Trading plan for 18/10/2017

Trading plan for 18/10/2017:

The FX market remains tight and stock indices consolidate recent gains. Gold reverses Tuesday's gains and Crude Oil is rallying higher by a good API report. The 19th Congress of the Communist Party of China has started, but so far the conference has brought more pompous language than the announcement of actual action.

On Wednesday 18th of October, the event calendar is quite busy with important economic news releases. During the London session, the UK will post Claimant Count Change, Average Earnings Index, and Unemployment Rate data. Moreover, ECB President Mario Draghi will give a speech early in the morning as well. Later, during the US session, Canada will post Manufacturing Sales data and the US will reveal Building Permits and Housing Starts data. Two FOMC members will give a speech as well: Robert Kaplan and William Dudley.

GBP/USD analysis for 18/10/2017:

The Claimant Count Change, Average Earnings Index, and Unemployment Rate data are scheduled for release at 08:30 am GMT and market participants expect good data from the UK job market. The Unemployment Rate is expected to stay unchanged at the level of 4.3% and the Average Earnings Index is expected to stay unchanged at the level of 2.1% as well. A number of those individuals who are out of work and who are claiming some sort of unemployment benefit is expected to increase from -2.8k to 1.3k for the reported month. If the data will meet market expectations, it will be no real game changer for the Bank of England before its next meeting in November. Nevertheless, the market would cheer some better than expected news from the UK as the recent poor results of Brexit negotiations worsened the sentiment toward the British Pound across the board.

Let's now take a look at the GBP/USD technical picture on the H4 time frame. The market has broken below the dashed black short-term trend line support, bounced from the technical support at the level of 1.3154 and now is testing the trend line from below. The momentum indicator is clearly pointing down, so there is still a possibility of a further down move extension towards the level of 1.3111 and below. The key support remains at the level of 1.3030.

Market Snapshot: SPY in a Rising Wedge?

The price of SPY (SP500 ETF) has made another marginal new high at the level of 255.46, but the volume was very low. Currently, the market is testing this recent high while the momentum is decreasing significantly. Moreover, the whole structure from the low at the level of 254.00 looks like a Rising Wedge pattern, which indicates a reversal might happen anytime soon. The nearest technical support is seen at the level of 253.43.

Market Snapshot: Crude Oil bounces on good API data

The price of Crude Oil has bounced back towards the recent highs after the API data, but the price is still moving inside of a channel. The nearest technical resistance is seen at the level of 52.42, but the key resistance for bulls is still at the level of 52.86. The market conditions are overbought and there is a clear divergence between the price and the momentum oscillator, so the price is likely to fall out of the channel soon.