Start the week of November 28, 2021 with our Forex forecast focusing on major currency pairs here.
Technical Analysis
U.S. Dollar Index
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 above its levels from 3 and 6 months ago, which shows that a long-term bullish trend in the greenback is present. However, Friday’s news sent the greenback falling, and the Index clearly rejected probably resistance overhead at 12238 as shown in the price chart below, so the bullish USD trend may have come to an end, at least for a while. The short-term momentum is certainly bearish.
Thebest strategy in the Forex market over the coming week will probably be to look for trades driven by other, weaker currencies, and using either USD or ideally JPY as the long counterparty, or maybe a mixture of both.
GBP/JPY
The British pound initially tried to rally last week but then collapsed on Friday as we saw a major “risk off move” around the world. The new coronavirus variant coming out of South Africa has people selling anything remotely close to being risk-related. It is worth noting that the market breaking down the way it has does suggest that we have momentum to the downside, but at this point we need to break through the ¥149 level to truly fall apart.
USD/JPY
The US dollar initially rallied last week but had an absolutely brutal Friday session. This was in reaction to the negativity coming out of South Africa, and the possibility of further lockdowns. This had a major “risk off” attitude coming into the market, and I think it does make sense that we would break apart here. If we can get down below the ¥112.50 level, this is a market that has further to go, perhaps reaching down to the ¥110 level. If we do turnaround at this point in time, I would expect more consolidation than anything else. Unfortunately, weekend news is probably going to be the main driver.
EUR/USD
The euro fell rather hard last week, reaching down towards the 1.12 level. However, we have recovered completely to form a massive hammer. This suggests to me that perhaps we have gotten a little bit ahead of ourselves, so it makes sense that we would get a little bit of a bounce. The “ceiling in the market” at this point seems to be near the 1.15 handle, and I think that is where we will try to get to in the short term. However, if we were to turn around and break down below the bottom of the candlestick, then the euro breaks apart to reach down towards the 1.10 level.
EUR/GBP
The euro rallied quite significantly against the British pound last week, but I still see a lot of resistance above, especially near the 0.8550 level. Because of this, a short-term rally is possible, but I do think it is only a matter of time before the sellers come back in and push this market lower.
Bottom Line
I see the best opportunities in the financial markets this weekaslikely to be long of USD/ZAR and USD/MXN. If you have access to the JPY crosses in ZAR and MXN, these are likely to be better options provided you are short of ZAR and MXN.
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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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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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The weekly price chart below shows the U.S. Dollar Index printed an indecisivedojicandlestick last week after having earlier rejected the zone of support which I had identified between 11899 and 11833. The price is above the levels from 3 and 6 months ago, which shows that the long-term bullish trend in the greenback is still valid. However, the short-term momentum is unclear in the USD right now. This suggests thattrades in the USD look better on the long rather than short side right, 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 but only once the short-term momentum turns from bearish to bullish.
WTI Crude Oil
WTI Crude Oil closed Friday at a new 6-year high weekly closing price for the second consecutive week. This is a very bullish sign. The price is likely to continue rising over the short term as the global energy supply crisis continues. Bulls should be aware of the potential resistance level shown in the price chart below just above $84.
EUR/USD
The EUR/USD currency pair broke to a new 14-month low price for the second consecutive week but made a significant bullish retracement as can be seen from the fact that the weekly candlestick is almost a doji. The Euro has the steadiest long-term weakness of any major currency, but it is trending slowly with deep retracements, like the EUR/USD tends to.It is likely that the price will continue to move lower over the coming days once the short-term momentum turns bearish again,although the medium-term downside may be limited by thebig psychological round number below at 1.1500, which is confluent with a long-term pivotal horizontal level at 1.1517which could halt the drop.
USD/JPY
The USD/JPY currency pair made a strong and dramatic bullishbreakoutlast week beyond its recent multi-month range.The range of the weekly candlestick was unusually large, and the price closed near the top of that range. These are bullish signs which suggesttrading this pair long is likely to be a good opportunity to make some profit, especially as there are no key resistance levels until 115.45.One word of caution: the breakout price action recently has included deep retracements.
NZD/USD
The New Zealand dollar has been all over the place during the week, even as the Royal Bank of New Zealand has raised rates. The New Zealand economy is far too attached toAsiato think that it is simply going to take off to the upside. The market is showing signs of confusion, and I think at this point if we break down below the 0.68 handle, this market could unwind. On the other hand, move above the 0.70 level, then it is very likely that we go higher.
NZD/JPY
The New Zealand dollar rallied significantly last week, with ¥78 above offering resistance, right along with the ¥79 level after that. To the downside, the ¥77 level has offered little bit of support, and the 50-week EMA is starting to reach towards that area. This is a market that I think will continue to be very noisy and choppy, and I would anticipate more back-and-forth action due to the fact that there is so much concern around the world as far as growth is concerned, and this is a very risk-sensitive pair.
GBP/USD
The British pound rallied during the week but turned around at the 50-week EMA to show signs of hesitation again. If we can break down below the 1.35 handle, it is very likely that this market will go much lower, perhaps reaching towards the 200-week EMA. On the other hand, if the market were to turn around and break above the 1.37 level, then it is possible we may go looking towards 1.39.
Bottom Line
I see the best opportunities in the financial markets this week as likely to be short EUR/USD and long WTI Crude Oil in US dollar terms, and long USD/JPY.
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Get the Forex Forecast using fundamentals, sentiment, and technical positions analyses for major pairs for the week of September 27, 2021 here.
The difference between success and failure in Forex trading is very likely to depend mostly upon which currency pairs you choose to trade each week and in which direction, and not on the exact trading methods you might use to determine trade entries and exits.
When starting the trading week, it is a good idea to look at the big picture of what is developing in the market as a whole and how such developments and affected by macro fundamentals and market sentiment.
There are a few strong valid long and short-term trends in the market right now, so it is a good time to be trading to take advantage of that.
Big Picture 26th September 2021
Last week’s Forex market mostly moved weakly counter to most prevailing trends. The Japanese yen was weak while the US dollar, Canadian dollar, and Swiss franc were strong. Global stock markets recovered from a dip.
I wrote in my previous piece last week that the best trades were likely to be short of the AUD/USD currency pair taking aswing tradingstyle, and long of the USD/CHF currency pair with short-term day trades. This probably would have given a mixed outcome as the AUD/USD currency pair fell over the week, but the USD/CHF currency pair failed to rise.
Fundamental Analysis & Market Sentiment
The headline takeaway from last week were mildly hawkish tilts from the Federal Reserve on the USD and the Bank of England on the GBP. This sent yields higher, with the yield on the US 10-year treasury surpassing 1.45% for the first time since July. Global stock markets mostly recovered over the week, with the bearish Chinese market a notable exception. Perishable commodities are rising, with WTI Crude Oil’s breakout to close at a new 50-day high on Friday leading the way there.
This week’s schedule will be dominated by US and Canadian GDP data, but apart from these economic releases, scheduled events look very light. There is a federal election in Germany today and the opinion polls show the two major parties are closely tied. The election will determine the successor to Angela Merkel, who has been in office for the last sixteen years.
We are seeing an increase in supply chain disruptions, most notably in recent days within the UK where it has been hard for motorists to find retail gasoline for sale over the past days.
Last week saw the global number of confirmed new coronavirus cases fall for the fifth consecutive week after previously rising for more than two months, with deaths lower for the fourth consecutive week. Approximately 44.3% of the global population has now received at least one vaccination.
The strongest growths in new confirmed coronavirus cases right now are happening in Barbados, Belarus, Croatia, Egypt, Estonia, South Korea, Laos, Latvia, Lithuania, Moldova, Romania, Russia, Slovakia, and the Ukraine.
Technical Analysis
U.S. Dollar Index
The weekly price chart below shows the U.S. Dollar Index printed another bullish candlestick last week after having rejected the zone of support which I had identified between 11899 and 11833. The price is 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 not far from 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.
WTI Crude Oil
WTI Crude Oil closed Friday at a new 50-day high price. This is a bullish signand many trend-following hedge funds will be buying WTI Crude Oil futureson Monday. However, bulls should be warned that the multi-month price action remains rectangular shaped, as can be seen by the chart below, with the $76.38 level above the current price quite likely to act as resistance. Nevertheless, the price is more likely than not to rise over the very short term.
GBP/USD
The GBP/USD currency pair is looking heavy as it has again fallen to test the pivotal 1.3600 area for the third time since July. This pattern is likely to produce either a significant bearish breakdown in line with the bearish trend or give another bullish reversal from the 1.3600 area which could become a long-term bullish triple bottom.
A daily close of a firm bearish candlestick below 1.3600 could be a good short trade entry signal.
Silver (XAU/USD)
Silver broke down to new long-term low daily closing prices last week, although the low if its recent spike down has not yet been exceeded.The price action is clearly bearish although the price was reluctant at the end of the week to close at a significant low. Nevertheless,the trend is clearly bearish, and a daily close below $22.25 would be a bearish signalindicating that a short trade entry could be appropriate here. The bearish case for Silver is helped by the fact that Gold is also looking weak, albeit less so.
GBP/JPY
The British pound fell significantly during the last trading week, but then turned around to show signs of life at the ¥149 level. The market has turned around to form a bit of a hammer, and now it looks like we are trying to break out to the upside. That being said, the ¥153 level been broken to the upside is what needs to be seen in order to get overly bullish. In the meantime, I anticipate that we will have a lot of choppy behavior, based mainly upon the idea of risk appetite either being on or off.
EUR/USD
The euro fluctuated last week to show signs of confusion, with the 1.1685 level underneath offering support. If we break down below that level, then I believe that the euro will sell off quite drastically to open up a move down towards the 200-week EMA. That being said, this is a market that seems to be somewhat consolidating, and if we break above the top of the weekly candlestick, we could go looking towards 1.1850 level above. At this point, I think the market will stay in this tight range that we have been in for a while.
AUD/USD
The Australian dollar went gone back and forth last week as we continue to hear a lot of noise in this pair. That being said, the market is likely to make a decision based upon which side of this candlestick we break out of. If we break down below the bottom of the candlestick, it is likely we will go looking towards the 0.71 level. On the other hand, if we break above the top of the weekly candlestick, then it is likely we will go looking towards the 0.7450 level. Keep in mind that the Australian dollar is highly sensitive to the risk appetite of traders around the world and everything going on in China.
CAD/JPY
The Canadian dollar initially fell during the course of last week, but then turned around at the ¥85 level to show signs of strength. Furthermore, you should keep an eye on the oil market as it looks like it is trying to break out to the upside. If oil continues to rally the way it has been, then it is likely that the Canadian dollar could go looking towards the ¥90 level over the longer term. On the other hand, if we turn around and show signs of exhaustion, then we could go looking towards the ¥86 level initially before reaching towards the bottom of the candlestick.
Bottom Line
I see the best opportunities in the financial markets this weekaslikely to be short in Silver and the GBP against the USD once new low daily closing prices have been made, as I outlined above
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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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The US Dollar Index created a double-bottom formation on the chart in January and May 2021, which lined up with a support area made in early 2018, giving it a firm base to launch an uptrend.
However, the DXY reacted bearishly against previous resistance at 93.191, with a large selloff on Friday, producing an almost perfect double-top spanning the last three weeks. That said, the index is still technically in an uptrend on the 4-hour chart until the previous support at 91.782 is broken. A break of 91.513 would be even more bearish.
S&P 500
The S&P 500 notched up another positive week, continuing the uptrend that began on 24th March 2020. With the price in record-high territory, there are no previous resistance levels to slow down its long-term bull run (that doesn’t mean that the trend won’t pause or reverse at some point, but it will probably require an economic shock to make that happen). To repeat the words in my last market commentary, the first piece of investing advice I got was, “Buy the stock market, and just hold it.” The actions of the S&P 500 is proving this statement correct. After a precipitous sell-off in Feb/March 2020 when the global impact of COVID became apparent, it made back its losses and marched into new highs with the confidence of a star athlete. The index has shaken off, with remarkable speed, any concern you could throw at it, from peaking economic growth, historically high valuations, coronavirus variants, and extreme weather events, to name a few.
Our S&P 500 strategy is to buy on dips, preferably when it retests previously broken resistance levels, and we’ve identified levels in previous market commentaries. This has worked particularly well on the release of bearish economic data. For example, on Thursday, the U.S. Bureau of Labor Statistics released the monthly Producer Price Index (PPI) numbers, a key inflation indicator. It came in higher than expected (1.0% compared to the forecasted 0.6%). The market sold off for a couple of hours, only to turn around and close higher than its open that day and make a new closing high the next day.
The most recent previously broken resistance levels that could potentially act as supports on dips are 4426.1 and 4386.5
What would make me reconsider the uptrend and look for a potential market reversal or at least a pause in the trend? If the market broke the support levels at 4234 (made on 19th July), 4138 (made on 21st June), and 4035 (made on 13th May). The last significant support before that was made way back in September 2020 at 3210.
EUR/USD
The EUR/USD is potentially starting a new downtrend. A reversal zone made in the first quarter of 2018 was tested in January 2021 and May 2021, creating a double-top formation on the chart.
On the daily chart, the market is below 1.19573, a key interchangeable support/resistance level, again a bearish sign. However, the price bounced off a previous support level, 1.17041 last week, effectively producing a channel between 1.17041 and 1.19573. The bounce also potentially sets up another bullish week ahead. We want to see the price break at least 1.17041 and 1.16121 to be more confident of a bearish outlook. 1.17041 is more important because it is the support in between the high in January and the high in May.
GBP/USD
A reversal zone made in the first quarter of 2018 was tested in February 2021 and June 2021, creating a double-top formation on the chart. But the price is still firmly in the reversal area.
On the daily chart, it’s clear the price is stuck in a sideways pattern. That said, there are several clues to a potential bearish move. The price made a double-top, and the second peak was a “rounded top” formation that can act as a strong resistance.
Looking at where the price is sitting right now, it is below 1.4005, a key interchangeable support/resistance level. Last week, the price trended down for most of the week before having a bullish Friday to leave it near where it opened for the week. In that sense, our commentary on this pair is almost identical to the previous week, but because it is sitting in a long-term resistance area with the potential to breakout, we want to highlight it again.
We want to see the price break the support at 1.3670 to be more confident of our bearish sentiment (and 1.3572 – the low made on 20th July – to be even safer).
USD/CAD
Over May & June 2021, USD/CAD bounced off a long-term support level made in September 2017 at 1.20613.
Visible on the daily and 4-hour charts, the price has made a series of higher lows since June 2021. However, recently, it has stalled and resistance at 1.25902 has appeared. The price must break the 1.25902 level for us to continue to feel bullish on the USD/CAD. The next resistance that could stall the price is 1.28075. If the price breaks the support at 1.24221, we would be neutral to bearish on the pair.
GBP/CHF
Normally, I focus on Forex majors, but a nice sideways channel on GBP/CHF is visible on both the haily and 4-Hour charts:
AUD/USD
AUD/USD is such an interesting pair from a support & resistance point of view. A large head & shoulders reversal pattern has formed over the first six months of 2021. The neckline of that pattern stood at 0.75812 – it was broken and then retested as resistance, thus providing a short entry opportunity. Note that “flipping” levels, i.e. support turning into resistance, and vice versa, can work out well. Now the price is retesting a previous resistance, 0.74135. The confluence of these factors gives us a nice bearish outlook for this pair
Summary
The best opportunity I see in the markets is to go long S&P 500 – I would look at the 4-hour chart to buy off support levels. Next, the best opportunity is the bullishness in Bitcoin, if you have the stomach for its volatility!
I am monitoring the levels outlined above for the EUR/USD and GBP/USD. Both have bearish pictures on the larger timeframes, but EUR/USD has bounced off a confirmed support level visible on the daily timeframe, and GBP/USD is in the middle of a channel.
USD/CAD will break out from the tight price range visible on the 4-hour chart and provide trading opportunities.
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Rehana William |Financial Consultant _Forex_Gold Xauusd| Fund Manager 