Trading plan for 07/02/2018

There is a sharp reversal of sentiment on stock markets. In its last installment, the initiative is in the hands of buyers, which allows for a moment of respite and stabilization on the currency and commodity markets. The SP500 session ended at 1.75% up. The DJIA, which recorded the strongest rise since November 2016, gained even more. This translates into less than the percentage increases of Nikkei 225 and Hang Seng.

On Wednesday 7th of February, the main event of the day is the Reserve Bank of New Zealand Interest Rate Decision, which will be published together with RBNZ Rate Statement and RBNZ Press Conference in the late evening today. However, before that happens, the market participants should keep an eye on German Industrial Production data, European Commission Economic Forecasts data, Canadian Building Permits data and two speeches made by FOMC Member Robert Kaplan and William Dudley.

EUR/USD analysis for 07/02/2018:

Stabilization of moods and the atmosphere of waiting are visible on the forex market, where there was a limited volatility at night. A partial reason behind the temporary lack of volatility lies in a fact, that there is not much data to release today, so the market wants a breather after a violate last week swings. On the other hand, the American economy, for which a bucket of ice water was poured during the Tuesday session, can talk about the inflow of not very optimistic data. According to the latest indications, the December US trade deficit reached US $ 53.1 billion, which surprised slightly more optimistic market participants (consensus: USD 52.1 billion). An additional light on the net export dependence was cast by estimates summarizing the year 2017. According to them, the trade gap has been at levels unchanged since 2008 (12.1%), which was undoubtedly caused by the record exchange deficit with China (USD 375.2 billion). ).

Let's now take a look at the EUR/USD technical picture at the H1 time frame. The market remains inside of the horizontal correction between the levels of 1.2314 - 1.2522. The bulls did not manage to break out above the level of 1.2434 and the price returned below the level of 1.2384 recently. The nearest support is seen at the level of 1.2333 and the nearest resistance is seen at the level of 1.2408.


Market Snapshot: SPY bounces to 38% Fibo

The price of SPY (SP500 ETF) has bounced towards the level of 269.65, which is 38% Fibo retracement of the previous swing down. The extremely oversold market conditions support this bounce together with the rising momentum indicator. The next main resistance for the price is seen at the level of 270.62 - 271.21.


Market Snapshot: DAX bounces as well

The price of German DAX Index has bounced higher as well, but not that much in price like the other indices. The gap between the levels of 12,551 - 12,626 is still not filled and this might be the next target for bulls. The question remains whether there is a strong rebound momentum behind this move up? So far the market conditions remains oversold and no increase in momentum was seen yet.


The material has been provided by InstaForex Company -