The New Year is fast approaching and the markets are set to slow down a little, but it would seem that Christmas still has a lot to offer before things really come to halt and look no further than the current US situation. The Tax bill which had so many doubts seems poised to make it across the senate now and into the hands of the president, and the markets are thoroughly enjoying the prospect of reduced corporate tax rates. Cutting from 35% to 20% is quite large, but also in line with some of the many western corporate tax rates that we see today. One of the big winners from any corporate changes that are positive for corporations is of course the equity markets, with the Dow and S&P currently charging up the charts before Christmas and offering a tantalising treat for the bulls.
So far the S&P 500 has been a rocket on the charts when it comes to bullish intentions with no sight at present of slowing down. Originally I had expected 2700 to come around after the Tax bill, but the markets are keen to price it in now as the expectations are that 2018 will be a strong year for the US corporate machine. For now 2700 looks to be the key area of resistance that we've fast approached and in reality we could potentially see 2018 become a 3000 level market. For now though the market is focused on beating the 2700 mark and potentially moving on to the next psychological level of 2750. When you get this high it's only daily pivots and psychological levels that really matter to bulls looking for some resistance or a point to take profit. If we did see a market correction lower than I would anticipate once again playing of previous resistance levels at 2675, and of course 2650 for market support.
Across the other side of the world and the New Zealand dollar has been struggling as of late on the charts after the recent government election. The market seemed to shake things off and climb higher but it seems to have recently stalled and the daily candles are starting to show strong signs of selling pressure from the bears. NZ consumer confidence was weighing heavily this morning as it came in at 107.4 (112.4 prior) showing that households in NZ are currently a little worried after the change of government. This will likely have a flow on effect for Q4 GDP, and may also flow on into the Q1 reading as well if we see further falls.
For the NZDUSD on the charts the 0.7000 barrier continues to be a real thing as the market has shied away from it. In the event the NZDUSD can find further momentum to go higher then resistance can be found at 0.7026 and 0.7080 on the charts. Support levels can be found accordingly at 0.6961 and 0.6980 in the event it did fall further. While the bulls are still in control it's easy to wonder if all the long candle wicks are a sign that the bears are certainly coming back into play now.
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