Stocks recovered majority of losses after news that the Fed is shifting to a “wait and see” mode after December meeting   

Stocks were reeling early in NY after Chinese tech giant, Huawei’s CFO was arrested sparking concerns it could derail the trade progress that was made over the weekend.   The Dow was down 780 points and turned negative for 2018 but managed to finish the day only lower by 79.4 points.   The dollar also recovered some of its losses against the Japanese yen after falling to a fresh monthly low.

The rebound in risk appetite also benefited from the Wall Street Journal report that “Federal Reserve officials are considering whether to signal a new wait-and-see mentality after a likely interest-rate increase at their meeting in December, which could slow down the pace of rate increases next year.”

Price action saw the Dow form a triple bottom pattern at around the 24,250 level.  Price is now facing key resistance from the 200-day SMA, which currently trades at the 25,113 level.  If bearish momentum returns and the triple bottom pattern is invalidated, we could see a run towards the 23,500 region.  To the upside, 26,300 remains major resistance.

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya