Last week, the GDP(Gross Domestic Product) and the CPI(Consumer Price Index) in the Eurozone bitted expression, and the Euro was gaining strength across the currency board. The Australian dollar continued to be a weak currency as the CPI report reported lower than forecasted. With the BoJ (Bank of Japan) keeping Interest Rates at 0.25%, the Japanese Yen didn't really show extreme weakness. All trader's attention was on the NFP (Non-Farm Payroll) last Friday. Despite the fact that the actual report was much less than the forecasted number, the US Dollar followed through only for a short period and by the end of the New York trading session, the US Dollar’s strength was evident across the currency board.
This week is expected to be different from other weeks, as the Presidential elections on Tuesday in the US will affect the volatility of the markets.
On Monday, usually, the markets “digest” the previous Friday’s move, Especially last Friday because of the NFP report. The only two major events for the day will be first the Investor Confidence Index in the Eurozone and the US Factory Orders in the US. Regarding Investor Confidence, the forecast shows an improvement compared with the previous report. Last time, the Index reported -13.8, and this time, it is expected to report -12.7, which can have a positive impact on the Euro. Regarding the US Factory Orders, the last report was -0.2% and this time, the forecast estimates a drop to -0.5%.
On Tuesday, the markets are expected to behave slightly differently due to the Presidential Elections in the US. The volatility is expected to be at its highest point, and day traders, as well as swing traders, must have this in mind in order to best manage their position sizing and stop loss placements. Early in the morning, during the Asian Trading Session in China, they will report the Caixin Services PMI (Purchase Manufacture Index), and the forecast shows a number remaining above the benchmark of 50, which can be perceived as positive for the Chinese Yuan. The next significant event will be the Interest Rates report by the RBA (Reserve Bank of Australia). The forecast shows that for another consecutive month, the RBA wants to keep their Interest Rates unchanged. As most major banks have already cut rates, the RBA is trying to keep the rate high for a longer time. We expect an increase in Volatility around the report, and if the actual number is anything less than 4.35%, the Australian dollar's weakness will be noticeable on the price charts. Moving into the European trading session, Switzerland will report its Unemployment Rate. The forecast shows that the unemployment is expected to remain at 2.6%. Remember that all the major currency pairs, including the USDCHF, will be sensitive during the day due to the Presidential Elections. Next, in the UK, they will report the Services PMI, which they expected to remain at 51.8 and the Composite PMI, which they expected to remain at 51.7.
Moving into the New York trading session, the market’s volatility is expected to be at its highest stage. In the US, they will report the Trade Balance. The forecast shows an increase from -70.4B to -71.9 B. Usually, this is considered a weakness for the Greenback. The next significant event, still in the US, will be the ISM Services PMI, and the consensus estimates a drop from 54.9 to 53.4. The last significant event for the day will be the Unemployment Rate in New Zealand. The forecast shows an increase from 4.6% to 5%. This can be a negative sign for Kiwi, and if the actual report confirms the forecast and the market follows through, we can see a weak New Zealand dollar on the currency board.
On Wednesday, in Japan, they will report the IHS Markit services PMI and the Composite PMI, which currently are around 49.3 and 49.4, respectively. The next event will be the Construction PMI in the UK, with the consensus showing a decrease from 57.2 to 55.3. During the same trading session, in the Eurozone, they will report the PPI(Producer Price Index), and the consensus estimates a drop from -2.3% to -3.5%. Today, we expect the market to be influenced primarily by yesterday's Presidential Election outcome instead of the news events that were presented.
On Thursday, the volatility is expected to pick up early in the morning as during the Asian trading session in Australia, they will report the Trade Balance. The consensus estimates a drop from 5.64B to 5.28 B. As this shows the difference between imported and exported products, if the outcome forms a lower number, it can be negative for the Australian Dollar. The next significant event will be the Retail Sales in the Eurozone. The forecast shows an increase in the number from 0.8% to 1.5%, which can be seen as a positive sign for Euro. The next event will be the Interest Rates report in the UK. This time, the forecast estimates a rate cut by 25 basis points in the UK and from 5% to drop to 4.75%. If the actual report confirms the outcome, we expect to see a weak Sterling, which can lift the EURGBP higher. Also, sell opportunities might be possible on the GBPUSD and the GBPJPY, as the technical analysis we will see below can go along with the news expectations. Also, in the scope will be the US dollar, as in the US, they will report the Interest Rates. The consensus estimates a drop from 5% to 4.75%. The volatility during the report will be extreme, especially on the major currency pairs. Then, the Fed Monetary Policy and the FOMC Press Conference will follow.
On Friday, the markets will “digest” yesterday’s news. During the Asian and London trading Sessions, there won’t be any significant news events. The only significant event for the day will be the Employment Change and the Unemployment Rate in Canada. The employment change is expected to drop from 46.7K to 33.2 K. The Unemployment Rate is expected to increase from 6.5% to 6.6%. If the reported outcome confirms the forecast, the Canadian Dollar is expected to weaken, and the USDCAD, EURCAD, and GBPCAD can potentially benefit if the lower time frames will develop bullish trends.
EUR USD 4H
Last week, the price of the EURUSD didn't create a new weekly low level. Instead, it created a higher high formation, rejecting the weekly resistance R1 we pointed out in the previous week’s Market Outlook. The weekly candle ended as a Bullish candle with a relatively long upper wick. On the 4-hour chart, the 50-period is below the 200-period, which is bearish. The RSI Oscillator is below its middle line of 50, which is also bearish. The MACD created a Bearish Crossover while the indicator is above its zero line. If the price follows the weekly price action, we expect the 4-hour chart to continue moving upwards. Hence, the first resistance area, R1, will be 1.09058, which is the previous week’s high. If the price penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be 1.09365.
On the other hand, if the price moves downward, the first support area, S1, will be t.08336. This is considered a key level of support as it consists of the 61.8% Golden Ratio Fibonacci measuring from the swing at point (a) until the swing at point (b) as shown on the chart and the 50-period moving average. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be 1.07690, which is the previous week’s low.
GBP USD 4H
Last Wednesday, the Sterling tested the Bearish Order Block we pointed out in the previous week’s analysis. Last Thursday, it declined by 1600 points (160 pips), leaving a significant FVP (Fair Value Price ) on the 4-hour chart, which was filed on Friday during the NFP (Non-Farm Payroll) report. Due to this, the weekly candle ended as a Long-Legged Doji candle bouncing off the 40-period weekly moving average(not shown on the chart). On the 4-hour chart, the price created a lower low formation with a Bearish Engulfing Candlestick, creating a Bearish Engulfing Order Block. A retracement then occurred one day later, and the price stopped at the middle of the Bollinger Band indicator, which is the 20-period moving average. The RSI is below its middle line of 50, and the MACD is below its zero line, both of which have bearish implications. Starting Monday, if the price keeps moving downwards, the first support area, S1, will be the previous week’s low at 1.28438. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be around 1.27468.
Oppositely, if the price fails to keep moving downwards and starts moving upwards, the first resistance area, R1, will be 1.29998. If it penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be 1.30580, which is the previous week’s high.
AUD USD 4H
For the fifth week in a row, the Australian dollar was considered among the weakest currencies overall. The weekly candle ended as a Bearish continuation candle. On the 4-hour chart, the price has been moving sideways since last Wednesday, as shown on the chart. The price is below the 50-period moving average, and this has bearish implications. The RSI Oscillator is below its middle line of 50, and this is also bearish. Last week, the price created a Bearish Engulfing Order Block of around 0.66000. If the sideways move will end up being a continuation chart pattern, the price is expected to move downwards. In this case, the first support area, S1, will be the previous week’s low at 0.65369. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be 0.64796. On the other hand, if the price moves upwards, the first resistance area, R1, will be 0.65963. If the price penetrates the R1 and keeps moving upward, the next resistance area, R2, will be 0.66171, which is the previous week’s high.
USD JPY 4H
Despite the US Dollar’s strength last week, the 61.8% Golden Ratio of the Fibonacci was the main reason for the decline. According to the chart analysis, this caused the USDJPY to create a Doji candle on the weekly chart. Usually, this has a bearish implication when it precedes an Uptrend. On the 4-hour chart, the 20-period is above the 50-period moving average, and this is bullish. The RSI is above its middle line of 50, and this is a bullish implication. The Stochastic Oscillator created a Bullish Crossover last Friday once its %K Line (Blue) crossed above the %D Line (Orange). Last Thursday, the price created an FVP (Fair Value Price) of around 153.000 and a Bearish Engulfing Order Block of around 153.500. Starting Monday, if the price is rejected and moves downwards, the first support area, S1, will be 151.787, 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 149.087. On the other hand, if the price moves upwards, the first resistance area, R1, will be around 153.882, which is the previous week’s high. If the price penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be at 155.218.
USD CHF 4H
The negative CPI report in Switzerland caused the Swiss Frank to suffer extreme weakness, and USDCHF moved approximately 550 points. The weekly chart ended with a Bullish Engulfing candle with a Long Lower Wick. Last Thursday, the price stopped declining at the Lower Band, and a Bullish Engulfing Order Block was created at around 0.86400. Despite the negative NFP report on the 4-hour chart, the price kept moving upwards. Towards the end of New York’s trading session last Friday, the price rejected the Upper Band of the Bollinger Band indicator, as shown on the chart. The RSI Oscillator is above its middle line of 50, and this has bullish implications. Starting Monday, if the price moves upwards, the first resistance area, R1, will be around 0.87087, 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 0.87486.
Oppositely, if the price moves downwards, the first support area, S1, will be at 0.86320. This is considered a key level of support as it consists of the Bullish Engulfing Order Block and the Lower Band, as shown on the chart. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be at 0.86068.
GBP JPY 4H
Following the previous week’s Market Outlook, the price created a higher high and a higher low formation on the weekly chart, but the candlestick didn't close as a bullish candle. This can cause the price to start a retracement phase this week. On the 4-hour chart, the price found support at the Bullish Engulfing Order Block, as we pointed out in the previous week’s analysis, and it bounced off and moved away from the level, as shown on the chart.
Regarding the moving averages analysis, the 20-period moving average is above the 50-period moving average, which is bullish. The RSI is around its middle line of 50. The MACD is below the zero line, which has bearish implications.
Additionally, the MACD’s Histogram is below zero, which is also bearish. Currently, the price is in the Bearish Engulfing Order Block area, as shown on the chart. Therefore, if it declines and moves downwards, the first support area, S1, will be at 195.376, which is the previous week’s low. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be at 194.570, which is an older weekly level.
On the other hand, if the price moves upwards, the first resistance area, R1, will be at 198.632. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be at 199.811, which is the previous week’s high.
GOLD 4H
The price of GOLD last week created a new ATH(All-time High) at $2790. It was at the exact price level we pointed out last week, the 161.8% Fibonacci extension, as the potential ATH. However, the price on the weekly chart ended as a Shooting Star, and this has bearish implications. On the 4-hour chart, the 20-period is above the 50-period moving average, and this has bullish implications. The RSI thought it is below its middle line of 50, which is bearish. The MACD is around its zero line. The MACD’s Histogram is below the zero line, and this has bearish implications. Last Thursday, the price created an FVP (Fair Value Price) of around $2770. Starting Monday, if the price moves downwards, the first support area, S1, will be at $2724, which is the previous week’s low. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be at $2708.
If the price follows the major uptrend of the weekly chart and moves upwards, the first resistance area, R1, will be $2762. This level consists of the FVP(Fair Value Price) around $2770, the 61.8% Fibonacci Golden Ratio and the 20-period moving average. If the price penetrates R1 and keeps moving upwards, the next resistance area, R2, will be the ATH (All-Time High) at $2789.
USOIL 4H
Last Monday, the price of the USOIL dropped by 3888 points immediately after the markets opened. In the lower time frames, the market created a Wickhoff accumulation pattern, and by the end of the week, the price moved upwards in a series of higher highs and higher lows. On the 4-hour chart, the 50-period moving average is below the 200-period moving average, and this is bearish. The RSI is around its middle line of 50. The Stochastic Oscillator is in an Overbought condition with the Berarish Crossover as the %K Line(Blue) crossed below the %D Line (Orange), and this has bearish implications. Last Wednesday, a Bullish Engulfing Order Block created around $67.50.
Starting Monday, if the price keeps moving downwards, the first support area, S1, will be around $68.27. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be at $66.70, which is the previous week’s low.
Oppositely, if the price moves upwards, the first resistance area, R1, will be at $71.60, which is the previous week’s high. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be approximately $73.31, which is an older weekly level.
BTC USD 4H
Despite the Hanging Man reversal price action we saw last week on the chart, the price of BTCUSD moved upwards, reaching $72500 and rejecting, creating a Shooting Star reversal pattern. Based on the weekly chart, this has bearish implications. On the 4-hour chart, however, the price didn't make a lower high and lower low formation to create a downtrend. The 50-period is still above the 200-period moving average, and this has bullish implications. Analysing the RSI and the Stochastic Oscillators, the RSI is below its middle line of 50, and this is bearish. The Stochastic is in an Oversold condition, and this is also bearish. Hence, if the price is rejected and moves downwards, the first support area, S1, will be the previous week’s low at $67535. This is considered a key level of support as it coexists with the Bullish Engulfing Order Block that was created last Monday, and it hasn’t been tested yet.
Additionally, the 61.8% Golden Ratio of the Fibonacci is very close to the S1 support, which can be considered an additional support factor for the price. If the price penetrates S1 and keeps lowering, the next support area, S2, will be $65262.
On the other hand, if the price moves upwards, the first resistance area, R1, will be at $72662. As shown in the chart above, there is a Bearish Engulfing Order Block and an FVP (Fair Value Price). Both can act as additional resistance to the price. If the price penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be the $73574.
E-mini SP 500 Futures, 4H
The weekly chart created a Bearish Continuation candle, which bounced off the 10-period weekly moving average (not shown on the chart). Looking at the 4-hour chart, the price created the first lower high and lower low formation, and this has bearish implications. The 20-period is below the 50-period moving average, and this is also bearish. The RSI is below its middle line of 50, and this is bearish. The Stochastic Oscillator is in an Oversold condition after the price dropped last Wednesday. Starting Monday, if the price continues moving downwards, the first support area, S1, will be $5732, which is the previous week’s low. If the price penetrates the S1 and keeps moving lower, the next support area, S2, will be at $5609, which is an older weekly level.
On the other hand, if the price bounces off and starts moving upwards, the first resistance R1 will be an Inside resistance at $5837. This is a significant level of resistance as it consists of the 61.8% Fibonacci percentage, the 50-period moving average and the penetrated swing low at point (1), as shown on the chart. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be around $5891, which is the previous week’s high. If the price penetrates the R2 and keeps moving upwards, the next resistance area, R3, will be the ATH at $5927.
US 30, 4H
The US30 was among the strongest US Indices, as the weekly chart ended as a Doji candle. As the primary trend is up, this can cause the US30 to move upward next week. On the 4-hour chart, the price created a series of lower highs and lower lows. The 20-period moving average is below the 50-period, and this has bearish implications. The RSI Oscillator is below its middle line of 50, and this is bearish. The MACD is below the zero line, and it created a Bullish Crossover as the MACD Line (Blue) crosses above the Signal Line (Orange). Last Friday, after the NFP was released, the price of the US30 rejected the 61.8% Fibonacci ratio and the 50-period moving average. Hence, if the price moves downwards, the first support area, S1, will be the previous week’s low at $41734. As shown on the chart, there is an Order Block and an FVP (Fair Value Price), both created last Friday, and they can become additional support for the price. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be the $41344, which is an older weekly level. Oppositely, if the price moves upwards, the first resistance area, R1, will be $42547, 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 $42637.
GER 30 (DAX Futures), 4H
Last week, the price of the DAX Futures ended as a Bearish Continuation candle on the weekly chart. At the same time, it was rejected at the 10-period moving average, indicating that the uptrend, which is the current major trend, can still be intact. On the 4-hour chart, the price inevitably created the first low high and lower low formation. Hence, the 20-period crossed below the 50-period moving average, known as a Bearish Crossover. The RSI is below its middle line of 50, and this is bearish. The Stochastic Oscillator is around its Oversold area, and this also has bearish implications. Last Tuesday, the price created a Breakaway Gap of around 19570 and, on Thursday, a Runaway Gap of around 19300.
Starting Monday, if the price moves downwards, the first support area, S1, will be at 19097 which is the previous week’s low. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be at 18851.
Oppositely, if the price bounces off and moves upward, the first resistance area will be an Inside resistance at 19412. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be at 19747, which is the previous week’s high. Traders need to be aware that the Breakaway Gap can provide additional resistance to the price as it hasn’t been tested yet.
