The Precise Take – ES at critical resistance off USD weakness

Leaders Analysis:   Overnight, the Australian central bank became the first (major CB) to raise rates (1/4 pt to 3.25%).  The USD is down as expected against the AUD, but also all the other major crosses.  Equities have been repriced in the weakened USD and are up materially on the news.  Interestingly, there seems to be no fear of a similar Fed hike, which would weigh on equities.  With the BOE and ECB to meet early Thursday, there is the potential, though unlikely, for more surprises.  We had speculated on Treasury weakness to boost equities (still possible), but this works as well.

Trading Today:  The ES got the expected bounce yesterday, and with no sellers, posted a high to toward the close at the monthly pivot of 1038.50.  Overnight, the ES has traded above the 1043.50 point of control and is at critical trendline resistance (see below) for the shorts.  We expect the daily R1’s to provide support at 1043.25 to 1043.75 and daily R2’s to provide resistance at 1049.50 to 1050.75.  We are willing to trade off…

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