Global macro overview for 23/02/2018

The majority of the ECB's Governing Council considered that the change in communication with the market demanded by some representatives to remove the most dovish formulas (like easing bias) at the first meeting in 2018 would be premature. However, the bank maintained the state of the possibility of changing the attitude (forward guidance) at a later date as part of the regular assessment of the economic situation and maintaining stable communication with the market. With regard to the Euro currency, it was written that although , the strengthening did not have a significant negative impact on Eurozone demand so far, volatility in currency markets is a risk factor that requires monitoring. The ECB expects that basic interest rates will remain at current levels for a long time; significantly exceeding the horizon of the QE program, which is expected to last until September this year. The ECB is prepared for its increase or prolongation, if necessary.

On the other hand, there are many dovish accents in the ECB report, which the bank does not have to withdraw (and will not have to in the near future), because inflationary pressures remain low. The emerging weak impulses for CPI are the result of cyclical improvement and concern mainly food and energy prices. Domestic demand or wages do not generate base rate increases. There are, however, signs of economic downturn, which in the perspective of several quarters will have a weakening effect on CPI. The German institute Ifo said that the economic climate index in February fell more than expected (115.4 pts vs. 117.0 pts) with the subindex of expectations at the lowest level in 10 months. Still high, but also weakening subindex of the current situation indicates the passing of the peak of economic activity in Germany in the first quarter.

In conclusion, the current macroeconomic developments will likely limit the opportunities to deepen appreciation of the Euro currency in the medium term.

Let's now take a look at the EUR/USD technical picture at the H4 time frame. The bounce from the technical support at the level of 1.2257 was short lived and the market was too weak to break through the level of 1.2366 so far. This technical resistance level is the key level to the upside, otherwise, the bears will regain the control over the market and push the price towards the golden trendline support around the level of 1.2257. Any violation of this level would directly expose the technical support at the level of 1.2203 for a test.

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Global macro overview for 23/02/2018

The undecided behavior of the USD this week raises uncertainty among market participants. The USD has had a weak Thursday, a recovery during the night session in Asia and the return of troubles at the opening of Europe. In general, however, we do not move much in any direction. There is a lack of conviction what to do next. Events that could change something have failed to do so. The minutes of the FOMC meeting were received as slightly dovish or slightly hawkish. Notes from the ECB meeting were also not enough for more than an hour of emotion because they did not bring anything to debate about the future of monetary policy. Stopping the depreciation of USD from the previous week violated the confidence of the sellers, and the trade interrupted by holidays added to indecision. Under its own weight, the market slightly reduces positions and makes profits, especially as the end of the month is approaching. At the same time, braver investors are looking for luck in attempts to awake some uptrends, which will hardly succeed.

USD is waiting for an impulse to confirm or invalidate the current stagnation period. This move might be triggered during the hearing of Fed President J. Powell in Congress on February 28 or a report from the labor market on March 9. It gives global investors a lot of time to think about it, and this is bad news from the side of maintaining a non-sustaining position.

Let's now take a look at the US Dollar Index technical picture on the H4 time frame. The market remains locked in a consolidation zone between the levels of 90.25 - 89.63, which also means it is still under the channel lower trend line. Moreover, the overbought trading conditions are indicating a possible pullback towards the level of 89.63 or even 89.37.

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Bitcoin analysis for February 23, 2018

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Bitcoin (BTC) has been trading sideways at the price of $10.050. The state of California has introduced a new bill that aims to recognize blockchain transactions, digital signatures, and smart contracts as a legal form of record. Assemblyman Ian Calderon introduced Assembly Bill 2658 on February 20 in order to re-define laws that apply to electronic records that take place within the state. Technical picture on bitcoin looks bearish.

Trading recommendations:

According to the 30M time frame, I found that the price is trading inside the well-defined downward channel, which is a sign that sellers are in control and that buying looks risky. I also found overbought conditions on the stochastic oscillator, which is another sign of weakness. My advice is to watch for potential selling opportunities. The downward targets are set at the prices of $9.555 and $9.136.

Support/Resistance

$10.160 – Intraday resistance

$9.555 – Intraday support

$9.555 – Objective target 1

$9.136 – Objective target 2

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NZD/USD Intraday technical levels and trading recommendations for February 23, 2018

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Daily Outlook

In July 2017, an atypical Head and Shoulders pattern was expressed on the depicted chart which indicated upcoming bearish reversal.

As expected, the price level of 0.7050 failed to offer enough bullish support for the NZD/USD pair. That's why, further bearish decline was expected towards 0.6800 (Reversal pattern bearish target).

Evident signs of bullish recovery was expressed around the depicted low (0.6780). An inverted Head and Shoulders pattern was expressed around these price levels.

The price zone of 0.7140-0.7250 (prominent Supply Zone) failed to pause the ongoing bullish momentum. Instead, a bullish breakout above 0.7250 was expressed on January 11.

That's why, a quick bullish movement was expected towards the depicted supply zone (0.7320-0.7390) where evident bearish rejection and a valid SELL entry were expected.

On February 2, a bearish engulfing daily candlestick was expressed. This enhances the bearish scenario towards the price levels of 0.7230 - 0.7165 where bullish recovery should be expressed.

Trade Recommendations:

The current price zone (0.7320-0.7390) remains a significant supply zone to offer a vaid SELL entry.

Stop Loss should be set as a daily candlestick above 0.7450.

Bearish persistence below 0.7300 should be maintained to allow further bearish decline towards 0.7160 and 0.7090.

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Analysis of Gold for February 23, 2018

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Recently, gold has been trading sideways at the price of $1,328.20. According to the 30M time frame, I found that the price is trading in the range between the support of $1,322.00 and the resistance $1,332.00. Gold is in the downward trend and my advice is to watch for selling opportunities with a potential target at $1,322.00 (support).

Resistance levels:

R1: $1,335.80

R2: $1,339.55

R3: $1,346.95

Support levels:

S1: $1,324.60

S2: $1,317.20

S3: $1,313.45

Trading recommendations for today: watch for potential selling opportunities.

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