The weekly price chart below shows the U.S. Dollar Index printed a bullish candlestick last week, again making its highest weekly closing price in over one year. The price is showing short-term bullish momentum, and the price is of course above its levels from 3 and 6 months ago, which shows that the long-term bullish trend in the greenback is still valid. Notably, the price is now bumping into a very key resistance zone for the USD, shown in the price chart below at 12140/58. If the price can break and hold above 12158 next week, that could be a key long-term bullish breakout.
Thebest strategy in the Forex market over the coming week will probably be to look for long trades in commodities, or in long USD Forex trades.
EUR/USD
This major currency pair has been in along-term bearish trend since May,but with deep bullish retracements, making it difficult to trade. However, last week saw the price fall sharply, especially on Wednesday following the U.S. inflation data release. The week ended at a 15-month low closing price, and the price closed very near its low, which is a bearish sign.
This currency pair is likely to fall further over the coming days, with no key support levels above the $1.1400 area.
Traders do need to be careful with this currency pair to only trade short when the short-term momentum is bearish.
AUD/JPY
We had expected the level at 83.02 might act as support, as it had acted previously as both support and resistance. Note how these “flipping” levels can work well. The H1 chart below shows how the price action rejected this level with a large near-engulfing candlestickright at the end of last Wednesday’s Asian session (typically one of the best times to trade currency pairs involving Asian currencies such as these) marked by the up arrow in the price chart below.
The trade has so far given a maximum reward to risk ratio of about 4 to 1 based on the size of the entry candlestick structure.
GBP/JPY
The British pound initially tried to rally against the Japanese yen last week but gave back the gains to crash into the ¥152.50 level. This is an area that would continue to be very supportive, but it is worth noting that the British pound has struggled across the board. With the Bank of England now dovish, it should continue to weigh upon the pound in general. That being said, though, the GBP/JPY is likely to be a little bit more sluggish than some of the other British pound-related pairs, simply because the Japanese yen is so weak itself. I would anticipate that rallies are going to continue to be sold into as we try to get down to the ¥150 level.
USD/JPY
The US dollar had initially fallen pretty hard during the course of the week but found enough support underneath to turn things around and show signs of life again. We reached towards the crucial ¥112.50 level, but then turned around to rally quite significantly. By the end of the week, we ended up staying within the flagging pattern that we have been in for a while. At this point, I think this remains a “buy on the dips market” going forward. The ¥115 level above is a major resistance barrier that must be acknowledged. Anything above there could open up a longer-term “buy-and-hold” scenario.
GBP/CHF
The British pound initially tried to rally against the Swiss franc but gave back gains during the course of the week to close near the 1.2350 level. At this point, it looks like we are still trying to make a move towards 1.22 handle, so I like the idea of shorting this market on little rallies that show signs of exhaustion. Ultimately, if we can break down below the 1.22 handle, we could see a move towards 1.18 level.
Bottom Line
I see the best opportunities in the financial markets this weekaslikely to be short EUR/USD, and long USD/TRY and Wheat.
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AUD/USD started a fresh decline from well above 0.7500.
It traded below a key bullish trend line at 0.7520 on the 4-hours chart.
EUR/USD is struggling to clear the 1.1600-1.1620 resistance zone.
The US CPI could increase 5.3% in Oct 2021 (YoY), down from 5.4%.
AUD/USD Technical Analysis
After a steady rise, the Aussie Dollar faced sellers near 0.7560 against the US Dollar. AUD/USD started a fresh decline below the 0.7500 support zone.
Looking at the 4-hours chart, the pair traded below the key 0.7480 support. Besides, there was a break below a major bullish trend line with support at 0.7520.
The pair even traded below the 50% Fib retracement level of the upward move from the 0.7225 swing low to 0.7558 high. The pair settled below the 0.7450 level and the 100 simple moving average (red, 4-hours).
The pair tested the 61.8% Fib retracement level of the upward move from the 0.7225 swing low to 0.7558 high. An immediate support is near the 07350 level.
A close below 0.7350 could open the doors for a move towards the 0.7300 level. The next major support is near the 0.7250 level. On the upside, an immediate resistance is near the 0.7420 level.
The next major resistance is near the 0.7450 level. A close above 0.7420 and 0.7450 could open the doors for a fresh increase. In the stated case, the pair could rise towards the 0.7550 level.
Looking at EUR/USD, the pair is attempting a recovery wave, but it is still struggling to gain pace above the 1.1620 level.
Economic Releases
German Consumer Price Index for Oct 2021 (YoY) – Forecast +4.5%, versus +4.5% previous.
German Consumer Price Index for Oct 2021 (MoM) – Forecast +0.5%, versus +0.5% previous.
US Consumer Price Index for Oct 2021 (MoM) – Forecast +0.5%, versus +0.4% previous.
US Consumer Price Index for Oct 2021 (YoY) – Forecast +5.3%, versus +5.4% previous.
US Consumer Price Index Ex Food & Energy for Oct 2021 (YoY) – Forecast +4%, versus +4% previous.
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The weekly price chart below shows the U.S. Dollar Index printed a bullish candlestick last week, making its highest weekly closing price in over one year. The price is showing weak short-term bullish momentum, and the price is of course above its levels from 3 and 6 months ago, which shows that the long-term bullish trend in the greenback is still valid. Thebest strategy in the Forex market over the coming week will probably be to look for long trades in stocks or commodities, or in long USD Forex trades.
GBP/USD
This major currency pair has been in a the long-term bearish trend since May,but with deep bullish retracements, making it difficult to trade. However, following the Bank of England’s slow reaction to changing monetary conditions last week, we saw a sharp drop ending inthe lowest weekly close here made in the last 10 months. Despite this, it should be noted that the price has not yet exceeded last week’s low, made at the support level of $1.3411.
If we get a daily (New York) close below $1.3411 – or ideally, below $1.3400 – we will probably see yet more downwards price movement, so there is likely to be a short trade opportunity here if this scenario plays out.
Traders do need to be careful to only trade short when the short-term momentum is bearish.
S&P 500 Index
After trading below its 100-day moving average just a few weeks ago, the major US stock index has been roaring ahead for the past five weeks, rising in value during this time by about 8%.The end of last week saw the price reach another new all-time high, after having traded above the round number at 4700 for the first time.
The weekly candlestick was solidly bullish and closed not far from the top of its price range. This, and the record high, are bullish signs.
The S&P 500 Index looks likely to remain a good potential buy.
NASDAQ 100 Index
After trading below its 100-day moving average just a few weeks ago, the major US technology stock index has been roaring ahead for the past five weeks, rising in value during this time by about 11%.Last week saw the price close at another new all-time high.
The weekly candlestick was solidly bullish and closed near the top of its price range. This, the above-average weekly price range, and the record high, are all bullish signs.
The NASDAQ 100 Index looks likely to be a good buy.
AUD/USD
We had expected the level at 0.7366 might act as resistance, as it had acted previously as both support and resistance. Note how these “flipping” levels can work well. The H1 chart below shows how the price action rejected this level with a large bullishoutside barright at the start of last Friday’s New York / London overlap session (typically one of the best times to trade currency pairs) marked by the up arrow in the price chart below.
GBP/JPY
The British pound got absolutely crushed last week after the Bank of England decided not to taper its bond purchasing program.The pound fell all the way down towards the ¥153 level, which suggests that we probably are going to test the purple box that I have on the chart, which should be supportive. Between here and the ¥152 level, I would anticipate some type of bounce, and if we do get that bounce, I think it could be a nice buying opportunity. If we break down below the ¥152 level, then we go looking towards the ¥150 region.
EUR/USD
The euro was all over the place last week to form a bit of a neutral candlestick. I believe we will probably continue to see a lot of that sideways action, but if we turn around and break above the 1.16 level again, then I think the market may try to recover. This will be all about the US dollar, and not necessarily the euro itself. I do anticipate that the euro is going to be very noisy, and I think short-term traders will continue to bounce this thing around between 1.15 and 1.16 before making a much longer-term move.
Bottom Line
I see the best opportunities in the financial markets this weekaslikely to belong of the S&P 500 & NASDAQ 500 Indices in US dollar terms, and long USD/TRYand short GBP/USD following respective daily (New York) closes beyond the long-term high or low closing prices.
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The US dollar steadies over lower-than-expected initial jobless claims.
Sentiment remains upbeat, however, the pair is struggling to climb past the psychological level of 115.00, probably due to overextension. The RSI’s double top in the overbought area and bearish divergence suggests that the rally could be losing steam.
A breach below 113.90 would prompt weaker hands to exit, leading to a pullback towards 113.00. A rebound past the said resistance would send the price to March 2017’s high of 115.40.
XAGUSD to test critical ceiling
Silver stalls as the greenback reclaims some lost ground. The break above the round number of 24.00 indicates strong commitment from the buy-side.
The bulls are looking at the major resistance at 24.80 from the daily timeframe, as a breakout would end a five-month-long correction and pave the way for a bullish reversal.
However, an overbought RSI coupled with a bearish divergence suggests possible exhaustion in the run-up. 23.60 would be the first level to watch for if the price pulls lower in search of support.
SPX 500 tests all-time high
The S&P 500 flies high supported by better-than-expected third-quarter earnings. The index has reached the previous all-time high at 4550.
A breakout may trigger a runaway rally. Nonetheless, a repeatedly overbought RSI may cause a limited pullback as buyers take profit.
A drop below the immediate support at 4515 would pull the trigger. 4445 would be next as it coincides with the 38.2% Fibonacci retracement level of the October rally. The bulls are likely to buy the dips though after sentiment turns optimistic.
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Get the Forex Forecast using fundamentals, sentiment, and technical positions analyses for major pairs for the week of September 20, 2021 here.
Technical Analysis
U.S. Dollar Index
The weekly price chart below shows the U.S. Dollar Index printed a bullish candlestick last week which again rejected the zone of support which I have identified between 11899 and 11833. The price is still above the levels from 3 and 6 months ago, which shows that the long-term bullish trend in the greenback is still valid. We also have some bullish momentum evidenced by the fact that the weekly candlestick closed right at the top of its range. This suggests thattrades in the USD look better on the long rather than short side right now, so the best strategy in the Forex market over the coming week will probably be to look for long trades in US dollar currency pairs.
AUD/USD
The AUD/USD currency pair fell firmly last week, printing a bearish candlestick that closed right on its low.This currency pair is showing the highest medium-term volatilityin the Forex market right now. This was a movement in line with the long-term bearish trend, evidenced by the fact that the price is below its levels from both 3 and six months ago. As market sentiment has turned risk-off and the AUD has become a key risk barometer currency, there could be another good short trade opportunity here over the coming week. Waiting for the end of Monday’s market and then trading any breakdown from Monday’s range short could be a good approach here.
USD/CHF
The USD/CHF currency pair rose strongly over the final two days of last week, printing a bullish weekly candlestick that closed right on its high.This currency pair stood out in recent days as it broke to a new long-term high price. There could be another good short trade opportunity here over the coming week, but traders should be at least a little cautious as this currency pair does not tend to trade. Looking for long trades following shallow pullbacks on short-term price charts could be a great strategy for trading this currency pair, at least at the start of this coming week.
EURJPY
We had expected the level at 128.69 might act as support, as it had acted previously as both support and resistance. Note how these “flipping” levels can work well. The H1 chart below shows how the price rejected this level with an inside bar just before last Thursday’s New York open (typically a great time to be trading Forex currency pairs) marked by the up arrow in the price chart below. This trade has been nicely profitable, achieving a maximum positive reward to risk ratio so far of more than 3 to 1 based upon the size of the entry candlestick structure.
EUR/USD
The euro initially tried to rally last week, reaching towards the 1.1850 level before falling apart. At this point, the market has crossed below the 1.18 level and the 1.1750 level after that. In general, this is a market that I think continues to see negativity as we have closed towards the bottom of the weekly candlestick. The market is likely to go looking towards the 1.16 level. That is an area that has been massive support, so I think it has to be tested rather soon. In the short term, I think you should looking for signs of exhaustion on short-term charts to start selling.
GBPJPY
The British pound has rallied to kick off the week, only to turn around at the ¥153 level. The market has collapsed as we are starting to see a lot of negativity. The market is closing towards the bottom of the week, which does suggest that we are ready to go lower, perhaps reaching towards the ¥150 level. That is an area that I think kicks off a lot of support extending all the way down to the ¥149 level. If we were to break down below there, the market then would fall apart. In fact, you could even make an argument that we have formed a bit of a head and shoulders.
CADJPY
The Canadian dollar initially tried to rally against the Japanese yen but as you can see, we have fallen apart. The ¥85 level underneath is massive support, so if we can turn around and break down below there, the market is likely to go looking towards the ¥81 level. Rallies at this point will continue to struggle until we can get above the ¥88 level.It is worth noting that the Canadian dollar has been struggling even though the oil markets have been rather strong.
Bottom Line
I see the best opportunity in the financial markets this weekaslikely to be in swing trades in the AUD/USD currency pair, on the short side, and short-term day trades long in the USD/CHF currency pair.
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Gold Forecast: Pulling Back from 200 Day EMA Again
The gold markets initially tried to break out above the 200 day EMA during the trading session on Thursday but gave back the gains to show the 200 day EMA to be rather resilient. If that holds true, then we could very well find this market reaching back towards the 50 day EMA. It is also worth noting that the $1800 level is sitting just above, so that may have caused a little bit of trouble as well. With that being the case, the market is likely to see a lot of noise in general, because we are trading between the 50 day EMA on the bottom and the 200 day EMA on the top.
On a bullish move, I anticipate that the $1850 level would be targeted rather quickly, followed by the $1950 level. After all, that could send money flowing into the precious metals market and perhaps even try to push towards the all-time highs eventually. Do not get me wrong, this will of course be influenced by yields in America as well, so you need to pay attention to whether or not they start spiking. When they do, that works against gold rather rapidly as we had seen previously. On the other hand, if yields rise gradually, then it is not as big of an issue. It is about the rate of change in the bond market more than anything else right now.
Oil Price Outlook: A Breakout Pattern Is Forming With Resistance Near $61.90
Crude oil price started a downside correction after it failed to settle above $64.00 against the US Dollar. The price broke the $62.50 support zone to move into a short-term bearish zone.
The price even declined below $62.00 and tested the $60.50 support. A low was formed near $60.57 before the price recovered higher. It is now trading above $61.50 and the 50 hourly simple moving average.
It seems like there is a breakout pattern forming with resistance near $61.90 on the hourly chart. If the price breaks the $61.90 and $62.00 resistance levels, it could start a fresh increase towards $64.00 on FXOpen.
Conversely, there could be a downside break below the $61.50 and $61.20 support levels. In the stated case, the price might decline towards the $60.50 support level in the near term.
DAX Forecast: Attempting to Test Support Level
This is a market that is in an uptrend so even if we do get a significant pullback, that pullback will more than likely attract a certain amount of value hunters out there, as trend traders will jump in.
The DAX initially gapped higher to kick off the trading session on Thursday but then gave back the gains to form a bit of a shooting star. This is a very ugly candlestick, and I think it does suggest that we are going to see negativity and therefore it is likely that we are going to see an attempt to test the support level underneath. The 15,000 level underneath will more than likely be paid close attention to as it is a large, round, psychologically significant figure and there is a huge gap in that general vicinity that will also offer support. Beyond that, the 50 day EMA is starting to reach towards that area, so I think it is only a matter of time before we get some type of buyers underneath.
Furthermore, the German economy is identified as the main engine the European Union, and therefore it is a way to play the strength or weakness of the European Union by a lot of traders. At this point, it looks as if the ECB announcement and lack of action by the bank suggests that the market was very disappointed. That being said though, we are still very much in an uptrend so I would anticipate that there are lot of value hunters underneath, and therefore I have noticed in shorting this market. In fact, with liquidity measures being pumped out by central banks around the world, including the ECB, it is very difficult to imagine that there will be anything more than a short-term correction ahead of us. To the upside, I anticipate that this market may go looking to 17,000 given enough time.
FTSE 100 Forecast: Gives Up Early Gains
The FTSE 100 has rallied a bit during the course of the trading session on Thursday only to turn around and show signs of weakness again. Because of this, the market is likely to continue to see a lot of volatility, as it seems like the matter what we do, we cannot get any type of straightforward move. The FTSE 100 of course is going to be no different than any other market, being thrown around by algorithms and headlines from time to time. That being said, there are some technical indicators to keep in mind.
The 7000 and of course has been the most recent resistance barrier and is a large, round, psychologically significant figure. If we do break above there, then the market is likely to continue going much higher, perhaps reaching towards the 7300 level. The reason I say 7300 is the fact that the ascending triangle measures for that type of move, so from a technical analysis standpoint that is where you have to assume the market will eventually go. That being said, it is likely that we continue to see a lot of noisy trading in the short term, because we are obviously in an area that features a lot of choppy behavior.
EUR/USD Forecast: Giving Up Early Gains
The market looks like it is ready to chop up trading accounts in the short term.
The Euro initially tried to rally during the trading session, perhaps anticipating the ECB meeting. However, we obviously did not get what the market needed to see during that, as we initially spiked towards the 1.21 level only to give it back up. We have now at the end of the day started to test the 1.20 level, an area that continues to be important. Furthermore, the market is likely to see a lot of noise between here and the 50 day EMA, so it is possible that we could see some type of turnaround.
The US bond markets have been all over the place during the trading session, so that has given traders headaches for short-term positions anyway. To the upside, if we were to break above the high from both Tuesday and Thursday, then it opens up the possibility of a move towards the 1.22 handle above which has seen a massive amount of selling in the past. The market looks like it is ready to chop up trading accounts in the short term.
AUD/USD Forecast: Looking for Clarity
The Australian dollar recently has been chopping around as we are starting to question things like the reopening trade.
The Australian dollar has pulled back against the greenback during the trading session on Thursday again, but still sees plenty of support underneath at the 50 day EMA to keep the market afloat. That being the case, the market is likely to continue to see a lot of choppy and sloppy behavior, because quite frankly it appears that the pair has nowhere to be anytime soon. Obviously, we cannot jump into this market with any size now, because quite frankly we just do not know what to do. The Australian dollar recently has been chopping around as we are starting to question things like the reopening trade.
There is an area of support between 0.76 and 0.75, so breaking down below their opens up a massive black hole of selling from what I can see. At that point, I would be looking at the 0.71 handle for a longer-term trade. The market certainly looks as if something big is going to happen eventually, but right now we are simply spinning our wheels trying to figure out where that is going to be. I suspect you will see a large impulsive candle in one direction or the other to tell you which way we are going to break.
GBP/USD Forecast: Gets Pummeled
The British pound fell rather hard during the course of the trading session on Thursday to crash back into that uptrend line that has recently been taken out. The selling escalated quite drastically late in the day, as we are now testing not only the previous downtrend line, but also the 50 day EMA. At this point, it looks to me like we are trying to figure out whether or not we can continue to go higher. While this candle does not necessarily spell the end of the uptrend, it certainly is something worth paying attention to.
The market gets into these fits sometimes, which means that you need to cut your position size. Unless you have the ability to watch the chart very closely, you simply must find a way to cut down your position size and ride through quite a bit of volatility. As things stand right now, we are still technically in an uptrend but the session on Thursday will have done absolutely nothing to make people feel better about it.
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Rehana William |Financial Consultant _Forex_Gold Xauusd| Fund Manager 