Trading plan for 20/11/2017:
The new week starts with the euro depreciation in response to overnight reports from Germany about the break of coalition talks.The press service has concluded that the impasse in the talks could lead to accelerated choices. EUR/USD lost at the start of 50 pips and dropped to 1.1730. On the other hand, JPY and CHF remain strong, highlighting a lack of appetite for risk. Still, on Friday USD/JPY broke down and now oscillates at 112. USD/CHF fell below 0.99. The stock market is reporting a grim mood. Nikkei225 is losing 0.6% today, while in China, Hang Seng is only trying to go to zero at the end of the session.
On Monday, 20th of November, the event calendar is light in economic news releases. Germany will post PPI Index data and Bundesbank Monthly Report data. The US will release CB Leading Index data. There are some speeches scheduled for today from ECB President Mario Draghi, BOE Deputy Governor for Markets and Banking Sir David Ramsden, and RBA Assistant Governor Michele Bullock.
EUR/USD analysis for 20/11/2017:
The likelihood of new elections in Germany has increased as coalition talks failed last night when the liberal FDP walked away from the negotiations. For five weeks, Angela Merkel's CDU, the Bavarian sister party CSU, the liberal FDP and the Greens have negotiated behind closed doors. Almost every day, key politicians showed up on a balcony, providing pictures and motives for journalists. Last night, these talks ended with a failure. The liberal FDP walked away from the talks, with FDP leader Christian Lindner saying that "it's better not to govern, than to govern badly". He added that party leaders had failed to build "a foundation of trust". This probably is the best summary of why the talks for a so-called Jamaica coalition failed: next to political differences, personal and atmospheric tensions had overshadowed the talks from the beginning onwards.
For the German economy, the collapsed talks will probably have no immediate impact in the short run, but might weaken the Euro across the board. German politics should not waste too much time if they don't want to put the economy's future at risk.
Let's now take a look at the EUR/USD technical picture at the H4 time frame. The market bounced after the golden trend line had been tested from the upside and now it looks like the bulls are heading to higher to test the resistance at the level of 1.1823. The key level to the upside remains at the level of 1.1880. The key level to the downside is at 1.1713.
Market Snapshot: USD/JPY felt out of a channel
The price of USD/JPY has fallen out of the downward channel and now is trading just below the lower boundary line around the level of 112.27. The nearest technical resistance is seen at the level of 112.27 and 112.60, the next technical support is seen at the level of 111.61. Please notice the oversold market conditions.
Market Snapshot: Fake breakout on Gold?
The price of gold has broken out of the channel to rally as high as $1,298. Nevertheless, the price reversed and now is testing the technical support at the level of $1,290. If the test will be successful, then the bulls might push the price higher towards the most important technical resistance zone between the levels of $1,298 - $1,305. Otherwise, the market will be back to the channel zone.
