failure and subsequent reversal from the 309 level, Kape shares have since rebounded are now trading back up towards the level. This is a key near-term pivot for the stock. With momentum studies turning bullish, a break of current highs will open the way for a move higher towards the 373.5 level thereafter.

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Daily Market Outlook, February 13, 2023

Daily Market Outlook, February 13, 2023A Cautious Start To Trading Ahead of Inflation DataAsian equities are mixed this morning ahead of tomorrow’s key US inflation print, with investors hoping that the trend in retreating inflationary pressures persists, however, Friday’s reports of revisions to past CPI data and elevated consumer inflation expectations have investors nervous regarding a potential upside surprise to tomorrow’s number, a hotter number tomorrow would likely spark another rapid repricing in interest rate yields and a markdown for global equities. Geo-politics risk also remains on the radar, with the US shooting down a fourth flying object believed to have potential surveillance capabilities, China has now indicated its intention to carry out a similar termination of an object in its airspace, stating that US surveillance balloons have trespassed into Chinese airspace over 10 times since January 2022. Overnight the Japanese Government is believed to confirm to the Diet that Kazuo Ueda is the nominee to become the new Bank of Japan Governor. Markets  reacted on Friday to chatter regarding his nomination, which initially led to a jump in the yen on concerns that it may mean a move to more restrictive monetary policy. The yen retreated after Ueda commented that he did not plan an immediate change in policy but markets will be alert for further details on his policy views. Japanese GDP for Q4 will also be released overnight and is expected to show a rebound from Q3’s decline.FX Options Expiration New York CutEURUSD 1.09(842mln), 1.10(337mln)USDJPY 126.50(700mln), 127.60(426mln)Overnight News of NoteAsian Equities Tumble And US Futures Slide After Wall Street SlumpDollar Hangs Near 5-Week High As Inflation Data Looms; Yen SlipsAs Funding Costs Surge, China Set To Pump Extra Cash Into Money MarketJapan’s LDP Policy Head Says Monetary Policy Has Room For ReformAustralian Tsy: RBA Review To Scrutinise Communications On RatesECB’s Visco: ECB Must Avoid Unnecessary Rise In Real Interest RatesChancellor Scholz’s Party Loses Berlin Election For First Time Since 1999UK Firms Plan Biggest Pay Rises Since 2012 To Fill Staff GapsAnalysts Say Credit Markets Are Poised For A Gut Check After 10% RallyCrypto Firm Paxos Faces SEC Lawsuit Over Binance USD TokenOil Edges Lower As Slowdown Concerns Vie With Russian CutbackOPEC Expects Global Oil Demand To Cross Pre-Pandemic Levels In 2023Meta Delays Setting Team Budgets As It Plans Fresh Round Of Job Cuts(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Bias: Intraday Bullish Above Bearish Below 4040Primary support is 3990Primary objective is 4384Below 4040 opens 400020 Day VWAP bullish, 5 Day VWAP bearishEURUSD Bias: Intraday Bullish Above Bearish below 1.0810Primary resistance is 1.0950Primary objective is 1.06Below 1.0580 opens 1.050020 Day VWAP bearish, 5 Day VWAP bearishGBPUSD Bias: Intraday Bullish Above Bearish below 1.21Primary resistance  is 1.21Primary objective 1.1840Above 1.2165 opens 1.226020 Day VWAP bearish, 5 Day VWAP bearishUSDJPY Bias: Intraday Bullish above Bearish Below 131.50Primary support  is 130Primary objective is 134.70Below 130.80 opens 130.1120 Day VWAP bullish, 5 Day VWAP bullishAUDUSD Bias: Intraday Bullish Above Bearish below .7050Primary resistance is .7050Primary objective is .6750Above .7150 opens .725020 Day VWAP bearish, 5 DayVWAP bullishBTCUSD Intraday Bias: Bullish Above Bearish below 21500Primary support 21200Primary objective is 25000Below 20300 opens 1950020 Day VWAP bullish, 5 Day VWAP bearish

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Gold Undergoing a Correction; S&P 500 Might Jump Soon

Gold has managed to form a bearish flag and approach the resistance at the level of 1820.00. The asset might potentially pull from this level and jump. Currently, gold is undergoing a mere correction. So, it would be wise to follow the candlestick formations to understand what might happen next.American stock index S&P 500 got back to the broken downtrend and local uptrend. It has formed a hammer at the end of last Friday. This might signify a potential price growth towards the level of 4200. So, let’s observe what the index is about to do next.The currency pair EUR/USD is undergoing correction. It might gain the required support at the level of 1.0350 soon. Also, this level is located next to the broken downtrend. So, it is likely that this currency pair will head up soon.

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USDCAD Potential for Bullish Rise to recent swing high

To discuss this trading idea, head over to Tickmill Traders Club where you can get direct access to our team of world-class analysts.TitleUSDCAD, H4 | Potential for Bullish Rise to recent swing high TypeBearish ReversalPreference:Looking at the H4 chart, my overall bias for USDCAD is slightly bullish as there is a key support level, Looking for a buy entry at 1.33408 where below the overlap support. We are looking to take profit at 1.34706 which is the overlap recent swing high.

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S&P500 potential for bearish drop towards intermediate support

To discuss this trading idea, head over to Tickmill Traders Club where you can get direct access to our team of world-class analysts.TitleS&P500 potential for bearish drop towards intermediate supportTypeBearish DropPreference:Looking at the H4 chart, my overall bias for S&P500 is bearish due to the current price being below the Ichimoku cloud, indicating a bearish market.Looking for an immediate entry at the pivot. The resistance is where the overlap resistance level is. The support is the intermediate support.

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USDJPY potential for bullish rise towards overlap support

TitleUSDJPY potential for bullish rise towards overlap supportTypeBullish BouncePreference:Looking at the H4 chart, my overall bias for USDJPY is bullish due to the current price being above the Ichimoku cloud, indicating a bullish market.Looking for price to retest the pivot which is the overlap support. Expecting price to continue bullish towards the overlap resistance levelIt's worthy to note that there is an intermediate resistance level where the previous swing high is. Price could reverse back down from that area.

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UK economy stalls in the final quarter of 2022 but avoids recession

The latest data from the Office for National Statistics showed GDP fell 0.5% in December but remained flat in the final quarter of the year.

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Market Spotlight: UK Avoids Recession By Thinnest of Margins

UK Economy On the EdgeThe latest UK economic data today suggests that the recent optimism we’ve seen might be a little pre-mature. Preliminary quarterly GDP was seen at 0% in Q4, just above the -0.3% seen over the prior quarter. Had the result been negative today, the UK would have been in a technical recession. However, instead, the UK has avoided that situation by the thinnest of margins. For many, this will be a hollow victory and reflects the difficulties facing the UK economy very well. On the monthly reading, UK GDP was seen suffering a sharp 0.5% drop, below the 0.3% decline the market was looking for.Recession Risks Still ThereThe BOE has recently warned that the UK stull faces a recession this year, though did say that the downturn would likely not be as pronounced as previously thought. With interest rates at 14-year highs and with inflation still at excessive levels, financial conditions for businesses and consumers in the UK are the worst they’ve been for a generation. However, with the FTSE climbing to fresh record highs this week it’s clear that many players anticipate better times ahead. The fear is that if the BOE pauses hikes at current levels that inflation might rebound near-term, creating further difficulties for the bank.Technical ViewsGBPUSDThe pair currently oscillating around the 1.2195 level, contained within a triangle pattern which has framed the recent consolidation. On the back of the recent uptrend, the focus is on a further push higher and an eventual test of the 1.2659 level next if bulls can get back above 1.2195. Below here, and with momentum studies bearish, risks are skewed towards a break lower and a test of 1.1474 next.

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Daily Market Outlook, February 10, 2023

Daily Market Outlook, February 10, 2023Valentines Day Pick For BoJ Chief Could Prove To Be A Heartbreaker For Yen BearsAsian equities are mostly lower overnight as declines in US equities persisted following reports suggesting Fed comments that US interest rates have further to rise. Chinese inflation data for January was mixed as annual producer price inflation fell to -0.8% in January but consumer price inflation rose to 2.1% from 1.8% in December. The Japanese government has confirmed that it will announce its nominee for the next Bank of Japan Governor on 14th February, market chatter that the BoJ pick is believed to be the more hawkish ex board member Ueda after the favourite for the nomination refused to accept the role, has led to strengthening in the Yen overnight.In the US, consumer confidence has been rebounding after huge declines witnessed last year. The retreat in gas prices stateside has helped buffer sentiment, however today’s University of Michigan consumer sentiment survey, is thought to show another round of softness. The latest sentiment on inflationary expectations will also be eyed with the recent rebound in gas prices a concern.FX Options Expiration New York CutEURGBP .8800(425mln) .9390(580mln)Overnight News of NoteAsia Stocks Head For Second Weekly Loss As Fed Rate Worries FlareJapan Govt To Present Next BoJ Governor Nominee On Feb 14RBA Raises Inflation, Wages Forecasts, Sees Further Rate HikesChina Factory Deflation Deepens, Consumer Prices Rise In JanuaryJapan's Wholesale Inflation Stays Elevated, Keeps BoJ Under PressureBoJ Kuroda: Will Keep Easing As Long As Needed For Price GoalBoJs Amamiya: See No Need Now To Make YCC More FlexibleJapan’s Suzuki: Must Discuss Joint Accord With New BoJ GovernorFed's Foot 'Unequivocally' On Brake, Sensible To Move Slower, Barkin SaysBank Of England Officials Split Over Future Path For RatesDollar Defensive As Investors Remain Cautious Ahead Of Inflation DataTreasury Yield-Curve Inversion Reaches Deepest Level Since 1980sPBoC 3-Day Cash Injection Hits 1 Trillion Yuan To Ease SqueezeBoJ To Offer 5yr Loans To Banks On Feb. 14 To Help Cap YieldsOil Trims Weekly Gain As Slowdown Concerns Counter China DemandGoldman Cuts Oil Forecasts On Softer 2023 Demand-Supply BalancePayPal Says Volume Growth Slowed; CEO Schulman To Retire(Sourced from Bloomberg, Reuters and other reliable financial news outlets)Technical & Trade ViewsSP500 Bias: Intraday Bullish Above Bearish Below 4050Primary support is 3990Primary objective is 4384Below 4040 opens 400020 Day VWAP bullish, 5 Day VWAP bearishEURUSD Bias: Intraday Bullish Above Bearish below 1.0810Primary resistance is 1.0950Primary objective is 1.06Below 1.0580 opens 1.050020 Day VWAP bearish, 5 Day VWAP bearishGBPUSD Bias: Intraday Bullish Above Bearish below 1.21Primary resistance  is 1.21Primary objective 1.1840Above 1.2165 opens 1.226020 Day VWAP bearish, 5 Day VWAP bearishUSDJPY Bias: Intraday Bullish above Bearish Below 131Primary support  is 130Primary objective is 134.70Below 130.80 opens 130.1120 Day VWAP bullish, 5 Day VWAP bullishAUDUSD Bias: Intraday Bullish Above Bearish below .7050Primary resistance is .7050Primary objective is .6750Above .7150 opens .725020 Day VWAP bearish, 5 Day VWAP bullishBTCUSD Intraday Bias: Bullish Above Bearish below 21500Primary support 21200Primary objective is 25000Below 20300 opens 1950020 Day VWAP bullish, 5 Day VWAP bearish

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FOMO Friday: S&P Flies Too Close To the Sun

S&P Slips From HighsIt’s fair to say that it’s been a relatively quiet week across markets. We’ve seen decent volatility, just little in the way of clear directional moves. Much of what has gone up, subsequently came down and vice versa. Weeks like this, however, are a good time to reflect on one’s trading and plan ahead as the big moves and key catalysts are never far away. Still, there has been plenty happening this week and chatting with traders ahead of the weekend it seems the big move capturing most attention is the almost 3% pullback in the S&P. So, let’s take a look at what cause the move and, as ever, if you caught it? Well done! If you missed it? There’s always next week!What Caused the Move?Shifting USD View on Better US DataThe main driver behind the drop in the S&P this week has been the change in USD outlook on the back of recent US data and Fed commentary. Last week’s December US labour market data showed the NFP coming in almost 3x higher than forecasts while the unemployment rate was seen falling back to levels last seen in 1969. On the back of this surprisingly strong data traders feared the Fed might look to press ahead with rates hikes for longer than originally expected given that the anticipated downside impact on the economy has clearly not been as harsh as thought.Hawkish Fed CommentsWith USD rallying firmly across the board, US markets came off rather sharply. This week, then, focus shifted to a slew of Fed commentary over the week, kicking off with chairman Powell on Tuesday. While Powell’s speech was more or less a repetition of his comments at the FOMC it was subsequent comments from other Fed members which caused concern for equities traders. Fed’s Williams and Kashkari both called on the Fed to continue with hiking throughout this year with Williams saying that rates would need to stay at higher levels for years, beyond the Fed’s current projections, and Kashkari calling for rates to peak around 5.4% at least, above the Fed’s own projections again.Downside Risks for S&PThese comments represented a clear hawkish uptick on the back of last week’s data and raised fears that other Fed members might be feeling the same way, putting larger hikes (or hiking for longer) back on the table. Looking ahead then, the outlook for the S&P will be very tied to incoming US data and Fed commentary as traders look to gauge how the Fed is likely to proceed this year. Further strong data might therefore weigh on S&P, boosting hawkish Fed expectations.Technical ViewsS&PThe rally off last year’s lows has seen the index testing above the 4153.50 level though the move has stalled for now and since reversed back under the level. With momentum studies weakening, while below here, there are risks of a deeper move back towards the bull channel lows and 3910 below. Back above, focus shifts to the 4305 level next.

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AUDUSD Potential for Bearish Drop to recent swing low

To discuss this trading idea, head over to Tickmill Traders Club where you can get direct access to our team of world-class analysts.TitleAUDUSD, H4 | Potential for bearish drop to recent swing low TypeBearis Preference:My overall bias for AUDUSD is bearish as there is a descending trend line. Looking ofr buy entry at 0.701, take profit at 0.68705 which is an overlap support.

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