As we explained in last week’s Market Outlook, the Markets were primarily moving based on the Presidential Election in the US. We witnessed a significant rally in the price of every Indice. The US30, the SP 500 and the NASDAQ all made a new ATH (All-Time High). Last Thursday, the BoE (Bank of England) cut Interest Rates by 25 Basis points, and last Friday, the FED proceeded to a similar rate cut for the US. The new rates in the UK and the US are 4.75%. Although the RBA (Reserve Bank of Australia) kept their Interest Rates unchanged at 4.35%, the Australian Dollar from Tuesday until Last Friday was one of the strongest currencies in the markets. Cryptocurrencies are getting ready for a bull run as investors and traders around the world become very optimistic about it, with the new candidate elected as the new president of the United States of America.
This week, we expected a lot of trading activity as significant news events will bring volatility in the markets and, in many cases, change market trends.
The volatility is expected to become noticeable early on Monday morning, as Japan will report its Trade Balance. The current number is 3.02T, and the forecast estimates a drop to 2.99 T. This can have a negative effect on the Japanese Yen, at least temporarily. It is worth mentioning that the Japanese Yen last week was an even stronger currency than the US Dollar. During the European trading session, the volatility is expected to be as usual. There won't be any significant news events. In France, the Banks will be closed due to Armistice Day. Moving into the New York Trading Session, we don't expect intense volatility conditions. In Canada, the banks will be closed in observance of Remembrance Day, and in the US, they will be closed due to Veterans Day.
On Tuesday, the Unemployment Rate in the UK will be the first important event of the day. The consensus estimates an increase from 4.0% to 4.1%. If the actual forecast is confirmed, there is a high chance that Sterling will lose value against the US Dollar and the Japanese Yen. These two are the strongest currencies at the time. Therefore, selling opportunities could be available for the GBPUSD and the GBPJPY. The next important event will be the Germany ZEW Economic Sentiment Index. The forecast estimates an increase from 13.1 to 14, which, if the actual report confirms this, can positively impact the Euro. The last event of the day will be the speech of FOMC Member Waller in the US.
The volatility is expected to start being noticeable from Wednesday onwards. In Japan, they will report the PPI (Producer Price Index) early in the morning. The consensus estimates an increase from 2.8% to 2.9%. The fundamentals in Japan look positive this week, and we expected the Japanese Yen to be the primary currency on the focus not only due to the Macroeconomic outlook but also due to the Technical price chart analysis, as we will see later on the USDJPY and the GBPJPY currency pairs. Moving into the New York trading session, in the US, the CPI (Consumer Price Index) is expected to remain at 2.4%. If the actual report confirms the forecast, we need to see in which direction the US Dollar will move. A neutral CPI, along with a cut on the Interest Rates (from last week), can also be negative for the Greenback.
On Thursday, the Australian dollar will be on the scope as they will report the Unemployment Rate in Australia. The consensus this time shows that a rise in unemployment is possible. Currently, the unemployment is at 4.1%, and it is expected to increase to 4.2%. At the same time, this might be a cause of the significant drop in Employment Change from 64.1K to 25K. This means that people who run out of employment will seek unemployment benefits, and this can negatively impact the Australian dollar. In case the actual number and forecast numbers converge, there is a good chance to find some selling opportunities on the price chart on the AUDUSD currency pair. The next significant event will be the Industrial Output in the UK. The forecast shows a decrease from 0.5% to 0%. At the same time, the UK will report the Construction Output, which is expected to drop from 0.4% to 0.3%. These are not the types of events which usually change market directions, but especially with the events related to the Sterling, the market volatility becomes noticeable at the time of the event release.
The next significant event will be the GDP (Gross Domestic Product) in the Eurozone. The consensus estimates an unchanged number at 0.9%. Usually, a stable GDP does not support a currency optimist by traders and investors. Hence, a weakness in the Euro can be a more realistic expectation rather than a strength. Moving into the US trading session, the PPI (Producer Price Index) in the US is expected to increase from 0.2% to 0.3%. If this happens and at the same time the market follows through, we expect a strong US Dollar. The trading day will end with the speech of Chairman Powell on behalf of the FED in the US and Bailey’s speech on behalf of the BoE in the UK.
On Friday, the Japanese Yen will be in the scope of early mourning during the Asian trading session, as in Japan, they will report their GDP (Gross Domestic Product). As per the forecast, we expect to see a significant drop from 3.1% to 0.7%. If this forecast is confirmed and the markets will follow with this outcome, the Japanese Yen is expected to become a weak currency at that time. Moving into the London trading session, in the UK, they will report their GDP (Gross Domestic Product). The forecast estimates an unchanged number of 0.2%, which can be neutral for the Sterling. The trading day, as well as the trading week, will end with the last significant event in the US, which is the Retail Sales. As per the forecast, the Retail Sales are expected to drop from 0.4% to 0.3%. Although this is an important event for the US dollar, it is less likely a negative outcome will cause a significant trend reversal on the US Dollar currency pairs unless the market trades at the same time at a significant level of price support.
EUR USD 4H
Last week was special for all major currency pairs. The US Dollar was the dominating force, causing the price of the EURUSD to drop significantly. On the weekly chart, the price ended as a Bearish Engulfing candlestick. On the 4-hour chart, the price created a lower low formation last Wednesday. This downward impulse move created a Bearish Order Block around 1.09300 and an FVP (Fair Value Price) at 1.09000. Afterwards, the price created a swing low at point (a), and it retraced 50% of its original move, as shown on the chart. As per the moving averages analysis, the 50-period is below the 200-period, and this is bearish. The RSI Oscillator is below its middle line of 50, and this is also bearish. Starting Monday, if the price continues moving downwards, the first support area, S1, will be at 1.06826, which is the previous week’s low. If the price bounces off, it will create a double-bottom reversal pattern. In case the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be around 1.06024, which is an older weekly level.
On the contrary, if the price moves upwards, the first resistance area will be the R1, around 1.08248. This is a key level of resistance as it consists of the 50% Fibonacci retracement, as we explained earlier, and the 50-period moving average. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be around 1.09374, which is the previous week’s high.
GBP USD 4H
We saw a relatively strong Sterling towards the end of last week. On the weekly chart, the price remained above the 40-period weekly moving average (not shown on the chart). The weekly candlestick price action ended as a Long-Legged Doji candle. On the 4-hour chart, the price moved upwards until the Upper Band of the Bollinger Band indicator and last Tuesday, It rejected moving downwards until the Lower Band. The price was unable to penetrate the Bands. Therefore, it started moving within a range as shown on the chart. The RSI Oscillator is below its middle line of 50, and this is bearish. Currently, the price is below the 20-period moving average. If the price continues to move downwards, the first support area, S1, will be at 1.28340, which is the previous week’s low. If the price penetrates the S1 and keeps lowering, the next support area, S2, will be at 1.27468. Oppositely, if the price moves upwards, the first resistance area, R1, will be at 1.30462. This is considered a significant level of resistance because it consists of the Bearish Engulfing Order Block formed last Tuesday around 1.30200 and the Upper Band of the Bollinger Band indicator. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be approximately 1.31030.
AUD USD 4H
Although the Australian dollar started strong at the beginning of the previous week, by the end of the week, if it followed the other major currency pairs, it weakened. The weekly price action ended as a Doji candle rejecting the 40-period moving average and closing below it. On the 4-hour chart, the price moved away from the consolidation we pointed out on the chart last week. It then moved upwards until the 200-period moving average, and then on Friday, it declined, creating a Bearish engulfing Order Block around 0.66800 and an FVP (Fair Value Price) around 0.66200. The 50-period is below the 200-period, and this is bearish. The RSI Oscillator is below its middle line of 50, and this is also bearish. Therefore, if the price continues to move downwards, the first support area, S1, will be at 0.65124, which is the previous week’s low. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be around 0.64356.
On the other hand, if the price bounces off and moves upwards, the first resistance area, R1, will be at 0.66880. This is a significant area of resistance as it consists of the Berarish Order Block and the 200-period moving average. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be around 0.67234, which is the previous week's high.
USD JPY 4H
Following the previous week’s Market Outlook, and as we forecasted in the weekly price action, the price didn’t create an upward breakout on the weekly chart, but by the end of the week, it ended as a False Breakout. On the 4-hour chart, the 50-period moving average is above the 200-period moving average, which is bullish. The RSI, on the other hand, is below its middle line of 50, which indicates bearishness. Last Wednesday, the price created a Bullish Engulfing Order Block of around 151.500 and an FVP (Fair Value Price) of around 152.500. Currently, the price is testing the FVP, and it is trading close to the 50-period moving average. Hence, if the price finds support at the S1 Inside support, as shown on the chart, it will bounce off and move upwards. In this case, the first resistance area, R1, will be around 154.700, which is the previous week’s high. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be around 157.614.
On the other hand, if the price is rejected and moves downwards, the first support area, S1, will be the previous week’s low, around 151.284. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be at 149.087, which is an older weekly level.
USD CHF 4H
Following the US DoIllar’s Strength, the Swissy became a very weak currency (among with the Euro). Usually, the Swiss Frank is considered a “Safe Heaven” currency through the years, in periods like this, when there is political and geopolitical uncertainty in the World. Despite that, the weekly price action ended as a Bullish Engulfing. On the 4-hour chart, the price created a higher high formation last Thursday, and the 20-period crossed above the 50-period moving average. The Bullish price move that started last Wednesday created a Bullish Engulfing Order Block around 0.86200 and an FVP (Fair Value Price) around 0.86500, as shown on the chart. The RSI is above 50, which is bullish. Therefore, if the price continues moving upwards, the first resistance area, R1, will be the previous week’s high, around 0.87736. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be approximately 0.88756, which is an older weekly level.
Oppositely, if the price is rejected and moves downward, it will start a retracement phase. In this case, the first support area, S1, will be an Inside support area of around 0.87116. This level is considered as a key level of support as it coexists with the 50% Fibonacci and the 20-period moving average. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be around 0.86150, which is the previous week’s low.
GBP JPY 4H
As we explained last week, the weekly price action of the GBPJPY is likely to push the currency pair into a downfall. That’s what happened last week, and as traders, we used this to our advantage, trading the short-selling opportunities of the GBPJPY. On the 4-hour chart, the price moved within the boundaries of the Bollinger Band indicator. The price moved upwards at the beginning of the previous week and on Thursday reached the Upper Band of the indicator. After the BOE released the Interest Rates in the UK, the price declined and moved downward until last Friday. Currently, the RSI is below 50, indicating bearishness and the price is below the middle line of the Bollinger Band, which is the 20-period moving average. Starting Monday, if the price moves upwards, the first resistance area, R1, will be at 199.564, which is the previous week’s high. If the price surpasses the R1 resistance and keeps moving upwards, the next resistance area, R2, will be around 203.616, another weekly level. Alternatively, if the price is rejected and moves downwards, the first support area, S1, will be around 196.502, which is the previous week’s low. If the price surpasses the S1 support and keeps moving downward, the next support area, S2, will be approximately 195.376, which is an older weekly level.
GOLD 4H
Following the previous week’s market analysis, the Long Upper Wick Reversal candle on the weekly chart was enough evidence to push the price lower. The weekly trend remains an uptrend, but the price action is a Bearish Continuation candle. On the 4-hour chart last Wednesday, the price moved downwards, penetrating the demand area we pointed out in the previous week’s Market Outlook at around $2710. It created a lower low formation, and then it bounced off and moved upwards, retesting the $2710, which now acted as a Resistance level. Additionally, this level co-exists with the Golden Ratio of 61.8% starting from the swing at point (a) until the swing at point (b). Hence, the 20-period is below the 50-period moving average, and the RSI is below its middle line of 50, which are both bearish. Therefore, if the price will continue moving downwards, the first support area, S1, will be around $2643, which is the previous week’s low. In case the price penetrates the S1 and keeps declining, the next support area, S2, will be $6110, which is an older weekly level. A further downward move will find the next support area, S3, at approximately $2546.
On the other hand, if the price bounces off and moves upwards, the first resistance area, R1, will be around $2710. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be around $2749, which is the previous week’s high.
USOIL 4H
Last week was one of the least volatile weeks for the USOIL compared to the global political events. The weekly chart didn’t show any significant market direction or a reversal price action. The price remained around $70. On the 4-hour chart, the price moved upwards last Tuesday, tested the 4-h FVP(Fair Value Price), and then declined. Since then, the price moved sideways. The 50-period and the 200-period moving average are moving parallels to each other, which is an indication that the USOIL market is trendless. The MACD is above its zero line, which indicates bullishness. Starting Monday, if the price moves upwards, the first resistance area R1 will be around $72.85, which is the previous week’s high. If the price penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be around $74.75. A further upward move will find the next resistance area, R3, at approximately $75.62.
Oppositely, if the price is rejected and moves downwards, the first support area, S1, will be at $69.37, which is the previous week’s low. If the price penetrates the S1 and keeps lowering, the next support area, S2, will be around $68.27. A further downward move will find the next support area, S3, at approximately $66..70.
BTC USD 4H
Traders and Investors around the world were looking for the beginning of the Bullish run on Bitcoin and other cryptocurrencies with the current outcome of the Presidential Election in the US. Bitcoin registered an ATH (All-Time High), and the weekly reversal price action we pointed out on the previous week’s Market Outlook didn't follow through as the market printed a Bullish Engulfing candle with its closing price being well above the high of the shooting Star Reveral. This is an indication of the strength in the BTCUSD market. On the 4-hour chart, the price printed a Bullish Marubozu candle last Wednesday, moving the price from $69500 to $75000. Since then, the price has kept increasing, making a new ATH. The 50-period is above the 200-period moving average, and this is bullish. The Stochastic Oscillator is in an Overbought condition, which is also bullish. However, the %K Line (Blue) crossed below the %D Line (Orange), which can cause the price to start a retracement phase.
Additionally, last Monday, the price created a Bullish Order Block of around $67500 and an FVP (Fair Value Price) of around $71000, which neither of these two has yet been tested. Hence, if the price is rejected and moves downwards, the first support area, S1, will be at $6836, which is the previous week’s low. If the price surpasses the S1 and keeps lowering, the next support area, S2, will be around $64686.
On the other hand, if the price moves upwards, the first resistance area, R1, will be $79760. If the price penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be around $85000, which is expected to be the new ATH.
E-mini SP 500 Futures, 4H
It was inevitable to see a bullish and strong upward move on the SP500 last week. The weekly trend is up, and the week ended with a Bullish Engulfing reversal price action. On the 4-hour chart from last Tuesday, the price started moving upwards with long Bulliush Marubozu candles. On Wednesday, the price caused a moving average crossover known as the Bullish Crossover once the 20-period crossed above the 50-period moving average. It also created an FVP (Fair Value Price) of around $5850 and a Bullish Engulfing Order Block of around $5925. The RSI Oscillator is in Overbought condition, and this has bullish implications. Therefore, if the price continues to move upward, the first resistance area, R1, will be the ATH (All-Time High) at $6040.50. In case the price penetrates the R1 and keeps increasing, it will register a new ATH. Having no retracement since last Tuesday, we can not use the Fibonacci Extension tool to predict the next Resistance ATH level.
On the other hand, if the price rejects and moves downwards, the first support area, S1, will be at $5900.75. In case the price doesn't bounce off from S1 but instead rejects and penetrates it, the next support area, S2, will be $5724.25, which is the previous week’s low.
US 30, 4H
The weekly chart kept its upward move last week. The Presidential Election in the US caused the market participants to appreciate the price of the US30 Indicie. The weekly chart ended with Bullish Engulfing price action indicating bullishness. On the 4-hour chart, the price created a new higher high and higher low formation. On Wednesday, the 50-period crossed above the 200-period moving average known as the Golden Cross. Last Tuesday, the price also created a Bullish Engulfing Order Block of around $42000 and an FVP (Fair Value Price) of around $42500. The RSI Oscillator is in Overbought condition, which has bullish implications.
Similarly, the Stochastic Oscillator is also Overbought, indicating bullishness. Starting Monday, the price continues moving upwards. The first resistance area will be the ATH price at $44198. This is also the same level as the 200% Fibonacci Extension. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be approximately $44420, which is found using the 300% Fibonacci Extension level.
Conversely, if the price is rejected and moves downwards, the first support area, S1, will be at $43702. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, which is an Inside Support, will be at $42370. This is considered a key level of support as, at the same price area, there is a Bullish Order Block, an FVP (Fair Value Price) that was created last week, and the 200-period moving average.
GER 30 (DAX Futures), 4H
A more neutral perspective last week is that the German major index ended the weekly price action as a Doji candle. The primary trend on the weekly chart is an uptrend, which has bullish implications. On the 4-hour chart, the price moved sideways with long, bearish and bullish candles penetrating between the Upper and the Lower Bands of the Bollinger Band indicator, but in no case did the price successfully move away from the Bands in order to create a new trend. Hence, the MACD shown on the chart is flat around its middle line of zero despite the fact that the MACD Line (Blue) and the Signal Line (Orange) are both above the zero line. Currently, the price is below the 20-period moving average, which is the middle line of the Bollinger Band indicator.
Starting Monday, if the price keeps moving downwards, the first support area, S1, will be around 19091, the previous week’s low. If the price penetrates S1 and keeps moving lower, the next support area, S2, will be at 18851, an older weekly low level.
Conversely, if the price bounces off and moves upwards, the first resistance area, R1, will be around 19650, the previous week’s high. If the price penetrates the R1 and keeps increasing, then the next resistance area, R2, will be the ATH (All-time High) at 19802.
