The Trading Pit Week Ahead Market Outlook (March 04 – March 10)
The most significant noticeable move that occurred last week was in the Kiwi. The New Zealand dollar depreciated after the Reserve Bank of New Zealand announced its new Interest rates. Switzerland’s and Canada’s GDP numbers were positive, whereas the USA’s were hostile.
Moving on into this week’s events, Switzerland's CPI ( Consumer Price Index) is expected to drop from 1.3% to 1.1% on Monday. During financial uncertainties, Switzerland’s currency is considered a safe-haven asset.
However, a drop in the Swiss Franc is possible with low CPI numbers.
On Tuesday, the Bank of Japan will report their CPi number. As for now, no forecast is given by the economic calendars. A strong Yen can cause many yen pairs to drop as they rest around significant resistance levels. This event will be the only major event from Japan this week.
Lastly, the ISM Services PMI in the US is expected to remain above 50, which is considered a positive for the US dollar.
Wednesday is expected to be a highly volatile trading day. Starting early morning in Australia, the GDP (Gross Domestic Product) is forecast to remain at 0.2%. During the London trading session, the Eurozone will report on Retail Sales, and the forecast expects a drop in the current number from -0.8% to -1.3%. Right with the New York trading session, in the US, they will report the ADP Employment change, and the forecast shows an improved number, to 150K from 107K in January. This indicates what the NFP number might be in two days. An optimistic ADP usually points to an upbeat NFP. As per our observation, the positive correlation is not as strong lately.
The Canadian dollar is expected to experience high volatility as the Bank of Canada will report its Interest Rates, and they are expected to remain at the current rate of 5%. Usually, the currency is not appreciated, with interest rates staying the same. If the JPY gains strength and the Canadian dollar drops after the Interest Rates, the JPYCAD pair can reveal short tradable opportunities. Right after the Interest Rates, the BoC Monetary Policy Statement will follow. Lastly, the two-day Fed’s Chairman Powell testifies will begin.
On Thursday, the Trade Balance in Australia is expected to increase to 11.5M from 10.95M. This event usually highly impacts the Australian dollar. The next major event will be the European Central Bank's Interest Rate number announcement. The current rate is 4.5%, and the consensus estimates an unchanged number.
On Friday, the last event that affects the Euro for this week will be the GDP (Gross Domestic Product), which is expected to remain at 0.1%. In conclusion, the events can still keep the Euro strong this week. If the ECB keeps the IR unchanged and the Euro won't fall instantly, there is a high probability of a strong Euro afterwards.
In Canada, the Unemployment Rate is expected to increase by 0.1%, from 5.7% to 5.8%. If this occurred, it could add to the weakness of the Canadian dollar.
Friday’s focus will be on the NFP (Non-Farm Payroll) as the expectation is a significant drop to 200 from 350K. Based on the forecast, this means that approximately 40% fewer new jobs will be added to the US Economy, which can cause a drastic drop in the Greenbuck.
Traders must be aware that, during a week like this, during many Interest Rate news and the NFP, the majors usually trade sideways until all events are announced.
AUDUSD Daily
As per last week's expectation, the Australian dollar dropped. The price created support for around 0.64870, which the chart above points to the S1 weekly low. Price formed a pattern called double inside candles on Thursday and Friday. The price didn't make a new low, lower than the low at (a), but it is still trading under the 50-period moving average, which is bearish. The MACD is also below its zero Line, which is bearish. Therefore, if the price breaks above the box marked on the chart and moves upwards, the first resistance is the cluster area of the 50-period dynamic MA, and the last six weeks' high is around 0.65670. If the price breaks and closes above the R1, the next resistance, R2, is around 0.66103, which is the last month's high. Conversely, the price declines breaks below the box, and moves downwards; the next support, S2, is considered the previous month's low, around 0.64428. Considering the recent swing low, a break below it will create a downward impulse leg.
EURUSD, Daily
Following the broken swing high at point (c), the price didn’t create a new high and found resistance around the Bearish Engulfing Order Block. Last week, the price remained between the 50 and 200-period moving averages, with the Euro showing strength. Currently, the price is above the broken swing at point ( c). The MACD is below zero, and this makes the market considered bearish. However, out of the last 13 trading sessions, only four days were bearish, and the bodies were tiny.
If the Euro strengthens based on the expectation of the macroeconomic events and simultaneously, the NFP causes the dollar to weaken this week, the price can reach the first area of resistance, R1, around 1.08977. If the price penetrates the R1 and moves higher, the next resistance, R2, is approximately 1.10, a significant round number for the EURUSD. On the other hand, if the macroeconomic favours the USD and the market follows through, the price is expected to break below the swing point at ( c) and find the S1 support around 1.07617. If the price penetrates it and moves downwards, the next support, S2, the recent swing low at (b), approximately 1.06950.
GBPUSD, Daily
Candle’s (1) boundaries appeared to be significant intraday levels last week, with the price remaining within its limits for the previous five trading days. Observing the Weekly time frame, we identify an inside weekly candle. The market is trendless as the price doesn’t move in any direction with defined higher highs or lower lows. Therefore, less attention is needed on the MACD. Last Friday, the price found support around January’s low and bounced upwards.
If the price continuously moves upwards, the R1 weekly high of around 1.27096 is the first resistance in the market. If the price breaks and closes above it, the next resistance area will be the R2 monthly high, around 1.27723. There is a valid and unmitigated Bearish Engulfing Order Block in this area.
Oppositely, if the price pushes lower, the first support is found to be the S1 January’s low around 1.25967. If the S1 support breaks and the price moves lower, the next support area, S2, is around 1.25182.
USDCHF Daily
As expected from last week, the price moved upwards and found a strong resistance around the 200-period dynamic moving average and the 4-hour Bearish Engulfing Order Block and decline, leaving behind a well-defined shooting star bearish pattern. The price also failed to close above the last swing high. IF the Swissy gains strength, the price of the pair can drop, and the first zone of support is a 4-hour Bullish Engulfing Order Block that matches with intraday strong support, just below 0.88000. If the price declines further, the previous week’s low can act as the S2 support around 0.87426. Only after the break of the S2 will the failure swing high be considered a double-top reversal pattern. Otherwise, the price might bounce off and move upwards, creating an ascending triangle. If the price moves upwards, the R1 resistance can be tested again. If the price breaks and closes above it, there is room for the price to move until the next resistance R2, around 0.90524.
USDJPY 4H
Last week’s price action was a Bearish Engulfing - Outside candle. The price is around a resistance level. Looking at the macroeconomic events, the JPY is expected to strengthen and USD to weaken. If this happens and the price follows through, a downtrend can be developed on this 4-hour time frame chart. Usually, after an uptrend, the market enters a transition period and consolidates before it decides if it will continue moving upwards or create a new downtrend. Usually, when the transition takes significant time, like this one here, it moves in the opposite direction. This is not a rule, though.
If the price declines and moves downwards, the S1 support around 149.527 is the first support in the market. If the price breaks below it, the next support, S2, is approximately 148.900. On the other hand, a move to the upside can cause the price to rally to the R1 around 150.884.
A move beyond that can lead the price to a substantial area of resistance, around 151.910.
GBPJPY 4H
The price of the GBPJPY declined last week, creating a new market structure of lower highs and lower lows in the 4-hour time frame. The price also broke and closed below the 50-period moving average, which is a bearish indication. Moving averages still show an upward move, but always remember that moving averages are lagging indicators. Also, the RSI is below 50, indicating a bearish market. Weekly price action ended as a bearish candle, adding more bearish confirmation. If the price continues to move downward next week, the S1 support will become the first market support area. A break and close below it will create a lower low, and the price can move until the next area of support, S2, approximately 188.000. This chart point also consists of the 200-period moving average, which can act as a dynamic support. Conversely, if the price bounces off and moves upwards, the R1 inside resistance is below 190.500. If the price penetrates it and moves upwards, the next resistance, R2, is approximately 191.322.
GER40 4H
The enormous bullish move on the GER40 created a new all-time high last week.
The price kept rallying without any retracement or price correction. The RSI is still above 50, considering a bullish market. All three moving averages are in order: 20 is above 50, and both are above 200, indicating bullishness. The price makes higher highs and higher lows, indicating buying pressure. Last Wednesday, a bullish Order Block was created on the 4-h chart that hasn’t been tested. If the price continues to increase, the R1 resistance, which is at an all-time high around 17830, will be the first resistance area. A break above it can cause the price to move to the following resistance: R2, approximately 17900, or 18000. Remember that as the market makes all-time highs on every upward rally, there is no previous resistance to use as a reference on the chart.
If the price declines and moves downwards, the first support area, S1, is around 17566. It is where the Bullish Order Block was created, as seen on the chart. If the price penetrates that support and moves lower, the next area of support, S2, is an inside support of around 17472.
SP500, 4H
The market didn’t stop making new highs; the last week ended with a new all-time high price of around 5139. Even though the price made a new all-time high, the upward move combined with negative or bearish divergences on the RSI. This shows a lack of momentum during the last impulse upward move. This can cause a price correction, but it is not a guaranteed case. If the price declines and moves downwards, the first area of support, S1, is inside support and right above it is the 50-period moving average, which can act as a dynamic support. In the same area, a 4-hour Bullish Engulfing Order Block was created. If the price moves below the S1 after this, the next support is the S2, below the 5000. There, we find another Bullish engulfing order block. The S2 support is at a weekly low, which can attract the attention of many market participants. On the contrary, if the price rises, it will reach a new all-time high. We will use a new round number, and this time, it will be 5200.
US30, 4H
Last week, the price closed as an inside candle on the US30 weekly charts. This can cause the price to enter a corrective phase, which means a move to the opposite side.
The price is still in a solid upward trend, so the 50-period moving average is well above the 200-period. In the 4-hour time frame, the last impulse leg was made by the previous week’s low and high. None of them penetrated yet. Multiple Bearish Engulfing Order Blocks have been created around the all-time high. The RSI also shows bullishness among the moving averages as the line is above 50. Therefore, if the price continues to move upwards and penetrates the order block, it can reach the R1 resistance around 39283. If the price penetrates the R1 and closes above it, it will create a new all-time high. Using the Fibonacci extension, we mark the 161.8% around 39600 as the next resistance. Conversely, if the Bearish Engulfing Order block and the R1 hold, the price will decline and move downwards. The first area of support, S1, is around 38736. A move below S1 can push the price to test last week’s low, the S2 support, around 38300.
GOLD, 4H
After reaching all the price levels we marked last week in our analysis, the price of the Gold exploded to the upside, leaving behind a new order block. The weekly time frame is in an uptrend, and the price makes higher highs and closes higher. Looking at the 4-h time frame, the price expanded upwards during the end of last Friday's trading session. The Bollinger lower band was turned down when the price exceeded the upper band. This shows a strong bullish move. At the same time, the price forced the RSI oscillator into an overbought condition. This indicates the bullish strength in the Gold. The price stopped exactly at an old weekly high, which marks the R1 resistance, around 2088. If the price this week breaks above the R1 resistance and moves upwards, the next resistance in the market is the All-Time High price of around 2144. The NFP outcome will be a significant event in the development of the Gold price.
On the other hand, if the price declines and moves downwards, the first support, S1, becomes the previous month's high, approximately 2065. A break below it finds a solid 4-h Bullish Order Block that can cause the price to bounce upwards.
If not, and the price keeps lowering, the last week's low will become the following support, S2, around 2024.
USOIL, 4H
The USOil price entered into the well-defined 4-h Bullish Engulfing Order Block we marked on the 4-h time frame and bounced off, moving upwards last week—the price since was traded around the $79 area. The price fluctuates there for about two days without the sellers being able to push the price away from the resistance area. That was a market clue that the resistance is subjective to an upside breakout, which happened last Friday. The price reached a new High above $80. The MACD is above the zero line, and the MACD line crosses above the signal Line, which is a bullish sign. A short-term upwards channel CH1 can be drawn. If the price remains above the recently broken monthly high and continues to move upwards, the next resistance is approximately $82. If the price declines and moves downwards, the CH1 Channel can act as support and push the price back up. However, if the price penetrates the lower part of the CH1 channel and declines further, the S1 support is approximately $78. In the same area, a 4-h Bullish engulfing Order Block is resting. For a further decline, find last week's low around $75.
BTCUSD, 4H
The bullish run was noticeable last week as Bitcoin gained almost 20%. The price created a Bullish Pennant pattern, described by an upward impulse move, followed by a correction within an ascending and a descending trendline. Like the Daily chart, this pattern is shown as a double inside price action pattern on a higher time frame. This is usually a trend continuation pattern, and the expectancy is a trend resumption if the pierce breaks above the descending trendline. The minimum price target is the distance shown in the chart above, which is around $66,800 in case of a bullish breakout. If the price rallies, the all-time high is around $69.000. If the price declines and moves lower, the first support, S1, is approximately $59,800.
A penetration and further decline can lead to the price of the S2 support around $56,738.
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The Trading Pit offers only demo accounts to all users within the Challenges and Signal Provider Agreements (Scaling Plan). All assets and trading activities are purely virtual. Please note that we do not offer CFD (Contract for Difference) challenges to residents of Canada and the United States. All content and information on this website is for informational purposes only and should not be interpreted as financial advice. Also, remember that results achieved in the past are no guarantee of future results. It is essential to understand the risks associated with trading. If you are unsure, always consult an independent financial advisor.
