We have three powerful factors that support equity prices at the moment. Earnings reports have been decent keeping in mind that so many economies are hit by the pandemic. Secondly, vaccination programs have started in earnest and create hope in the minds of the investors. The third factor is the stimulus promised by the Democrats in the US. We have been saying all along that economic stimulus supports risky assets. Now we are seeing this working out as stocks move to new highs on daily basis. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.

Let’s take a quick look at what has been happening with the markets we have analysed lately.  EUR and GBP rallied nicely against the USD yesterday. Cable got going after it penetrated 1.3761 resistance and rallied approx. 50 pips. This is in line with our bullish scenario presented here. This scenario for GBPUSD suggested a 200 pip move in case this resistance was penetrated. EURUSD kept on rallying after breaking above the key resistance level 1.2053 and breaking out of the bullish wedge. You can find our commentary on EURUSD in that same report from two days ago as well as in yesterday’s report (here).  US stock indices keep on rallying with traders buying the intraday dips, exactly what we have expected would happen after the bad jobs numbers on Friday. President Joe Biden and the Treasury Secretary Janet Yellen added fuel to the fire saying that the bigger $1.9 trillion stimulus package is needed. Yellen even said it could even bring full employment by the next year. Bitcoin is trading near channel high and has slowed down a bit after a Reddit user that claimed to be a TESLA employee said that the $1.5 billion Bitcoin investment didn’t actually take place. This, however, cannot be validated and it is highly unlikely that a publicly-traded company would provide misleading information in their annual report. Bitcoin is trading at $46608 at the time of writing this. Today’s risk events include US inflation numbers and crude oil inventories from the US. See our economic calendar for more information. 

USDCHF retraces to a support area
After rallying over 120 pips USDCHF drops all the way to a support area created by former resistance, both 20-period and 50-period SMAs and a 50% Fibonacci retracement level. This cluster of technical factors between 0.8890 – 0.8920 is a potential reversal area. If the downward momentum wanes here and we see signs of reversal then a move to 0.8970 looks likely. A failure to attract buyers in this zone should bring the 0.8838 support into play. The key support and resistance levels for USDCHF are 0.8757, 0.8838, 0.8920 and 0.9046.  Open a VIP Black account with us.There are no per trade execution or monthly fees on our VIP Black accounts.

Citrix Systems rallies after a retracement
On the last week of January, we talked about Citrix Systems being a momentum play. We gave a target price and the stock almost hit it the same day. Our trade idea, however, started to play out a little later. The idea was to wait for a pullback to and then look for signs of reversal. Now the stock is rallying after finding support around 38.2% retracement level. The key support and resistance levels in the stock for this week are 130.59, 145.01, 146.90.  Open a VIP Black account with us. There are no per trade execution or monthly fees on our VIP Black accounts.

Recent macroeconomic data releases

  • Canadian Employment Change -212.8K, -43.5K expected
  • Canadian Unemployment Rate 9.4%, 8.9% expected
  • US Average Hourly Earnings 0.2%, 0.3% expected
  • US Non-Farm Employment Change 49K, 85K expected
  • US Unemployment Rate 6.3%, 6.7% expected
  • Canadian Ivey PMI 48.4, 49.5 expected
  • New Zealand Inflation Expectations 1.89%, 1.59% expected

Important macroeconomic data releases today

  • US CPI 0.3% expected
  • US Core CPIusd 0.2% expected
  • US Crude Oil Inventories -0.9M expected
  • BOE Governor Bailey’s Speech
  • Fed Chair Powell’s Speech

You may access the times and dates in the economic calendar here.

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Trade Safe!

Janne Muta
Chief Market Analyst
TIOmarkets.com

TIOmarkets offers exclusively consultancy-free service. The views expressed in this blog are our opinions only and made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and it’s affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions.

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