As per the previous weekly Market Outlook, last week, the BoC (Bank of Canada) dropped the Interest Rates in Canada to 4.5% from 4.75%. The Canadian dollar has since experienced a significant sell-off, and most of the other currencies have had some bullish runs against the CAD. The GDP in the US was one of the primary factors that pushed the USD upwards because the outcome reported was far higher than expected. Additionally, despite the CPI numbers in Japan dropping by 0.1%, the Yen was one of the strongest currencies last week until Friday.
Moving towards the last few trading days of this calendar month, on Monday, there won't be any significant news events that are expected to impact the currency’s prices. Therefore, we expect the volatility to be as normal during the major trading sessions, which are the Tokyo, London, and New York sessions.
Japan’s Unemployment Rate will be the first significant event for the week, and this will occur on Tuesday during the Asian Trading Session. The consensus shows that the 2.6%, which is the currency unemployment rate, is expected to be the same. Next, at the beginning of the London trading session in Switzerland, they will report the KOF Economy Leading Indicator for July. The reported number is the average of 10 economic indicators, including housing prices, residential income, money supply, and many more, and it is usually a good indication of the overall health of Switzerland’s economy. The forecast shows a drop from 102.7 to 102.5. Although the number is expected to drop, this event is not enough to cause trend reversals on the price charts. Next will be the GDP (Gross Domestic Product) in Germany, and the forecast shows an increase from -0.9% to 0.3%. Also, the CPI in Germany will be reported and is expected to increase from 0.15 to 0.3%. If these events are reported positively as per the forecast, and the market will follow through, then the Euro is expected to strengthen. A few hours later, the Eurozone will report the GDP, and the forecast estimates that the numbers will increase from 0.4% to 0.6%, which can have another positive impact on the Euro. The volatility is expected to remain high during the New York Trading session as the CCI (Consumer Confidence Index) and the Job Opening will be announced. Consumer Confidence is expected to drop from 100.4 to 99.9.
Wednesday is the last trading day of July, but it is also very important because of the high-impact news event, with the main being the FED’s report on the Interest Rates in the US. During the Asian trading session in Japan, the Retail Sales will be reported, and the consensus estimates a significant increase from 2.8% to 3.2%. If the Japanese Yen’s strength continues this week, then this event can be an important addition to the confluence for declines in the GBPJPY, AUDJPY, and CADJPY. The reason that the AUDJPY can be a good candidate is that in Australia, they will report the CPI (Consumer Price Index), and the consensus estimates a drop from 4% to 3.8%. Although we have explained in the past that a low CPI number is good for consumers due to its strong positive correlation with the country’s inflation, when it comes to currency value, it is considered a weak sign. Fundamentally and technically, the Aussie was one of the weak currencies last week, so this event can keep lowering the AUD’s value. Around the same time, Retail Sales in Australia will be reported, and they are expected to drop from 0.6% to 0.3%. Remaining at the Asian Trading Session, the BoJ (Bank of Japan) will report their Interest Rates, and the consensus estimates a number below 0.1%. Japan prefers to keep their rates low as it helps its import and export operations. Next, in the Eurozone, they will report the CPI and the forecast shows a drop from 2.5% to 2.4%. This can also be a weak sign for the Euro. Moving into the US Trading session, the ADP Non-Farm Employment Change is expected to increase from 150K to 166K. This is an early indication of the NFP report for the upcoming Friday. Only 15 minutes later, in Canada, the GDP is expected to decrease, as per the forecast, from 0.3% to 0.2%.
The next event will be the Chicago PMI, and the forecast estimates a drop from 47.4 to 44.1. As the number remains below 50, it is considered bearish for the US dollar. An improvement is expected as per the forecast for the Pending Home Sales as it is expected to increase from -2.1% to 1.6%.
The most significant event of the day has yet to be reported, and it is nothing else than the Interest Rates in the US. The FED is considering keeping the Interest Rates unchanged at 5.5%. Recently, major banks have started dropping their interest rates. If the FED keeps them unchanged this time, it might be the last month. Under normal situations, each bank follows the other.
In most cases, unchanged interest rates are considered a Bearish sign by market participants, and we might see a weakness in the US dollar. After that, the FOCM Statement and Press Conference will follow. However, the NFP report will be a determining factor for the overall performance of the US Dollar on Friday.
On Thursday, the first significant report for the day will be the Australian Trade Balance. It is expected to drop from 5.7 Million to 4.9 Million as per the forecast. The drop in number is due to the reduction in export products. The Australian Dollar is one of three major commodity currencies, and exports are considered important activities for the Australian economy. The Australian Trade Balance attracts a lot of attention in terms of market volatility, and it plays a major role in the Australian dollar’s overall performance. For the day, the Banks will be Closed in Switzerland because it's a National Holiday. During the London trading session, the Unemployment Rate will be reported in the Eurozone, and the forecast estimates an unchanged 6.4%. As an average, based on the overall unemployment rate in the eurozone, this is considered low Unemployment. Thursday’s volatility is about to pick up one hour before the New York Trading session starts because, in the UK, they will report the Interest Rates. The forecast estimates a rate cut from 5.25% to 5%. If this happens and the market follows through, Sterling is expected to weaken, giving an advantage to the GBPUSD and the GBPJPY for more weakness. This scenario is based on the Currency Correlation matching a potential strong with a prominent weak currency for a trading plan. The next important event for the day will be Canada’s Manufacturing PMI, which is currently at 49.3. The US ISM Manufacture PMI is expected to increase from 48.5 to 49. This can impact the US dollar during the overall trading session, increase the market’s volatility, and ultimately offer trading opportunities for intraday traders.
Friday is the last trading day of the week and one of the most important trading days as well. There are only a few significant news events on Friday, but enough to keep traders alert.
First will be the PPI (Producer Price Index) in Australia. This is one of the important indicators used to measure inflation, as it reflects the purchasing price at which Australian Businesses sell their goods and services within the country. This leads to the prices that consumers need to pay for these goods and services. Next, in Switzerland, the CPI (Consumer Price Index) is expected to remain at the current 1.3%. A stable CPI doesn't reflect any growth within the country.
Market participants and traders around the world will be paying close attention to the NFP (Non-Farm Payroll) event that will be announced during the New York trading session. The event reports how many new Payrolls were added to the US economy last month. It is a very important indication of how well the US economy is doing because it directly affects the consumer’s spending within the country. countryThe forecast estimates that 185K new payrolls were added last month compared to the 206K as per the last report. If the actual number confirms the forecast or it is even less, the USD is expected to drop, giving an advantage to the EURUSD in moving upwards. However, if the actual number will be greater than the forecast and if the market follows through, then the opposite is expected to happen, and the EURUSD can drop even lower. At the same time, in the US, the Average Hourly Wage is expected to drop from 3.9% to 3.7%, the Average Hourly Earnings to remain at 0.3%, and the Unemployment Rate to remain at 4.1%.
EUR USD 4H
Following the Euro’s weakness and the continued strength of the US Dollar, the EURUSD currency pair continued to move downwards, with the weekly chart creating a Bearish Continuation candlestick pattern. On the 4-hour chart, the price made a new Lower High and Lower Low, which has bearish implications. This contradicts the moving averages analysis as the 50-period is above the 200-period, which has bullish implications. As both these two moving averages follow the price, it takes time for the crossover to occur. The RSI Oscillator is below 50 following the price weakness. The MACD, on the other hand, is still below its zero line but with a Bullish Crossover between the MACD line (blue) and the Signal Line (orange). Currently, the price is trading between the two moving averages.
If the price declines and moves downwards, the first support area, S1, will be the previous week’s low, around 1.08256. As shown on the chart, there is a lower time frame, Order Blcok, which was created last week, and it can act as an additional supporting factor. At the same price level, there is the 200-period moving average. If the price penetrates the S1 and declines further, the next support area, S2, will be another weekly low of approximately 1.08062. Conversely, if the price moves upwards, the first resistance area, R1, will be the previous week’s high, around 1.0933. The price, in order to move until the R1 resistance, needs to penetrate a few areas that can act as resistance successfully. These are the 61.8% Fibonacci retracement, the FVP (Fair Value Price), and the Supply Area below the previous week’s high. If the price manages to penetrate the R1 and keeps increasing, the next resistance area, R2, will be 1.09482, which is another weekly high.
GBP USD 4H
Following the Non-Failure swing since last week and the Bearish reversal price action on the weekly chart, the price continued to move downwards as the US dollar fundamentally gained strength. That caused the price to continue in the lower low and lower high formations. This caused the 20-period moving average to cross below the 50-period moving average on the 4-hour chart. The sequence of the lower high and lower low formation created a Valid Downward Trendline T1. The RSI is below the middle line 50, and this is a bearish indication.
On the other hand, the Stochastic Oscillator is in an Overbought condition, but the %K Line (blue) crossed above the %D line (orange), which can be the beginning of a price correction. As long as the price is below the Downward Trendline Trendline T1, the market is considered to be in a downtrend.
Starting Monday, if the price keeps moving downwards, the first support area, S1, will be the previous week’s low, around 1.28506. If the penetration of the S1 declines further, the next significant support, S2, will be another weekly low, around 1.27776.
Conversely, if the price moves upwards, penetrates the T1 Trendline, and exceeds the 20-period and 50-period moving averages, the first resistance area, R1, will be the previous week’s high, approximately 1.29378. If the price surpasses the R1 and keeps moving upwards, the next resistance area, R2, will be around 1.304487, which is about 1000 points (100 pips) further away from the R1.
AUD USD 4H
The Australian Dollar’s weakness and the strength of the US Dollar were evidenced across all the currency pairs board last, causing the massive sell-off of the AUDUSD currency pair. This is one of the most important aspects of understanding currency correlation in trading. The weakly chart’s candle ended as a Bearish Continuation candle. The 4-hour chart had only a few bullish candles as the sell orders primarily drove the market. The few retracements that occurred last week were shallow under light trading volume. The 50-period crossed below the 200-period moving average, and this is known as the Death Crossover. The RSI Oscillator is around its Oversold area, which indicates a strong downward move. The MACD is below its zero line, with a Bullish Crossover that occurred last Friday. Therefore, if the price continues to move downwards, the first support area, S1, will be the previous week’s low of approximately 0.65138. If the price exceeds the S1 and keeps moving downwards, the next support area, S2, will be another weekly low, around 0.64653.
On the other hand, if the price bounces off and moves upwards, the first resistance area, R1, will be around the 4-h Bearish Order Block at 0.66104. If the price surpasses the R1 resistance and moves upwards, the next significant resistance area, R2, will be 0.67024, which is around the previous week’s high. As shown on the chart, a confluence of a Bearish Engulfing Order Block and an FVP (Fair Value Price) among the 200-period moving average can all play a significant role in creating additional resistance in the market.
USD JPY 4H
Following the rejection of the Fibonacci Golden Ratio last week, the price kept moving downwards. However, the weekly chart maintains the higher highs and higher lows formation. The weekly chart correction is shown on the 4-hour chart as a downtrend, which now shows the price, creating a Valid Downward Channel, CH1. The 50-period moving average is below the 200-period moving average, and this is bearish. The RSI OScillator is below 50, which indicates that the prices are declining. The MACD is below zero, but at the end of last week, it created a Bullish Crossover, and this can cause the price to enter into a corrective phase or retracement. Last Thursday, the price bounced off from the Return Line and moved upwards, creating the swing low at point (b). Measuring the swing at point (a) to the swing art point (b), the 61.8% retracement coincides with the FVP (Fair Value Price) around 155.45. Starting Monday, if the price keeps moving below the downward Channel CH1, the first support area, S1, will be the previous week’s low at approximately 151.93. If the price penetrates the S1 and moves lower, the next support area, S2 is around 150 and the S3 support at 148.90.
Conversely, if the price breaks through the CH1 channel and moves upwards, the first resistance area, R1, is around 155.95. In case that the price penetrates the R1, the next significant area of resistance, R2, is around 157.61. This area coexists with the Bearish Engulfing Oreder Block, the 200-period moving average, and the previous week’s high.
USD CHF 4H
Despite the US Dollar’s strength last week, the Swissy managed to overcome it and push the USDCHF pair downward, continuing the lower highs and lower lows formation. The weekly chart created a bearish candle and which is an indication of the currency pair's weakness. Looking at the 4-hour chart now, the 50-period moving average is below the 200-period, and this is bearish. Additionally, the distance between the two moving averages widens, and this signifies the imbalance between buy and sell orders in the market. The Bearish Engulfing Order Block created the last downward move last Wednesday, and it was also the highest price the market traded last week. The price made a new low at point (b), but the MACD showed a lack of momentum. Therefore, it showed Positive or Bullish Divergences. The RSI is below 50, which is considered Bearish.
Starting Monday, if the price moves upwards as expected due to the Positive Divergences, the first resistance area, R1, is an inside resistance of around 0.88886. This price level coexists with the FVP (Fair Value Price), the middle of the Bearish Marubozu candle and the 50-period moving average. If the price doesn’t find enough resistance to decline, keeping the downtrend intact and if it keeps moving upwards, the next resistance area, R2, will be the previous week’s high price at 0.89239.
Conversely, if the price declines and moves downwards, the first support area, S1, will be the swing low at point (b) at the price of 0.87770, which is the previous week’s low. If the downtrend continues, it means that S1 needs to be penetrated, and the price will move beyond it until the next significant support, S2, which is 0.87296.
GBP JPY 4H
The strength of the Japanese yen last week was the catalyst for the price to drop around 7000 points (700 pips) on the GBPJPY. Therefore, the weekly candle was a Long Bearish candle with a range much bigger than the currency pair’s ATR (Average True Range). The 4-hour chart shows the downward move from point (a) to point (b) as a single straight impulsive move.
The 50-period moving average crossed below the 200-period, indicating the dynamic sell-off of the currency pair. This is known as the Death Cross. The RSI Oscillator is below 50, and this has bearish implications. The MACD is below zero, which is bearish, but the MACD Line (blue) crosses above the Signal Line (orange), and the Histogram is rising. These last two observations point out that currently, the GBPJPY is in a corrective phase or retracement, which means it is moving upwards. Starting Monday, if the price continues to move upwards, the first resistance area, R1, will be 201.186. This horizontal price level coexists with the Fibonacci Golden Ratio 61.8%, the 50-period moving average, and the FVP (Fair Value Price). If the price surpasses the R1 and continues to move upwards, the next resistance area, R2, will be 203.602, which is the previous week’s high.
On the other hand, if the price is rejected and moves downwards, the first support area, S1, will be around 195.863. This is the previous week’s low. In case the price penetrates the S1 and keeps lowering, the next support area, S2, will be approximately 193.000.
A further downward move will find the S3 support around 190.320.
GOLD 4H
Following the previous week's weakness on the Gold, the price last week ended as a Doji candle on the weekly chart, with the candle’s body being small. This means the distance between the opening and the closing price was very small. On the 4-hour chart, the price created a new lower high and lower low, and a downtrend started. The Bearish Engulfing reversal pattern and the Band squeeze cause that. Using the Bollinger Band indicator, well-known as one of the most reliable trending indicators, the price trades within the Upper and the Lower Bands indicated normal market volatility. The RSI is below its middle line of 50, and this is an indication of a market that is driven primarily by selling pressure.
On the other hand, the Stochastic Oscillator created a Bullish Crossover while it was in an overbought condition, and this itself has bullish implications. The price is currency below the 50-period moving average, and this also indicates that sell orders control the market.
Starting Monday, if the price continues to move downwards, the first support area, S1, will be around $2352, and this is the previous week’s low. This price area coexists with the Lower Band of the Bollinger Band. In case the price penetrates the S1 and keeps lowering, the next support area, S2, will be around $2318, which is also another weekly low level. Oppositely, if the price bounces off and moves upwards, the first resistance area, R1, will be the previous week’s high of approximately $2432. This level is significant because it consists of the FVP (Fair Value Price), the Bearish Engulfing Order Block and the Upper Band of the Bollinger Band indicator. In case the price penetrates the R2 and keeps moving upwards, the next significant resistance area will be the ATH ( All-Time High) around $2483.
USOIL 4H
The price of USOIL dropped around $4 last week, and the weekly chart’s candle ended as a Long Bearish Candle. Looking at the 4-hour chart, the price moved in a series of lower highs and lower lows as per the swing analysis. Toward the end of the week, the price made a new low at point (b) without a closing price below the previous low at point (a). This is what we call a False Breakout and usually indicates a lack of market momentum. The MACD showed Positive Divergences, and instantly, the price bounced off and moved upwards. The RSI Oscillator is below 50, and this has bearish implications. The moving averages analysis shows a bearish market as per the Death Cross that occurred last Tuesday, which means that the 50-period moving average crossed below the 200-period moving average. Around $80, the price left an unmitigated FVP (Fair Value Price) and around the $82.50 a Bearish Order Block.
Starting Monday, if the price keeps moving downwards, the first support area, S1, will be $76 and this is the previous week’s low. If the price penetrates the S1 and keeps lowering, the next support, S2, will be another weekly low of around $75.27. A further price decline finds the next support, S3, at $74.
On the other hand, if the price bounces off and moves upwards, the first resistance area, R1, will be $78.59. If the price penetrates R1 and keeps increasing, the next resistance area, R2, will be approximately 480.19, which is the previous week’s high.
BTC USD 4H
Following the Bullish momentum from last week, Bitcoin’s weekly candle ended as a Bullish Hammer. Based on Candlestick pattern analysis, a Bullish Hammer during an Uptrend is usually considered a reversal candlestick pattern. Last week, the price on the 4-hour chart bounced off from the Bullish Engulfing Order Block we had pointed on the chart and created a new higher high formation. Based on the swing analysis, this is considered a bullish indication. The 20-period moving average is above the 50-period, and the 50-period moving average is above the 200-period moving average. Last Friday, the MACD, after a Bullish Crossover that occurred below the zero line, moved above zero, and its Histogram started rising, confirming the price's upward move.
Additionally, the price left an FVP (Fair Value Price) between $65000 and $66000 and a new Bullish Engulfing Order Block around $64000. Starting Monday, if the price continues to move upwards, the first resistance area, R1, will be the previous week’s high, around $69398. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be another weekly high, around $71900.
On the other hand, if the price is rejected and moves downward, the first support area, S1, will be approximately $63427, which is the previous week’s low. This is the only significant support for the current price and the previous week’s low. In case the price surpasses the S1 and declines further, the next support, S2, will be another weekly low at $60700.
SP 500 4H
Following the previous week’s Market Outlook, the price of the SP500 kept lowering as the weekly chart entered into a corrective phase. Therefore, the candlestick pattern on the weekly chart was a Bearish Continuation. On the 4-hour chart, though, the price kept moving downwards with a new lower low and a lower high, which defines a downtrend. The 50-period moving average is above the 20-period, and this has bearish implications. The RSI is below 50, following the downward price move. The MACD, on the other hand, created a Bullish Crossover while it was below the zero line, and this has bullish implications, at least to set the trend into a corrective phase, and this means that the price will move in the opposite direction.
Last Thursday, the price created a demand zone around $5340, causing the price to bounce off and move upwards. Starting Monday, if the price keeps moving upwards, the first resistance area, R1, will be the inside resistance approximately at $5500. As this is a round number, it can impact the traders' beliefs and make them interact with the market here. If the price penetrates the R1 and keeps moving upward, the next resistance area, R2, would be the previous week’s high, around $5593. Between the R1 and R2 resistance, there is the Golden Fibonacci 61.8% and the Run Away Gap, which can both act as resistance in the market.
Supposedly, the price was rejected and moved downwards. The first support area, S1, will be the previous week’s low of approximately $5398. If the price penetrates the Demand zone and keeps moving downward, the next support area, S2, will be at $5328, which is another weekly low.
US 30 4H
Last week, the price of the US30 kept moving upward. Last Wednesday, the price bounced off from the FVP (Fair Value Price) and the Fibonacci 61.8% as we mark on the chart on the previous week’s Market Outlook, and then it moved upwards, creating a new FVP.
Based on the Swing Analysis, the price created a higher high and a higher low last Friday.
A Bullish Marubozu candle broke above the Upper Band of the Bollinger Band Indicator. The Upper Band expanded and pointed upwards, while the lower band pointed downwards at the same time. In Bollinger Band analysis, this behaviour shows a strong upside breakout, and usually, it is followed by a substantial upward move. If the price keeps moving outside of the Upper Band, it is what we call “Walking the Bands,” and it is an indication of an increase in market volatility. In this type of market, Walking the Bands is not something that lasts for a long period rather than for a short time only. The 20-period moving average is the middle line of the Indicator and is above the 200-period moving average. The RSI oscillator is above 50. The MACD is almost at zero, and its Histogram is rising, which has bullish implications. If the price continues to move upwards, the first resistance area, R1, will be the previous week’s high, around 40782. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be the ATH (All-time High) around 41424. On the other hand, if the price declines and moves downward, the first support area, S1, will be an Inside Support area of around 40483. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be the 39845, which is the previous week’s low.
GER 30, 4H
Despite the candle of the previous week closing as a Bullish candle, the overall market structure is sideways. Looking at the 4-hour chart, the price is trading within a ranging market. Therefore, the Moving Average analysis is less useful. Using the Bollinger Band Indicator, we see the price is trading within the Upper and the Lower Bands. The RSI Oscillator is above 50, indicating rising prices.
On the other hand, the MACD is below zero, but the MACD line (blue) crosses above the Signal Liner (orange), and this has a Bulluish implication. The MACD’s Histogram confirms this, which is above the zero line. Last week, the price created an Order Block on the 4-hour chart around 18150 and an FVP (Fair Value price) around 18500.
Starting Monday, if the price continues to move upwards, the first resistance area, R1, will be between the Run Away Gap and the FVP, approximately 18530. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be the previous week’s high, around 18659. With a further upward move, the R3 resistance will be approximately 18786.
Oppositely, if the price is rejected and moves downwards, the first support area, S1, will be around 18285. If the price surpasses the S1 and keeps lowering, the next support arena, S2, will be the previous week’s low, around 18094.
