Stock markets are preparing for the Christmas rally

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Last few days have been favorable for us stocks – indexes rose for six consecutive days, and the index of the SP&500 is now nearly 7% higher than the lows of last week. It is really a very strong movement to positive aspect.
Stocks rose on Wednesday after fed Chairman Jerome Powell changed his position on the neutral level, stating that existing courses slightly below estimates. This tone differs from the former when he suggested that the neutral level is still far away. His words imply that the fed could pause with rate hikes in 2019 or stop them completely, because the rate above neutral can be considered as a limiting economy, which seems to be slowing down.
In addition, stocks soared around the world on Monday, as the Trump, and XI Jinping managed to calm the markets. In trade conflict of the ceasefire for 90 days. The white house said on Saturday that trump agreed to keep the tariffs on us goods at the same level after January 1, since China is willing to increase imports from the United States.
However, if the new trade deal will not be concluded within the next 90 days rates may be increased to 25 %, as previously promised. Stock markets took the news very positively. These two fundamental events sent in a strong bullish signal to investors about a possible start of a Christmas rally of the stock market, since December is usually a positive month for U.S. stocks.
From a technical point of view, the index of the SP&500 is now testing the important resistance around 815 2, where two peaks are located along with the 100-day moving average. RSI implies overbought, so there may be some correction. Key support is located at level 2, 760, where the 200-day moving average. It can be concluded that the bullish trend returned to normal, and if the price jump will exceed 2815, Christmas rally will continue, focusing on the level 2900.
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Yevgeny Abramovich
Analyst
Forex broker FXOpen