Talking Points:
- FOMC on Wednesday, S&P 500 still working on holding its ground
- DAX trying to string together a rally, but it’s not coming easy
- BoE on Thursday, European Council meets; FTSE remains technically weak
Check out our call for elevated volatility this year and what it could mean for the broader outlook of the S&P 500 in the DailyFX Top Trading Opportunities for 2018 guide.
S&P 500
In the week ahead, all eyes will be on the Fed on Wednesday, as the world’s largest central bank is expected to raise rates by 25 bps. With a raise expected, attention will be on sentiment expressed by the Fed towards the expected flight path for rates moving forward. Other key data points will be largely overshadowed by the Fed, but recently we have seen index futures react to data releases more so than any time in recent memory. On Friday, we have Durable Goods Orders for February. For details on all scheduled data releases, check out the economic calendar.
The S&P is still in limbo between possibly carving out a major lower-high or working its way back to fresh record levels. As discussed on Friday, keep an eye on the Dow Jones as its symmetrical triangle is nearly completed and ready for a breakout. Which way it breaks could go a long way towards determining the next big move for the broader market.
S&P 500: Daily
DAX
In terms of ‘high’ impact data, there is only one release next week. The ZEW survey for both Germany and the Euro-zone will be released at 10 GMT time on Tuesday. Traders will continue to keep an eye on the euro, although right now with it largely range-bound its impact is likely to be minimal in the week ahead. Watch how U.S. markets react to the Fed on Wednesday, as a carry-over reaction could be seen on Thursday’s open.
The DAX is in recovery mode, but the general price action isn’t very powerful on the upside. It is lagging U.S. markets by a solid margin and depending on how things shape up there and impact risk, the strength of the S&P 500 will play a big part in whether the German benchmark can continue to bounce. The DAX is still at risk of carving out a lower-high from the bounce in February, which could cause downside pressure to be reasserted again soon. If the U.S. maintains a bid, though, look for the DAX to continue limping higher.
Check out this guide for 4 ideas on how to Build Confidence in Trading.
DAX: Daily
FTSE
There is one ‘high’ impact data event next week scheduled on Tuesday, inflation data at 9:30 GMT time. This may not have much impact on the FTSE or sterling, as the market will be more focused on the BoE meeting on Thursday. The European Council meets on Thursday and Friday, as well, where they are expected to sign off on an agreed transitional period. As is the case with the DAX, how the U.S. plays out on Wednesday following the FOMC meeting, trade to start Thursday could begin with a gap open.
The FTSE makes the DAX looks strong, comparatively speaking. Overall, it has poor posturing around the Feb 2016 trend-line and 7100-area. The reversal on Monday may have cemented a lower-high in a bearish sequence dating back to last month. If the footsie can’t soon get into gear, look for the 7062 level to be challenged. A break above last week’s high keeps the market in recovery mode, but will then square up against strong resistance 7300. Outlook looks neutral at best right now.
FTSE: Daily
—Written by Paul Robinson, Market Analyst
To receive Paul’s analysis directly via email, please SIGN UP HERE
You can follow Paul on Twitter at@PaulRobinsonFX
