Global macro overview for 12/12/2017

The ZEW Economic Sentiment Index, measuring the moods of German financial analysts in December, fell from 18.7 points up to 17,4 points, while the market participants expected a reading of 18.0 points. Although at the beginning of November the Frankfurt exchange was breaking historic records, the moods of German economists remain only moderately optimistic. The December reading of the ZEW index was over one quarter lower than the long-term average of 23.7 points. What's more, throughout the whole year the ZEW index remained on a quite stable on a moderate level. A slightly smaller percentage of the surveyed economists (46.6% and 47% respectively) assumes maintaining an upward trend on historic indexes b in Tokyo (Nikkei225) and New York (Dow Jones). The bears' team is close to extinction - only in the case of the British FTSE, the percentage of those who are expecting a decrease in share prices exceeds 20%. On the other hand, inflation expectations are clearly growing. Already more than 71% of German economists expect inflation to increase in the US. It's up to 9.7% more than in November. In the case of Germany and the United Kingdom, more than half of respondents expect inflation to accelerate within the next six months.

A monthly ZEW survey is based on the answers sent by around two hundred German financial experts. Analysts are asked about expectations for the next six months. Only three answers are possible: increase/improve, remain unchanged, drop/worsen.

Let's now take a look at the German DAX30 Index technical picture at the H4 time frame. The Head & Shoulders pattern is still valid, but the market is not in hurry to break to the downside. The local support at the level of 13,085 has been defended well, but the key level to the upside is still the technical resistance at the level of 13.254.


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Global macro overview for 12/12/2017

The CPI data has beat the market participants expectations of 0.2% as the number released was at the level of 0.3% (0.1% prior). On yearly basis, the CPI jumped from 3.0% to 3.1%, but still, today's November CPI inflation data has not become a pretext to a recovery rally in British Pound (although it can not be ruled out that the reaction will be delayed). The market participants will receive the labor market data (this is tomorrow), and the dynamics of retail sales and the Bank of England meeting (interest rate decision on Thursday). Moreover, Brexit concerns still weigh on British Pound - yesterday speculations appeared that the ministers in the government of Prime Minister May, Boris Johnson and Michael Gove (the faction opting for the so-called hard Brexit) had a different vision for access negotiations to the single market and expected that May will take into account their demands in exchange for the support they have given her in recent days when negotiating an agreement with the EU that can open the door to the second, key phase of the talks. It is difficult to assess how much of this truth - the media are still hacking the thread of "undisciplined" ministers - but it is a signal that the second and the most important from the point of view of the economic interests of Great Britain will not be so easy.

It will be important for global investors to see how quickly it will be possible to agree on the so-called EU transition period after Brexit (possibly to last about 2 years) and under what exact conditions. Only then will the market participants might witness so-called relief rally in British Pound, which will reduce concerns related to the so-called hard or chaotic Brexit.

Let's now take a look at the GBP/JPY technical picture at the H4 timeframe. The price has dropped from the local high at the level of 153.38 and stopped at 38% Fibo at the level of 150.92. Currently, the price is testing the dashed black trend line around the level of 151.58. The key resistance is seen at the level of 151.91.


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Trading Plan for EUR/USD and US Dollar Index for December 12, 2017


Technical outlook:

The EUR/USD pair still seems to be looking to drop one last time before pulling back. It is expected to terminate through 1.1700 levels at least, which is the fibonacci 0.618 support as well. According to the wave counts 1.1700 could be labelled as wave C until the structure changes going forward. To simplify the view, until prices remain below 1.1940/50 levels, EUR/USD bears are expected to remain in control. A sustained break below 1.1700 levels would push through 1.1550 levels and lower. On the flip side a bullish reversal around 1.1700 would produce at least a meaningful pullback, if not an extended rally.

Trading plan:

Please remain short for now with a target of 1.1600/1.1700 levels.

US Dollar Index chart setups:


Technical outlook:

The US Dollar Index is looking poised to push through 94.10/20 levels, before producing a meaningful pullback. The wave structure still looks constructive for bulls and it would remain to be so till prices stay above 92.50 levels going forward. Please note that the corrective drop is also expected to find support around 93.40/50 mark before the bullish run continues. As labelled here, it the wave count holds true, the US Dollar Index is preparing to push through 95.00 and 98.00 levels in the weeks to come by. Whether you plan to trade short or medium term, looking to buy on dips is a safe strategy.

Trading plan:

Please remain long and also plan to buy on dips, target 92.20.

Fundamental outlook:

There are no major events lined up for the day.

Good luck!

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Bitcoin analysis for December 12, 2017


Bitcoin (BTC) has been trading upwards. As I expected, the price tested the level of $17,417. South Korea's top financial regulators have clarified their position following reports by local media that they have been considering a possible ban on all cryptocurrency transactions, particularly bitcoin. The technical picture looks bullish.

Trading recommendations:

According to the 30M time frame, I found the broken intraday bullish flag, which is a sign that selling looks risky. The buying pressure is present and my advice is to watch for potential buying opportunities. The upward targets are set at the price of $17,423 and $18,600.


$17,423 – Intraday resistance (price action)

$16,194 – Intraday support

$15,945 – Intraday support 2 (price action)

$17,423 – First objective point

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Technical analysis of NZD/USD for December 12, 2017



  • On the four-hour chart, the USD/CHF pair is trading in the bullish trend from the support levels of 0.6881 and 0.6830. Currently, the price is in a bullish channel. This is confirmed by the RSI indicator signaling that we are still in a bullish trending market. As the price is still above the moving average (100), immediate support is seen at 0.6881, which coincides with the first support (23.6% of Fibonacci). Consequently, the second support is set at the level of 0.6830. So, the market is likely to show signs of a bullish trend around the spot of 0.6830/0.6881. In other words, buy orders are recommended above the support of (0.6881) with the first target at the level of 0.6993. Furthermore, if the trend is able to breakout through the first resistance level of 0.6993. We should see the pair climbing towards the price of 0.7043 to test it. It would also be wise to consider where to place a stop loss; this should be set below the second support of 0.6813.
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