Mohicans markets：Under the Fed's Tightening cycle, Non-US Markets are Under Pressure

Reminder: This article involves the technical analysis of 6 varieties of spot gold, spot silver, U.S. crude oil, EURUSD, GBPUSD, and AUDUSD. Starting from the distribution of market chips, the change data of options positions published on the CME official website is superimposed on the average order flow change data of large brokers in the industry to more accurately mark the market trading sentiment in important price ranges.

The order flow mainly refers to the following Oder Book data, which is updated every 20 minutes, taking XAUUSD international gold as an example:

The opinions and strategies provided in this article are for reference only. The data are all from large brokers. Please check them according to your needs. They are not investment suggestions and please read the statement terms at the end of the article carefully.

Key Data

Market Overview

Long and Short News

On Wednesday, September 22, this trading day will focus on the Bank of England interest rate decision, changes in the number of initial jobless claims in the United States, and news related to the geopolitical situation.

A soft landing for the U.S. economy is all but unlikely, according to the Fed's latest rate forecast. Powell also acknowledged that economic growth will be below trend for some time, which should be interpreted as speaking of a “recession.” From now on, the situation will become more dire. But on the positive side, today's dot plot shows that the Fed appears to be starting to rein in the inflation outlook.

The Fed's hawkish stance will weigh on currency markets and push the dollar further, while the European Central Bank will never be able to reach rates above 4%.

The EIA data released last night showed that the tight supply and demand situation in the oil market may have eased, and the continued increase in inventories will further provide downward momentum for oil prices.

Although gold has fallen to near two-year lows and has repeatedly tested key support, recent moves in gold prices suggest that safe-haven demand is gradually becoming an important driver of gold's moves. The outbreak of the Russian-Ukrainian conflict at the end of February caused gold to rise briefly, but the threat of geopolitical risks has gradually faded out of the sight of most investors. Now the focus of the market is still on inflation and the central bank's interest rate hike.

What needs to be reminded is that in the three trading days after the Fed's interest rate hike, the gold price will usher in the opportunity of shock and rebound. Investors still need to beware of a bullish counterattack after the bears are exhausted.

The Mohicans Markets strategy is for reference only and not as investment advice. Please read the terms of the statement at the end of the article carefully. The following strategy was updated at 15:30 on September 22, 2022, Beijing time.

Technical Point of View

CME Group options layout changes:

1700 Bullish increase sharply, bearish decrease slightly, first target and key resistance for bulls

1690 Bullish increase, bearish increase, key resistance

1675 Bullish increase sharply, bearish decrease in equal amount, short-term resistance level

1660 Bullish slightly reduced, bearish greatly reduced but the stock is large, the first support

1650 Bullish unchanged, bearish increase, key support

1630 Bullish unchanged, bearish increase sharply, bear target

Order flow key point labeling (spot price):

1698 Trend key resistance

1688-1690 BA7

1667-1670 Intraday long and short demarcation

1654 Critical Support

1643 Short Target

1625 Short second target

Technical Analysis

At present, the market is betting on the next interest rate hike by 75 basis points is relatively high, which will suppress the rebound space of gold. Although the overall options are mainly call options to increase positions and put options to reduce positions, suggesting that there may be funds to start betting on the rebound, but the rebound resistance is intensive, and it is not ruled out that most positions are mainly hedging. Be cautious of short-term increases in options long positions.

Above the current price, the 1678 call options increased by 417 lots, and the put options also left here, suggesting that the resistance at this position has been greatly weakened. Once broken, the top 1693 will become a key resistance, where short-term call options will increase significantly. If the price does not stand firm at 1678, it is still necessary to pay attention to the risk of falling into a shock, and the 1663 put option part leaves the market, suggesting that the low-level bears are not willing to bet on further downside. The main bet range of the bears is concentrated below 1653, below or will look at the bearish target of 1633.

Note: The above strategy was updated at 15:00 on September 22. This strategy is a day strategy, please pay attention to the release time of the strategy.

Changes in CME Group's options layout (Futures prices in December):

20 Bullish increase greatly, bearish increase, strong resistance

19.75 Bullish increase, bearish decrease slightly, first target for bulls

19.45-19.5 Big bullish increase, bearish decrease, first resistance

19.25 Bullish unchanged, bearish increase, first support

19 Bullish slightly reduced, bearish increased, key support

18.85 Bullish increase, bearish unchanged, support level

18.50 Bullish increase, bearish increase, key support

Order flow key point labeling (spot price):

19.89 Strong resistance

19.58-19.67 key resistance in the day

19.32 Short-term key bit

19.15 First support

18.8-18.98 Key support in the day

18.3 Week support (bulls cost zone)

17.85-18 Bears target

Technical Analysis

At present, silver is still suppressed by the daily trend line. Yesterday, the overall bet on options was concentrated in the range of 19.45-19.6. 19.45-19.5 became the first resistance for short-term rebound, where short-term performance is more important. Stabilization is expected to look towards 19.75. Long bets are mainly concentrated on the 20 mark. This strong resistance has been tested by the sharp fluctuations in the early morning meeting, and it is more important during the day.

If silver continues to be suppressed by 19.5, there will be support at 19.25 and 19 below the short-term, of which the 19 mark is more critical, and the break may test the early rebound long cost area of 18.3-18.5.

Note: The above strategy was updated at 15:00 on September 22. This strategy is a day strategy, please pay attention to the release time of the strategy.

CME Group options layout changes:

87 Bullish increase, bearish increase, bulls and bears fight for points

86 Bullish increase, bearish increase, key resistance

85 Bullish increase, bearish increase, first resistance

82.5-83 Bullish slightly increased, bearish increased in equal amount, short-term short-term target

80 Bullish increase, bearish decrease sharply, bears target and support

78 Bullish unchanged, bearish reduced, bearish target

The key points of the order flow are marked: 

86.4 Key Resistance

84.8 Double top neckline resistance

83.4 The first resistance, short-term key level

81.7-82.13 key support range

80-81 Early Short Target

The first key position after breaking 78

Technical Analysis

Crude oil continued to fluctuate. After hitting the resistance of 86 yesterday, it fell back to trading around 82. From the perspective of options changes, longs and shorts are still increasing their positions near the current price, but the bulls are obviously more positive, and they are betting on a large scale in the resistance range around 90. The oil market is still dominated by supply and demand, although EIA data shows demand has slowed, but the downward movement of oil prices is limited for now.

In the short term, we still pay attention to the resistance at 85 and 86, and the oil price may go out of the obvious rise after the formation of an effective breakthrough. The following is concerned about the support near 82.5-83. There are a lot of put option bets, which also constitute a short target. If it breaks below, it will see the key level of 78.

Note: The above strategy was updated at 15:00 on September 22. This strategy is a day strategy, please pay attention to the release time of the strategy.

CME Group options layout changes：

0.995 Bullish increase sharply, bearish decrease, long target and resistance

0.9875-0.99 Bullish increase sharply, bearish equally decrease but the stock is large, rally target and resistance

0.985 Bullish unchanged, bearish increase, first resistance

0.98 Bullish unchanged, bearish decrease sharply but the stock is large, key support

0.975 Bullish unchanged, bearish increase, downside target

0.97 Bullish decrease slightly, bearish decrease, support

Technical Analysis

The euro fell sharply against the dollar on Wednesday due to the escalating situation in Russia and Ukraine, as well as the Federal Reserve's 75 basis point rate hike. It fell below yesterday's short target of 0.99 in one fell swoop, though it still closed above 0.98. The options distribution shows that the shorts took profits and left the market, while the longs concentrated on the range 0.99-0.995 adding large bets, which make more bullish on the rally above.

Among them, 0.985 is the biggest new short bets a position, which will be the rebound resistance for the euro against the dollar. If it breaks down, it perhaps will look to rally target 0.9875-0.99 and long target 0.995, where there is some resistance to the rally target, but weakened.

A large amount of short money leaving at 0.98 will be the key support for the decline in Europe and the United States. If it breaks down, it perhaps will look to the downside target of 0.975, with the next support level seen at 0.97.

Note: The above strategy was updated at 15:00 on September 22. This strategy is a day strategy, please pay attention to the release time of the strategy.

CME Group options layout changes：

1.135 Bullish increase, bearish increase and the stock is large, long target and resistance

1.13 Bullish increase, bearish increase slightly, rally target and resistance

1.125 Bullish unchanged, bearish increase and the stock is large, near-term resistance

1.12 Bullish unchanged, bearish unchanged and the stock is large, retreat target

1.115 Bullish unchanged, bearish decrease slightly, short target and support

Technical Analysis

GBPUSD trend similar to the euro, and experienced two waves of big losses on Wednesday. Today‘s opening once fell below yesterday’s short target 1.125, and is now still oscillating near the position.

From the options, the current price below the long and short basically no action, basically concentrated in the upper entry. Then short money is denser around 1.125 and there are new bets, so it will be rebound resistance; if it rises above, it perhaps  will look to the rebound target of 1.13 and the long target of 1.135.

On the downside, a pullback target is seen at 1.12, where there is a large stock of bearish options. If it breaks, it perhaps will look to the short target cum support at 1.115.

Note: The above strategy was updated at 15:00 on September 22. This strategy is a day strategy, please pay attention to the release time of the strategy.

CME Group options layout changes：

0.68 Bullish increase sharply and the stock is large, bearish unchanged, long target

0.6725 Bullish increase sharply, bearish unchanged, long target

0.67 Bullish increase sharply, bearish decrease sharply, resistance to adding long positions weakens

0.6675 Bullish increase sharply, bearish unchanged, rally target

0.655 Bullish unchanged, bearish decrease slightly, short target

0.65 Bullish unchanged, bearish decrease but the stock is large, downward momentum expands

Technical Analysis

The Fed continued to adhere to its hawkish stance, and the dollar was boosted by expectations of a rate hike to strengthen again. AUDUSD rebounded after breaking below 0.667 support, which was stopped at 0.7 and then continued its downward movement. From the options market, the long side is still in high spirits and the short side is showing signs of leaving the market, but the short term is still dominated by the dollar trend.

The current price around 0.66 has not seen any long entry, and need to rally to 0.6675 after the long sentiment to be effectively boosted. Although the short has a stock advantage on 0.67, there have been more departures. The long side has new bets, and the long and short sides are starting to equalize. At the same time 0.67 is also the location of the rally blocked in the early hours of this morning, and is expected to remain pressure on the AUDUSD. If the breakout continues, continued long additions could extend upside momentum with long targets at 0.6725 and 0.68.

At the same time, the 0.58-0.66 area does not show any signs of long inventory or entry, support is weak and the trend may be more controlled by the short side. 0.655 is the first short target, while under 0.65 need to be alert to the expansion of downward momentum.

Note: The above strategy was updated at 15:00 on September 22. This strategy is a day strategy, please pay attention to the release time of the strategy.

Statement | Disclaimer

Disclaimer: The information contained in this material is for general advice only. It does not take into account your investment goals, financial situation or special needs. We have made every effort to ensure the accuracy of the information as of the date of publication. MHMarkets makes no warranties or representations about this material. The examples in this material are for illustration only. To the extent permitted by law, MHMarkets and its employees shall not be liable for any loss or damage arising in any way, including negligence, from any information provided or omitted from this material. The features of MHMarkets products, including applicable fees and charges, are outlined in the product disclosure statements available on the MHMarkets website. Derivatives can be risky and losses can exceed your initial payment. MHMarkets recommends that you seek independent advice.

Mohicans Markets, (Abbreviation: MHMarkets or MHM, Chinese name: Maihui), Australian Financial Services License No. 001296777.