Trading plan for 23/10/2017:
USD/JPY touched three-month highs after Prime Minister Abe's victory in the Japanese election. The Nikkei shows a positive reaction while other markets remain stable in the face of today's lackluster publication. EUR/USD stands at 1.1770 and investors do not show much interest in the political dispute in Spain.
On Monday 23rd of October, the event calendar is very light in important events releases. The only news worth to keep an eye on is the Wholesale Sales data from Canada.
USD/PY analysis for 23/10/2017:
Due to the lack of important news at the beginning of the week, the trading day will likely be dominated by a dispute about Shinzo Abe's victory in the election in Japan. On Sunday's election, former Japanese Prime Minister Shinzo Abe and his ruling coalition won 312 out of 465 seats in the lower parliament, securing a majority of two-thirds. For investors, the most important signal is the strengthening of "abenomics" that is implemented by the governing of the economic policy based on fiscal stimulus and mild monetary policy. Both factors translate into increases in the Japanese stock market. Suffice it to say that since November 2012, when it became clear that Abe was in power (former prime minister in 2006-2007), the Nikkei index has grown by 146% so far. The result is better than expected and reinforces the belief that economic policy will continue to be driven by fiscal and monetary expansion. USD/JPY jumped to 114.10 and Nikkei 225 rose 1.2 percent to 21-year high.
Let's now take a look at USD/JPY technical picture at the H4 time frame. The market opened higher above the technical resistance at the level of 113.43 and now is trying to fill the small gap. The next technical resistance is seen at the level of 114.47, but the market conditions are overbought already. There is still a possibility of a spike up towards this level followed by a correction towards the level of 113.43.
Market Snapshot: USD/CAD breaks out of the range
The price of USD/CAD has broken out of the horizontal range between the levels of 1.2416 - 1.2598 and it is heading towards the next technical resistance at the level of 1.2662. This is the last level before the local swing high at the level of 1.2777. The strong momentum supports the short-term bullish bias.
Market Snapshot: SPY opens gap up
The price of US SPY index (SP500 ETF) has opened with a gap between the levels of 255.83 - 256.37, which means another higher high was made in the trend up in this index. The price is trading above all of the moveing averages and the next technical support is seen at the level of 255.46. The larger time frame trend remains up.
