Last week, the US Dollar was the leading currency in the markets. As we forecasted in the previous week’s Market Outlook, the market moved exactly as we expected. The Canadian dollar was among the weakest currencies, as the BOC (Bank Of Canada) cut Interest Rates from 4.25% to 3.75% last Wednesday and on Friday, meaning 2 days after, the Retail Sales reported not only less than the previous report but also less than the forecast. We can say that the Loonie was heavily traded on the sell side last week. Additionally, the other two major commodity currencies, the Australian dollar and the New Zealand dollar, were very weak currencies. Also, the Japanese Yen experienced significant weakness last week due to the drop on the CPI (Consumer Price Index) number.
On Monday, the Market might Gap at the Open ( during the Asian trading Session) as in Japan. They will have the Lower House Elections a day before. Therefore, traders looking at trading strategies involving gaps and reversals might have a good chance of finding trading opportunities. As Mondays are usually “quiet” days in terms of major news events, the markets are expected to “digest” the last Friday’s moves. The only significant event for the day will be the BoC Governor Macklem's speech during the New York Trading session, which will primarily will affect the Canadian Dollar directly.
On Tuesday, starting early in the morning during the Asian trading session, volatility is expected to pick up as Japan reports its Unemployment Rate. The forecast shows a stable unemployment rate, which is expected to remain at 2.5%. The next event will be the German GfK Consumer Climate, which has been adopted to increase from -21.2 to -20.4. As it shows the level of Consumer spending within Germany, the negative and below zero indicates a contraction in spending, which is usually not a positive sign for the Euro. Moving into the New York trading session, the Goods Trade Balance is expected to be reported less compared with he previous report. The forecast estimates a drop from -94.3B to -96.1 B. This can cause some drop in the US Dollar, but this is not enough to create a trend reversal in the market. During the New York trading session, the UK's Monetary Policy Report Hearings will take place. Next will be Consumer Confidence in the US. The consensus estimates an increase from 98.7 to 98.9. At the same time, still in the US, they will report the job opening, which they expected a decrease from 8.04M to 7.92 M. As on Friday, the NFP will be released, the markets will still be anticipating that report, and the market participants will weigh more on the NFP rather than any other report in order to justify the US Dollar’s performance.
On Wednesday, the Australian Dollar will be in the trader’s scope, especially during the Asian Trading Session, as in Australia, they will report the CPI (Consumer Price Index). The forecast shows a drop in the CPI number from 2.7% to 2.5%. This can be a weak sign for the Aussie. If the CPI is reported as per the forecast, and if, at the same time, the market follows through, we expect much more weakness in the Australian Dollar. Currently, the Australian Dollar is among the weakest currencies across the board. This event outcome can add more to the sell side. Therefore, the AUDUSD can keep moving downwards, and trend-following traders might find retracement trading opportunities to sell the currency pair. The next event will be the Consumer Confidence in Japan. The forecast estimates a drop from 36.9 to 36.8. Moving into the European Trading session, the German Prelim CPI is expected to be reported higher than the previous report. Previously, it was 0.0%, and this time, it is expected to be reported at 0.2%, which can be a positive outcome for the Euro.
With the London trading session kicking in, the KOF Barometer in Switzerland is expected to drop from 105.5 to 105.1. That usually directly affects the Swiss Frank. The most significant and anticipated event for the day will be the change in ADP Non-Farm employment in the US. The last report was at 143K at his time, and the consensus estimates a drop to 106K. This is an early indication of the NFP report, which will be announced 48 hours later. Despite the ADP outcome, the market won’t reveal 100% of the US Dollar’s directional move as they will be waiting for the report of the NFP on Friday. A drop in the ADP will create intraday volatility on the US dollar, and it might offer traders short-term trades. Next, in the US, they will report the GDP (Gross Domestic Product), which is expected to remain at 3%. Undoubtedly, the volatility around the Greenback is expected to be noticeable. Therefore, day traders need to be aware of that and manage their positions accordingly. The last important event for the day will be the CPI (Consumer Price Index) in Germany. The forecast estimates an increase from 1.6% to 1.8%. If this happens and simultaneously if the market follows through, the Euro is expected to gain significant strength.
On Thursday, volatility is expected to be noticeable starting early in the morning, as Japan and Australia will report their Retail Sales during the Asian trading session. In Japan, the forecast estimates a 0.5% drop, meaning the current 2.8% is expected to drop to 2.3%.
The forecast estimates a drop from 0.75 to 0.4% in Australia. If the actual report confirms the forecast, the Japanese Yen and the Australian Dollar might continue losing value, primarily against the US Dollar. This means the USDJPY can keep moving upwards, and the price of the AUDUSD could keep declining. The next significant event will be the Japan Interest Rates Report. The BoJ (Bank of Japan) is expected to keep its Interest Rates at 0.25%, which means that, most likely, the Japanese Yen will become a weak currency across the currency board.
In most cases, when the Interest Rates remain the same or have been cut, the currency’s value depreciates. The next event will be the Unemployment Rate in the Eurozone. The consensus estimates an Unemployment Rate of 6.4%. At the same time, still in the Eurozone, the HICP Prelim is expected to increase from 1.7% to 1.9%. If this happens and at the same time the market follows through, we expect to see a strong Euro, at least during the London trading session. The trading day will end with the GDP (Gross Domestic Product) in Canada. The consensus estimates a decrease from 0.2% to 0.1%. This means that if the actual report confirms the forecast, the Canadian dollar’s weakness is expected to continue.
On Friday, volatility is expected to start in the Asian trading session, as in Australia, the PPI (Producer Price Index) is expected to drop from 1.0% to 0.7%. If the actuarial report confirms this forecast, the Australian Dollar can weaken further. Moving into the European and London trading sessions, the Banks in France and Italy will be closed in observance of All Saint Day. Hence, we expected low liquidity and volatility for the Euro during the European trading session. In Switzerland, they will report the CPI ( Consumer Price Index). The forecast estimates an increase from -0.3% to 0.0%. This can help the Swiss Frank to gain some strength across the board. At the same time, in Switzerland, Retail Sales are expected to be lower than in the previous report. The consensus estimates a drop from 3.2% to 2.5%. The day's attention will be on the NFP( Non-Farm Payroll), which will be the next significant event for the day. The consensus estimates a significant decrease from 254K to 125K. If the actual report confirms the forecast and, at the same time, if the market follows through, the US Dollar can become the weakest currency in her market. This can give an advantage to the Euro, the Sterling, and the rest of the currencies to dominate their exchange rate against the US Dollar. At the same time, the Average Hourly Earnings are expected to be reported at 0.3% compared to the current 0.4%, and the Unemployment Rate in the US remains at 4.1%. The trading day will end with the ISM Manufacturing PMI in the US, which is expected to increase from 47.2 to 47.7. The volatility during the New York Trading Session is expected to be extreme, and day trading activity needs to be approached with decent risk and position management.
EUR USD 4H
Last week, the price of the EURUSD kept declining, and on the weekly chart, it ended as a Bearish Continuation candle. On the 4-hour chart, the 50-period moving average is below the 200-period, which is bearish. The RSI is below its middle level of 50, indicating bearishness. The Stochastic Oscillator is in an Overbought condition with the Bearish Crossover that occurred last Friday, indicating that the downtrend is likely to resume. Last Friday, a Bearish Engulfing occurred around the 50-period moving average. Hence, if the price continues to move downwards, the first support area, S1, will be around 1.07612, which is the previous week’s low. If the price penetrates the S1 and keeps moving lower, the next support area, S2, will be an older weekly level at 1.07100.
Conversely, if the price bounces off and moves upwards, the first resistance area, R1, will be at 1.08718, the previous week’s high. Below the R1, there is a Bearish Engulfing Order Block that was created last Monday, and it can act as an additional resistance factor for the price. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be around 1.09365, which is an older weekly level.
GBP USD 4H
Although sterling showed some evidence of strength last week, the US Dollar’s Strength forced the price of the GBPUSD to lower. On the weekly chart, the price made a lower high and a lower low formation. On the 4-hour chart, the last downward impulsive move, which is shown on the chart with the lower low formation, occurred under Convergences, which means that the RSI Oscillator didn't show any Divergences. The 50-period moving average is below the 200-period, and this is bearish. The RSI is below its middle line of 50, and this is also bearish. The Stochastic Oscillator is almost at its Overbought condition, without showing any Bearish Crossover (meaning the %K Line (Blue) didn't cross below the %D Line (Orange).
Last Monday, the price created a Bearish Engulfing Order Block around 1.30300, and last Thursday, it created an FVP (Fair Value Price) around 1.29400. Hence, if the price continues moving downwards, the first support area, S1, will be at 1.29074, which is the previous week’s low. If the price penetrates the S1 support and it keeps declining, the next support area, S2, will be at 1.27468, which is an older weekly low.
On the other hand, if the price moves upwards, the first resistance area, R1, will be at 1.3153. This is a key level of resistance as the price coexists with the Golden Ratio 61.8% Fibonacci, the Bearish Order Block, and the 50-period moving average. If the price penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be at 1.30580.
AUD USD 4H
The Australian dollar’s weakness was evident last week, and the price on the weekly chart ended with a Long Bearish candle, with the candle closing price near its low. On the 4-hour chart, the price kept declining until the end of the New York trading session, and the price created a Bearish Engulfing Order Block around 0.66400. The 50-period is below the 200-period moving average, and this is bearish. The RSI Oscillator is below 50, which is bearish. The MACD is below its zero line, and this has bearish implications.
Starting Monday, if the price continues moving downwards, the first support area, S1, will be around 0.66012, 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 0.65640, which is an older weekly level. On the other hand, if the price moves upwards, the first resistance area, R1, will be around 0.66614, which is the swing at point (1), as shown in the chart. If the price penetrates the R1, it will change the current market structure, meaning that the current downtrend will end. In this case, the next resistance area, R2, will be at 0.66918. A further upward movie will find the next resistance area, R3, around 0.67234, which is the previous week’s high.
USD JPY 4H
As we explained in previous market analyses, the negative divergences we identified in last week’s Market Outlook forced the price into the retracement phase. The price of the USDJPY kept moving upward, creating a new higher high on the weekly chart. On the 4-hour chart, the price on Monday entered the Demand Zone we pointed out on the Chart last week, bounced off, and then moved upward, creating a 4-hour uptrend. The 50-period moving average is still above the 200-period moving average, and this is bullish. The RSI is above its middle line of 50, indicating bullishness. The MACD is above its zero line, which has bullish implications. If the price continues moving upwards, the first resistance area, R1, will be around 153.190, the previous week’s high. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be 155.218. In case the price moves downwards to start a retracement phase, the first support area, S1, will be Inside support at the 150.322 level.
This is a key level of support as it consists of the Golden Ratio 61.8% Fibonacci measuring from the swing at point (a) to the swing at point (b) as shown on the chart, the 4-h FVP (Fair Value Price) created last Monday and the 50-period moving average. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be around 149.087, which is the previous week’s low. At this level, a 4-h Bullish Engulfing Order Block was created last Monday.
USD CHF 4H
The Swiss Frank was also one of the strongest currencies last week, but the price of the US Dollar appears to have strengthened even more as the exchange rate between USDCHF increased.
The weekly candle ended as a Bullish Continuation pattern, but its body was relatively small compared to two weeks ago, which indicated market weakness. On the 4-hour chart, the price moved sideways in a narrow trading range.
The move can be seen better using the Bollinger Band indicator. The price remained between the Upper and Lower Bands of the Indicator. On Wednesday, the price created a False Breakout as it tried to move above the Upper Band, as shown on the chart. The RSI is above its middle line of 50, which is bullish. The MACD is above its zero line, which is also bullish.
Starting Monday, if the price moves upwards, the first resistance area, R1, will be around 0.86862, 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 0.87486, which is an older weekly level.
On the other hand, if the price is rejected and moves downwards, the first support area, S1, will be around 0.86332, 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 0.86068.
GBP JPY 4H
The price of the GBPJPY on the weekly chart created a Bullish Breakout. On the 4-hour chart, the price moved upwards in a series of higher highs and higher lows.
The 50-period is above the 200-period moving average, and this is bullish. The RSI is above 50, indicating bullishness. The MACD is above its zero line, and this is also bullish.
Last Tuesday, the price created a 4-h Bullish Engulfing Order Block of around 195.000 and last Wednesday, a 4-h Bearish Engulfing Order Block of around 198.000.
Starting Monday, if the price declines and moves downwards, the Demand Zone around 196.522 will become the first support area S1. If the price penetrates the Demand zone and moves downwards, the next support area, S2, will be around 194.570, which is the previous week’s low.
If the price penetrates the S2 and keeps moving downwards, the next support area, S3, will be at 193.704, which is the previous week’s low.
On the other hand, if the price moves upwards, the first resistance area, R1, will be at 198.442. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be approximately 199.48,0, which is an older weekly level.
GOLD 4H
Although all traders are waiting for a deep price correction, the price of the GOLD for another week created a new ATH (All-time High). Since September, the weekly RSI has been in Overbought condition as the price keeps increasing. On the 4-hour chart, since last Wednesday, the price has been trading within a Trading Range. Using the Bollinger Band indicator, the Upper Band is parallel to the Lower Band, indicating the price is in equilibrium with the forces of supply and demand being equal. The RSI Oscillator is above 50, which indicates bullishness. The MACD is above its zero line, which is bullish. Currently, the price is above the 20-period moving average, which is the middle of the Bollinger Band indicator. Hence, if the price moves upward, the first resistance area, R1, will be ATH (All-Time High) at $2758. If the price penetrates R1 and keeps moving upwards, the next resistance area, R2, will be at $2789. This is the 161.8% Fibonacci Extension measuring from the swing at point (a) to the swing at point (b), as shown on the chart.
On the other hand, the price moves downwards, the first support area, S1, will be around $2708, which is the previous week’s low. If the price penetrates the S1 and keeps lowering, the next support area, S2, will be at $2672. In this area, a Bullish Engulfing Order Block was created a few weeks ago, and it hasn’t been tested yet.
USOIL 4H
The USOIL weekly candle ended as an Inside candle. Last week's price didn't create a new lower low or a new higher high. On the 4-hour chart, the 200-period moving average acted as a Resistance last Tuesday, Thursday and Friday, as the price failed to penetrate it. The 50-period is below the 200-period moving average, and this is bearish. On the contrary, the RSI is above its middle line of 50, which is bullish. The MACD is flat around its middle line of 50. The FVP (Fair Value Price) around $73, and the 4-h Bearish Engulfing Order Block around $75, which we pointed out on the chart in last week’s Market Outlook, are both still valid.
Starting Monday, if the price moves downwards, the first support area, S1, will be at $68.97, which is the previous week’s low. In case the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be at $68.66, which is an older weekly level.
On the other hand, if the price moves upwards, the first resistance area, R1, will be at $72.31, which is the previous week’s high. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be at $74.75.
BTC USD 4H
Following the previous week’s Market Outlook, the price of Bitcoin created a Hanging Man candlestick pattern. When found in resistance areas, this pattern is considered a reversal price action.
On the 4-hour chart, the price was trading in a Range last week, as no higher high or lower low occurred. A 4-h Bearish Order Block occurred last Monday for around $69000.The FVP (Fair Value Price) occurred a few weeks ago at around $63000, and the Bullish Engulfing Order Block at around $62000 are still valid as none of them have been tested yet. The RSI Oscillator is below its middle line of 50, which is bearish.
The MACD is below its zero line, which is also bearish. The MACD’s Histogram is also below zero, which indicates bearishness.
A breakout is needed in order for the market to create a trend. Starting Monday, if the price moves downwards, the first support area, S1, will be $65199, which is the previous week’s low and also the bottom of the range. If the price penetrates the S1 and keeps moving lower, the next support area, S2, will be at $62465, which is an older weekly level.
Conversely, if the price moves upwards, the first resistance area, R1, will be at $69477, which is the previous week’s high. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be at $71900.
E-mini SP 500 Futures, 4H
The price of the ES created a swing-high formation on the weekly chart. Last week, the price didn't make a new ATH. Instead, it created a new lower low. On the 4-hour chart, the price created a series of lower highs and lower lows, which indicated a downtrend. Last Friday, a Long Bearish Engulfing candlestick created a Bearish Order Block for around $5900.
Last Wednesday, the price created a Demand Zone of around $5800, which was also the lowest level of the weekly candle. Hence, the RSI is below 50, which is bearish. The MACD is now below its zero line, which has bearish implications. The 20-period moving average is below the 50-period, which indicates bearishness. Therefore, if the price continues to move downwards, the first support area, S1, will be around $5800, 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 $5725.
If the price bounces off and moves upwards, the first resistance area, R1, will be at $5915, which is also the previous week’s high. If the price penetrates R1 and keeps moving upwards, the next resistance area, R2, will be the ATH (All-time High) at $5927.25.
US 30, 4H
Last week, the US 30 was the weakest of the three major US Indices, and the weekly chart price ended in a Bearish Marubozu candle.
On the 4-hour chart, the price created a downtrend with a series of lower highs and lower lows. We see on the chart that the bearish candles (Black) are much larger and longer than the bullish candles, which means that the traded volume on the sell side is intense.
The 20-period crossed below the 50-period moving average, known as a Bearish Crossover. The RSI Oscillator is in an Oversold condition, indicating a strong downward move in price.
Starting Monday, if the price keeps moving downwards, the first support area, S1, will be $42078, 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 $41843, which is an older weekly level. If the price penetrates the S2 and keeps moving downwards, the next support area, S3, will be around $41344.
Conversely, if the price moves upward, the first resistance area, R1, will be around $42637. This is considered a key level of resistance as it consists of the Bearish Engulfing Order Block, which was created last Friday during the New York trading session, the 4-h FVP (Fair Value Price), which was created last Wednesday, and the 20-period moving average.
In case the price penetrates the R1 resistance and it keeps moving upwards, the next resistance area, R2, will be at $43094.
GER 30 (DAX Futures), 4H
Following the previous week’s Market Outlook, this market didn't manage to register new ATH prices. The price created a lower low formation, but its weekly candlestick didn't close below the previous week’s candle low. On the 4-hour chart last Thursday and last Friday, the price was moving sideways, with the forces of supply and demand being almost equal. The 20-period moving average is above the 50-period, and this is bullish. On the contrary, the RSI Oscillator is below its middle line of 50., which is bearish. The MACD is also bearish as both the MACD Line (Blue) and the Signal Line (Orange) are below its zero line.
Additionally, the MACD’s Histogram is bearish as it is below the zero line. Starting Monday, if the price moves downwards, the first support area, S1, will be at 19412, which is the previous week’s low. At this level, a 1-h Bearish Order Block was created last Thursday, and it hasn’t been tested yet. In case the price penetrates the S1 support and keeps moving downwards, the next support area, S2, will be around the 19143 level.
On the other hand, if the price finds support, bounces off and moves upwards as per the moving averages analysis, the first resistance area, R1, will be 19666. If the price penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be the ATH (All-Time High) at 19802, as we point out on the chart.
