Charts Weekly Trade Opportunities For Feb. 13-17

The markets were mixed last week as the U.S. dollar started on a weaker note, but managed to regain some of the losses by Friday’s close. The rebound in the U.S. dollar came as U.S. President Trump said that he would be making an announcement on tax reforms in the coming weeks. His comments spurred a rally in the markets rejuvenating the Trump rally which started to lose steam on lack of further directives from the U.S. President.

Japanese Prime Minister Shinzo Abe is in the U.S. for an official visit. The markets are nervous following the allegations of currency manipulation that was levied by U.S. officials. While Japanese officials were quick to dismiss the allegations, the fact that a weaker Japanese yen supports the export oriented country still weighs on traders' minds. Investors are therefore a bit concerned how the events will turn.

Elsewhere, last week saw the RBA, the RBNZ and the Bank of Mexico set their monetary policies. The RBA and the RBNZ held interest rates steady. The RBNZ surprised with some dovish news as the central bank officials said that the rate hikes will come only next year, disappointing investors who expected to see a faster pace of rate hikes following an increase in the nation’s inflation and also the rise in the quarterly inflation expectations.

The Bank of Mexico was seen hiking rates by 50 basis points last week, bringing interest rates to 6.25%. The rate hike was widely expected by economists as the central bank is battling higher inflation and a weaker exchange rate. It was only in January that the central bank sold U.S. dollars to help prop up the Mexican peso. The rate hike last week helped the peso a bit as the currency continued to strengthen for a third consecutive week against the U.S. dollar.

Technical Outlook

FTSE100: FTSE100: As noted last week, the FTSE100 has been in a bullish trend as the index retraced the declines from the week before. Expect some near term gains towards 7275.00 and a lower high to be formed at this level. The Stochastics oscillator is showing a possible bearish divergence near 7275.00 which will indicate a near term decline in prices. Support is at 7125.00 followed by 6975.00 which is the final target to the downside. In terms of risk/reward set up, the short position will be invalidated on a close above 7355.75, thus giving a very favorable set up.

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I/We do not have any positions in the above mentioned instrument.

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