European Open Euro Pairs Consolidates Ahead of Key Data Points

Asian Indices:

• Australia's ASX 200 index rose by 4.3 points (0.06%) and currently trades at 7,286.20
• Japan's Nikkei 225 index has fallen by -68.21 points (-0.22%) and currently trades at 28,955.10
• Hong Kong's Hang Seng index has fallen by -101.78 points (-0.35%) and currently trades at 28,685.50

UK and Europe:

• UK's FTSE 100 futures are currently down -6.5 points (-0.09%), the cash market is currently estimated to open at 7,070.72
• Euro STOXX 50 futures are currently down -3 points (-0.07%), the cash market is currently estimated to open at 4,094.65
• Germany's DAX futures are currently down -31 points (-0.2%), the cash market is currently estimated to open at 15,646.15

US Futures:

• DJI futures are currently down -126.15 points (-0.36%), the cash market is currently estimated to open at 34,449.16
• S&P 500 futures are currently up 27.75 points (0.2%), the cash market is currently estimated to open at 4,254.27
• Nasdaq 100 futures are currently up 1.5 points (0.04%), the cash market is currently estimated to open at 13,804.39

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Futures point to a slightly lower open for cash market indices

The CAC closed to its highest level in over twenty years yesterday and closed with a bullish outside / engulfing candle. Its break above 6522 confirms an inverted head and shoulders pattern which projects a target around 6570. Whilst yesterday’s high made it around 2/3^rd the way to target, prices retraced in the final two hours of trade yesterday. So we are now seeking a bullish reversal pattern, around or above the 6522 neckline to suggest a swing low has formed and its trend is ready to extend. 

The FTSE 100 closed slightly higher yesterday, with a report from UK mortgage lender Halifax showing the UK housing market remains strong whilst the stamp duty holiday remains in place. Banks and homebuilders supported the index, which is currently on track for its fifth consecutive monthly gain.

Depending on which side of it the market opens today, 7083 could be either support or resistance and marks the point of control (POC) where the most trading activity took place yesterday. Around here, 7069 – 7100 is a key zone for bulls to break whilst 7069 – 7074 is a key support zone for bulls to defend. Given that prices remain within Thursday’s large bearish range and the prior two sessions have been more ‘wick’ than ‘body’ then it is not a market for directional positions on the daily timeframe yet, hence the focus on intraday levels.

FTSE 350: Market Internals

FTSE 350: 7077.22 (0.12%) 07 June 2021

• 206 (58.52%) stocks advanced and 128 (36.36%) declined
• 38 stocks rose to a new 52-week high, 5 fell to new lows
• 86.36% of stocks closed above their 200-day average
• 24.43% of stocks closed above their 20-day average

Outperformers:

• + 5.92%   -  Liontrust Asset Management PLC  (LIO.L) 
• + 5.69%   -  NCC Group PLC  (NCCG.L) 
• + 4.65%   -  Crest Nicholson Holdings PLC  (CRST.L) 

Underperformers:

• -10.3%   -  IWG Plc  (IWG.L) 
• -4.81%   -  Chemring Group PLC  (CHG.L) 
• -4.42%   -  Hochschild Mining PLC  (HOCM.L) 

Forex:

Very quiet ranges overnight made for a dull trading environment. With that said, JPY and GBP are the weakest majors and USD is the strongest (if you could really call it that).

Germany’s ZEW economic indicator is released alongside final Eurozone employment and GDP figures, so euro pairs will be the place to look for any spurts of volatility ahead of this week’s ECB meeting.

EUR/JPY is trying to build a base (and higher low) above 132.50 support o the daily chart, which remains in a corrective phase of a bullish trend. Yesterday’s small Doji shows a hesitancy to push lower but, with a ECB meeting looming, volatility may be limited leading up to it.

EUR/USD rose to a two day high amid its second consecutive bullish day, and we expect volatility to increase as we get to the end of the week as we have ECB meeting an US CPI to direct this pair accordingly. Form a technical perspective we’d sooner seek signs of weakness whist prices remain below 1.2266 and wide legged Doji’s on the weekly chart continue to suggest it may be choppy rangers to contend with over clean directional moves.

EUR/CHF has been in a choppy, sideways range on the daily chart since the second week of May. Yet its series of lower highs leading into support around 1.0934 suggest downside pressure could be building for a breaking. However, bears should be mindful of the June 2020 high at 1.0915 as it could initially provide support upon a break low, so we’d prefer to wait for prices to break beneath that high before assuming a breakout as valid.

However, whilst support continues to hold, the potential for a bounce from the base of its pattern remains. Traders could seek an hourly bullish engulfing candle to suggest a base has complete, or wait for a break beneath the June 2020 to confirm a downside breakout.  

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Commodities: $28 is pivotal for silver, oil continues to retrace

$28 is the pivotal level for silver over the near-term. We noted last week that the two bearish pinbars/hammers that failed to close above the Feb 23^rd high of 28.32 warned of a potential correction. Thursday’s large bearish candle and break of the daily bullish channel underscore the fact that bulls have slowly lost control. Yet its two-day rally and hanging man candle yesterday have taken prices back to $28.0 which is acting as resistance, which makes it a pivotal level this session and of interest to bears whilst prices remain beneath it, or bulls of prices can break above it.

Oil prices are indeed correcting lower after WTI confirmed resistance at $70 yesterday. Initial target remains the 67.98 – 68.00 area, which could also prompt a minor bounce due to profit taking. A break beneath support brings 66.40 – 67.00 into focus for bears.

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