European Open: Has gold finally found a floor?

Asian Indices:

• Australia's ASX 200 index fell by -8.2 points (-0.12%) and currently trades at 6,786.10
• Japan's Nikkei 225 index has risen by 128.35 points (0.46%) and currently trades at 27,931.35
• Hong Kong's Hang Seng index has risen by 14.75 points (0.07%) and currently trades at 20,589.38
• China's A50 Index has risen by 33.37 points (0.24%) and currently trades at 14,007.50

UK and Europe:

• UK's FTSE 100 futures are currently up 14 points (0.19%), the cash market is currently estimated to open at 7,284.51
• Euro STOXX 50 futures are currently down -5 points (-0.14%), the cash market is currently estimated to open at 3,591.51
• Germany's DAX futures are currently down -27 points (-0.2%), the cash market is currently estimated to open at 13,219.64

US Futures:

• DJI futures are currently down -60 points (-0.19%)
• S&P 500 futures are currently down -109 points (-0.86%)
• Nasdaq 100 futures are currently down -18.75 points (-0.47%)

China’s share markets slipped on Friday due to reports of another outbreak in the region. The Nikkei is on track for its best week in four months, with growth stocks and shipping firms taking the lead. US futures have opened lower, roughly taking around half of yesterday’s gains away. European bourses are also lower, although the FTSE has bucked the trend and trades 0.2% higher from yesterday’s close.

Oil prices made minor gains overnight, but it appears more likely that the markets printed a swing high on Tuesday and could be set to fall further over the near-term. A stronger US dollar would clearly help with that outlook, so on that front it is encouraging to see the US dollar index has found support at the 20-day eMA and be may forming a swing low.

Gold daily chart:

Gold remains within an established bearish channel, although recent price action suggests an important swing low has formed. Yesterday’s low held above the August 2021 low (with the March 2021 low ~$5 beneath it). We highlighted the importance of these lows in yesterday’s Gold Wrap report. A bullish engulfing pattern has formed on the daily chart and tested a 4-day high, and provides a bullish bias over the near-term and potential for a rally to $1750 resistance. Retracements towards the $1700 / monthly S3 pivot would be desirable to increase the potential reward to rise ratio, otherwise a direct break of yesterday’s high assumes bullish continuation.

FTSE 350 – Market Internals:

The FTSE 100 was one of the few major indices to not break to new cycle highs yesterday, which is a sign of weakness on a relative basis. In theory this keeps the FTSE as a potential short candidate should sentiment turn lower. Support was found at the 20-day eMA after a weak start and a bullish pinbar formed on the daily chart, but the bias remains bearish beneath Wednesday’s high (or the 7362.37 high for extra comfort) in line with the analysis from yesterday’s European open.

FTSE 350: 4055.79 (0.09%) 20 July 2022

• 281 (80.06%) stocks advanced and 65 (18.52%) declined
• 5 stocks rose to a new 52-week high, 0 fell to new lows
• 25.93% of stocks closed above their 200-day average
• 76.07% of stocks closed above their 50-day average
• 17.95% of stocks closed above their 20-day average

Outperformers:

• + 26.60% - Frasers Group PLC (FRAS.L)
• + 12.86% - Moneysupermarket.Com Group PLC (MONY.L)
• + 10.05% - IG Group Holdings PLC (IGG.L)

Underperformers:

• -9.44% - Carnival PLC (CCL.L)
• -5.65% - Harbour Energy PLC (HBR.L)
• -3.84% - Wizz Air Holdings PLC (WIZZ.L)

Economic events up next (Times in BST)

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