Trading plan for 24/05/2017

Trading plan for 24/05/2017:

The Moody's rating agency has cut China's rating from Aa3 to A1, which made an impact on the AUD and the Shanghai Stock Exchange. However, the vast majority of financial markets was calm overnight, with the US Dollar gaining slightly and the crude oil trading near the highs as the OPEC meeting is still in progress.

On Wednesday 23rd of May, the event calendar will be bust mostly during the US trading session, so market participants will pay attention to the Bank of Canada's interest rate decision and statement, Existing Home Sales Data, Crude Oil Inventories data from the US and FOMC Meeting Minutes.

USD/CAD analysis for 23/05/2017:

The Bank of Canada's Overnight Rate is scheduled for release at 02:00 pm GMT and global investors expect no change in the current interest rate level of 0.5%. Nevertheless, the BoC statement will be interesting to read, mainly due to a possible justification of no change of the interest rates despite the growing pressure from a hot house market in major cities.

Let's now take a look at the USD/CAD technical picture on the H4 timeframe. The market has almost hit the 61%Fibo at the level of 1.3441 and bounced back up towards the next technical resistance at the level of 1.3526. The oversold market conditions and visible bullish divergence between the price and the momentum indicator support the bullish outlook. Nevertheless, to confirm the larger rebound, the price must break out above the level of 1.3569 and head towards the level of 1.3640. Any unexpected rate hike will make this scenario possible, but in case of no hike, a move sideways or down is more probable.

Market snapshot: EUR/USD at important support

After a rally up to the level of 1.1266, the price pulled back and currently is trading at the support at the level of 1.1170. The momentum indicator is pointing south and so is the stochastic indicator, which means a possible profit taking after the 500 pips rally. If the support at the level of 1.1170 is broken, then the next support is seen at the level of 1.1075.

Market snapshot: Crude Oil still trades near highs

The price of the Crude Oil has hit a 78%Fibo at the level of $51.56 with a high at the level of $51.76. There are rumors that the OPEC might extend the production cuts until March 2018, so market participants keep buying at low prices. Nevertheless, there is a clear bearish divergence between the price and the momentum indicator, so the price might pull back anytime. The next support is seen at the level of $50.54.