The US dollar has rallied again during the trading session on Monday against the Brazilian real, as we continue to see a lot of concerns around the world affecting emerging market currency such as this one.
All things being equal, this is a market that I think will continue to see a lot of upward pressure, and I think at this point in time it does make a certain amount of sense that short-term pullbacks will continue to be buying opportunities.
Technical Analysis
AC several support levels that are excellent buying opportunities if you do in fact get the opportunity. Keep in mind that this is a pair that will be extraordinarily volatile at times because it is somewhat thinly traded during certain times of the day. That being said, I believe that the 5.30 level has now offered itself a bit of support, as it previously had been resistance. With that being the case, I like the idea of buying dips in bits and pieces and taking advantage of value any time, it shows up. After all, the US dollar is backed up by an economy that has seen a lot of bullish pressure due to the idea of jobs coming out hotter than anticipated.
People believe that the Federal Reserve will continue to stay tight with monetary policy, and that of course will continue to favor the US dollar as Brazil is considered to be a “risky economy”, despite the fact that the interest rate situation in Brazil is quite robust. However, when traders are not willing to take on a lot of risk in the emerging markets, Brazil is one of the first places they leave.
The 50-Day EMA is closer to the 5.17 level and is rising. I think it will offer a short-term floor if we do get some type of correction, but right now looks more likely that we go reaching to the 5.50 level above, as there is so much momentum. I have no interest in shorting this market and believe that any time we pull back its to be looked at as a buying opportunity.
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EURUSD was not triggered, as there was no bullish price action when the support level at $1.0863 was first reached.
Today’s EUR/USD Signals
Risk 0.75%.
Trades may only be taken prior to 5pm London time today.
Short Trade Ideas
Short entry following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.0784, $1.0834, or $1.0856.
Place the stop loss 1 pip above the local swing high.
Move the stop loss to break even once the trade is 20 pips in profit.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
Long Trade Ideas
Long entry following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.0758, $1.0722, or $1.0709.
Place the stop loss 1 pip below the local swing low.
Move the stop loss to break even once the trade is 20 pips in profit.
Remove 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to ride.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
EUR/USD Analysis
In my previous analysis of the EUR/USD currency pair on 20th May, I wrote that the technical picture had become more bullish, with the Euro one of the strongest major currencies. I thought that there may be a chance for a long trade from a bounce at the support level at $1.0863 but this did not set up. I also said there were better assets to trade that day, and that certainly turned out to be true.
The technical picture now is more bearish, but not decisively so. The price was basically consolidating within a predictable range until the shock of Sunday’s calling of a general election in France following terrible EU Parliament election results for President Macron’s party. Macron has no majority in the French Parliament, so he is gambling that the far-right’s very strong showing last weekend might galvanise more centrist voters into voting for Macron again. However, the polls show the far right as likely to assume power, which would be a major political earthquake in France and the EU and will impact the Euro negatively if it happens.
These political events caused the Euro to plummet yesterday, before finding some support above $1.0700 and especially at the key support level at $1.0758 which seems to be holding as the first higher low. The key thing to watch for now is whether this level, let’s call it $1.0750 as that is a confluent major quarter level, holds up over the course of the day. The longer it holds, the more likely we are to see a continued recovery.
The Euro will now come into focus as a currency over the next few weeks and will probably show a higher level of volatility. Although the major far right party in France no longer support an exit from the EU, the Euro will likely trade lower the more polls show it on course for victory.
I think we will eventually see more downwards movement here, although that may be determined over the short term by the US Dollar and its key CPI and FOMC data coming tomorrow.
I think the best approach here is to look for short trades from and failed tests of key resistance levels, and to hold for a swing or even position trade if possible.
There is nothing of high importance scheduled today concerning either the EUR or the USD.
BTC/USD Forex Signal: Inverse Head and Shoulders Pattern Forms
Bullish view
Buy the BTC/USD pair and set a take-profit at 73,650.
Add a stop-loss at 67,000.
Timeline: 1-2 days.
Bearish view
Set a sell-stop at 69,000 and a take-profit at 67,000.
Add a stop-loss at 72,000.
Bitcoin price continued to consolidate in the evening session as investors waited for the upcoming Federal Reserve decision. The BTC/USD pair has been stuck below the key resistance point at 70,000 in the past few days.
BTC/USD technical analysis
Bitcoin bottomed at $56,450 in May and has crawled back in the past few weeks. It rebounded and moved to the crucial resistance point at 70,000. The BTC/USD pair has moved above the 50-day and 25-day moving averages.
Most importantly, it has formed an inverse head and shoulders pattern and is now sitting near its neckline. The inverse H&S pattern is one of the most bullish signs in the market.
Also, the Awesome Oscillator has moved above the neutral point at zero. Therefore, the pair will likely have a bullish breakout in the next few days or weeks. If this happens, the initial level to watch will be last week’s high of 71,870. A break above that level will see it rise to the YTD high of 73,650.
GBP/USD Forex Signal: Ripe for a New Bearish Wave
Bearish view
Sell the GBP/USD pair and set a take-profit at 1.2650.
Add a stop-loss at 1.2765.
Timeline: 1-2 days.
Bullish view
Set a buy-stop at 1.2735 and a take-profit at 1.2800.
Add a stop-loss at 1.2650.
Fed and BoE rates
The GBP/USD pair tilted upwards ahead of the upcoming UK jobs numbers, which will provide more information about the country’s wage growth. According to Bloomberg, analysts expect the data to show that the country’s unemployment rate remained at 4.3% in April while wage growth, including bonuses jumped by 5.7%.
A higher wage growth figure than expected will complicate the BoE’s rate cut outlook by signalling that the tight labor market was stirring inflation. That would make it difficult for the BoE to start easing interest rates, which sit at the highest level in 16 years.
The Bank of England is expected to start cutting rates as soon as in its July meeting since inflation has dropped recently. However, a rate cut may be complicated by the upcoming election in July where the Tories are expected to lose big.
There will be no other economic event in the UK on Tuesday. Therefore, focus among traders will be on the upcoming Federal Reserve decision. In it, the bank is not expected to slash interest rates.
Instead, the committee will provide more color on when the first cut will happen. This meeting will come at a time when the US is sending mixed signals. On the one hand, a report showed that the country’s manufacturing sector has moved into a deep contraction.
At the same time, the labor market is strong, with the economy adding over 272k jobs in May last year. Wage growth also continued accelerating, risking more inflation trends in the country.
GBP/USD technical analysis
The GBP/USD pair has rebounded from last week’s low of 1.2688. This rebound happened after the pair formed a morning star on the four-hour chart. It has moved above the lower side of the ascending channel shown in red.
The pair has also jumped above the 23.6% Fibonacci Retracement point level. However, the 25-period and 50-period moving averages are about to form a bearish crossover, which is a popular bearish sign.
Therefore, the pair will likely resume the bearish trend as sellers target last Friday’s low of 1.2688. A move below that level will point to more downside as sellers target the key support at 1.2650.
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Short Term Elliott Wave in Gold (XAUUSD) suggests the rally from 5.03.2024 low ended a wave 3 at 2450.10 high. Wave 4 pullback is currently in progress. The internal subdivision of wave 4 takes the form of a double three Elliott Wave structure. Down from wave 3, wave (a) ended at 2407.15 low and wave (b) bounce ended at 2433.90. The stock extended lower in wave (c) towards 2325.20 which completed wave ((w)) in higher degree.
The market rallied starting wave ((x)) taking the form expanded flat structure. Up from wave ((w)), wave (a) ended at 2364.12 and pullback in wave (b) ended at 2314.40. Wave (c) higher finish at 2387.71 which completed wave ((x)). XAUUSD continued lower strongly in wave ((y)) of 4. Down from wave ((x)) Wave (a) of ((y)) ended at 2286.50 as an impulsive structure. Wave (b) bounce could already end at 2313.8 and the metal has turned lower in wave (c). Near term, while below 2387, it should continue lower in wave (c) of ((y)) to the extreme 100% – 161.8% Fibonacci area of wave ((a)). This area comes at 2262 – 2185 area where buyers should be waiting to continue the rally or see 3 swings higher at least.
XAUUSD 60 Minutes Elliott Wave Chart
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The NZD/USD has had another solid spurt of upwards momentum develop in the past half day and sustained values near important mid-term resistance marks.
The NZD/USD stumbled in early trading yesterday and touched the 0.61560 vicinity, but the move lower actually did not test Monday’s lows.
And importantly the support level touched yesterday remained within sight of Friday’s highs. After touching yesterday’s low, the NZD/USD actually began to generate buying momentum.
Economic data from the U.S continues to come in below expectations as signs appear to be growing the American economy is slowing.
As of this writing the NZD/USD is near the 0.61818 ratio and this is noteworthy because the currency pair is within sight of yesterday’s highs which were achieved before the downturn. Support and resistance levels short-term are playing the usual cat and mouse game of give and take, but traders who look at a week’s, one month and even a three month chart can see a verifiable trend upwards that has emerged.
Improved Outlook for the NZD/USD and Market Correlation
Yes, on the 19th of April the NZD/USD was near the 0.58565 mark, but short-term traders looking to interpret behavioral sentiment will see the value of the currency pair is now within sight of prices last seen in the second week of March. Meaning even though there was a wicked downturn, the NZD/USD has now returned to a price level which is more optimistically inclined likely due to the notion that financial institutions believe the U.S Federal Reserve is really going to have sound dovish next week on the 12th of June. The broad Forex market and major currency pairs have shown a belief USD centric weakness is expected.
There are absolutely no guarantees, but recent short-term trading is showing signs of stronger support levels. The bullish trading in the NZD/US is still below the 0.62000 level which is likely a target in the minds of some speculators. And the NZD/USD will need more impetus to drive values upwards. Today Services PMI data will come from the States and the data is expected to meet last month’s outcome and be slightly stronger per the reports that will be published. But on this Friday the U.S will issue its Non-Farm Employment Change numbers and Average Hourly Earnings. The combination of these reports will create volatility in the NZD/USD.
Push Higher and Possibly Solid Walls Ahead for NZD/USD
As the NZD/USD challenges higher ratios resistance levels will have to be watched. While sentiment is certainly turning bullish another dose of negative economic news via the jobs reports will likely be needed to create momentum higher that can break critical resistance levels upwards.
The U.S Federal Reserve is also waiting in the shadows and will deliver their FOMC rhetoric on the 12th of June.
Until then choppiness will prevail in the NZD/USD as positions are wagered on, but bullish traders may continue to believe additional upside is the biggest potential.
NZD/USD Short Term Outlook:
Current Resistance: 0.61840
Current Support: 0.61750
High Target: 0.61940
Low Target: 0.61670
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