Do We Have Enough Fuel for the Next Bullish Week?

Summary of Last Week

After a week of this, a simple question arises: Was that just a one-time thing or a proper start of a trend reversal? As always, we’re about to find out.

The key event last week was the rate decision in the Eurozone. The markets were expecting a rise but the ECB surprised us by raising its rates slightly more (50bp vs 25bp expected). As often happens, EURUSD experienced a whipsaw kind of movement. The first reaction was to the upside but then the price quickly dropped to fresh lows for the day. On Friday we had a continuation of the drop in the first half of the day, and the rise at the very end of the week.

The slide seen in the morning of the European session was mostly due to bad PMI data from the Eurozone, especially from the German Manufacturing and Service PMIs, which both fell below 50 – a magic barrier signaling recession. As a consequence, we start the new week on EURUSD precisely in the same place as before the rate decision.

The end of the week also brought us a correction on the Japanese yen. It started on Thursday, after the monetary policy statement from the Bank of Japan. USDDJPY fell below the 136.8 support and set the mid-term sell signal for this instrument.

Last week could be crucial for gold. After months of a bearish trend, the price finally reached a concrete, long-term support on the 1680 USD/oz. Reaching that support is one thing, but actually using it for a bounce is another and bulls managed to do that. It seems that sellers on gold will take five and we should see some rises here in the nearest future.

It was a decent week for indices as well. Most of the major assets in this class managed to break crucial resistances and rose significantly. DAX, Nasdaq and SP500 managed to set the highest levels in July. Apart from the central banks, indices will be influenced by the earning season. On Tuesday, we’ll see data from Microsoft and Alphabet. Meta (Facebook) will join them on Wednesday, while Amazon and Apple will post earnings on Thursday.

Key Fundamentals for This Week

If we had to point out the single most important event this week, it would of course be Wednesday’s interest rate decision from FED. Market expects a rise of 75bp, so quite a solid one. A rise of 100 or even more would be a great reason for the EURUSD to fall below parity.

Wednesday will also bring us the CPI data from Australia. The recent data from Australia was mostly bullish, which strongly supported the AUD over the last few days. The number expected is 1.9% q/q and with the current surroundings it wouldn’t be hard to beat that one too.

Setups for This Week

Gold

Primary View:

Reaching the 1680 USD/oz support stops the downtrend, at least for a while.

The price created a weekly bullish candle – the first one since the beginning of June.

The target is on the 1780 USD/oz.

Alternative View:

The price breaking the 1680 USD/oz would bring a strong sell signal but chances for that are now limited.

GBPUSD

Primary View:

Last week finished with a rise and the price being close to a crucial resistance.

The Cable created an inverse head and shoulders pattern and for the buy signal, we need to see the breakout of the neckline around 1.202.

The price already broke the mid-term down trendline, which is promising.

Alternative View:

If the price bounces off the orange area, the iH&S pattern will be denied.

USDJPY

Primary View:

Last week brought us a reversal on yen.

The price managed to create a head and shoulders pattern (orange) and USDJPY already managed to break the neckline (green), which at the same time is a mid-term uptrend line.

Another broken support is the 136.8 (blue), which only strengthens the bearish case here.

Alternative View:

The USDJPY climbing back above the 136.8 resistance would cancel the sell signal on this instrument.

Indices Step into a Busy Week on the Front Foot

Summary of Last Week

Stock traders took a wild ride on the market last week. We started off with a pretty standard drop and finished with a bullish bounce, which can actually start a proper reversal and a mid-term up trend. The Macro calendar was very helpful with that as Friday brought us two positive surprises. Retail Sales and UoM Consumer Sentiment in US happened to be higher than expectations.

The Retail Sales print was 1% and we also got a positive revision of data from the previous month. The UoM Consumer Sentiment came at 51.1, as opposed to expectations of 49. No wonder Friday’s candle was a bullish one with a fairly high closing.

Last week was pretty busy for commodity currencies. The Australian Dollar was on Thursday was supported by the data from the job market, where Unemployment rate dropped to 3.5% and 88400 more jobs were created. The Canadian Dollar was influences on Wednesday, when the Bank of Canada (BOC) decided to raise interest rates to 2.5%, which came as a surprise and more of a hawkish stance as the rise to 2.25% was expected and priced in. 2.5% was also a decision from the Reserve Bank of New Zealand although here there was no shock as the rise of 50bp was generally anticipated by market participants.

On Wednesday traders’ attention was focused on inflation from the US, which came in hot, exceeding expectations (1,3% vs 1.1%). Interestingly, that did not cause the USD to strengthen. We saw a rather whipsaw kind of movement with no clear winner hours after the publication.

Fundamentals and Events for This Week

The new week will mostly focus on inflation. We already received data from New Zealand, where CPI came at 1.7% vs the expected 1.5%. Initially, that supported the NZD but by the end of the Asian session it caused it to decline. Tuesday will bring us the Final CPI print from the Eurozone although final prints do not posses such power as the early ones. Wednesday will bring us CPI prints from the UK and Canada and that will for sure be something to look at.

Thursday, will be central bank day with the Bank of Japan and the European Central Bank in focus. If you have any trades or plan to have any trades involving the Euro or Yen, on Thursday you should be extra cautious and for sure you will experience high volatility and momentum – a blessing for day traders and nightmare for long-term position investors.

Lastly, Friday, will be PMI day, where we will see PMIs from literally across the globe, from Australia to the United States. In general, numbers above 50 are expected, so apparently the mood is not that bad as many think.

Setups for This Week

DAX

Primary View:

Seems that the 12450 support was defended once again

The price bounced creating the double bottom formation

On Friday, the DAX broke the mid-term down trendline, which triggers a buy signal

Alternative View:

The price coming back below the blue line, will cancel the positive sentiment

Brent Oil

Primary View:

Oil started the new week higher after US President Joe Biden’s meeting with MBS.

The price bounced off the 100 USD/bbl support, indicating that the meeting was a failure at least if we consider the topic of raising the supply

Potentially, the next move can be an upswing towards the resistance level at 106 USD/bbl and the mid-term down trendline (black)

Alternative View:

If the price breaks the red support at 100 USD/bbl, a major sell signal will be triggered

USDCAD

Primary View:

The USDCAD is still trading around the 38,2% Fibonacci.

The buying pressure last week was really high but buyers were unable to secure a breakout of that resistance along with an escape from the wedge pattern

That leaves the doors open for the sellers as resistance in this bearish formation is still alive

Alternative View:

The price closing the week above the upper line of the wedge (black lines) will be a strong buy signal.

GBP/NZD Comes Back to the Bearish Trend

This piece is about the current situation on the GBPNZD, where we have a very handsome bearish situation with the pair respecting all major, price action principles.

End of The Flag

GBP/NZD 4 hour chart

Since the beginning of the year, GBPNZD is in an uptrend. Drop, traditionally was sharp and then we entered a correction stage, which had much lower volatility. Correction is a beautiful flag pattern (black), which actually came to an end this week. What’s remarkable here is that the price, apparat from respecting the flag lines, also respected the Fibonacci lines. 23,6% was a crucial support and the 50% was an ultimate resistance. In the meantime, we were also locally respecting the 38,2%.

One Last Thing

As we said, GBPNZD already broke the lower line of the flag, which technically brings back the major sell signal. Last obstacle to a full bearish mode is a 23,6% Fibo, once it will be broken, even those unconvinced yet could join the selloff. The potential target is at April low. Once the 23,6% Fibo will be broken, getting there should be just a matter of time.

For a look at all of today’s economic events, check out our economic calendar.

Indices, Oil and Forex Analysis – JPY Turns Red Again

Major Markets Technical Analysis

Indices continue the bearish correction but in a very limited manner. It seems like buyers are in a full control of the situation.

The SP500 is very close to the resistance level on the 23.6% Fibonacci, a breakout of that resistance will be a great confirmation of a buy signal.

NASDAQ is doing pretty much the same but below the 38,2% Fibonacci.

Brent Oil slightly dropped after touching March highs. The sentiment remains positive.

The USDJPY continues the upswing after the pair escaped from the symmetric triangle pattern.

The EURUSD is trying to create a nice Head and Shoulders pattern on a crucial horizontal resistance.

The EURGBP is locked inside of a rectangle. We have to wait for the breakout.

The USDCAD continues sliding aiming for the lower line of the ascending triangle.

The GBPCAD dropped after the price broke the lower line of the flag.

The GBPAUD also dropped but after leaving a small pennant formation.

The GBPJPY is aiming for the 164 resistance after a successful escape from the symmetric triangle pattern.

Traders Edge: Market Briefing Video for 01.06.22

For a look at all of today’s economic events, check out our economic calendar.

Nasdaq Takes Five on a Crucial Resistance

I don’t think that anything negative can happen on the last trading day of the month, although the European session is a bearish one. That’s understandable, seeing as the last four trading days were very bullish.

Will the FED Ease?

Fundamentally, we have a few factors here. Experts point at the FED, where we’re expecting a more dovish approach to increasing rates, in which case the second half of the year may not be so aggressive. Moreover, many experts point at China where Covid restrictions are easing, which can generally be considered as good news.

Respecting the Fibos

NASDAQ 100 Daily chart

Technically, the situation definitely favors buyers. The price created a double bottom formation (yellow) on the 50% Fibonacci. What’s more, we broke the down trendline (red), which in theory cancels the negative sentiment. What’s worth mentioning is how the price is respecting the Fibonacci levels. First, we had this 50% and now, the price is stopping on the 38,2%. We may say, that when the 38,2% is broken, a proper, and strong buy signal will be triggered. The one that shouldn’t be ignored and the one that many are waiting for.

The positive sentiment will be cancelled when the price breaks the 50% Fibonacci, which for now, is less likely to happen.

Indices and Pairs with JPY Start a New Week with an Upswing

Indices continue the reversal initiated in the last week.

SP500 broke a crucial horizontal support on the 4150 points.

Nasdaq bounced off of the 50% Fibonacci and is aiming the 38,2%.

DAX escaped from the symmetric triangle pattern and is aiming crucial resistance on the 14850 points.

USDJPY tries to escape from the symmetric triangle as well.

USDCAD continues the drop influenced by the giant Head and Shoulders pattern.

GBPCAD tries to break the lower line of the flag in order to start a new sell signal.

GBPAUD is doing pretty much the same thing but breaking the horizontal support.

AUDCHF comes back inside of the rectangle. A false bearish breakout can be a good buy signal.

GBPJPY tries to end the correction and is putting heavy pressure on resistances.

Traders Edge: Market Briefing for 30.05.22

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD is Driven Lower by Both Technicals and Fundamnetals

Recent Economic News

If we look at yesterday’s calendar, fundamentally it should not be a surprise, as we had important data for both currencies, traditionally at the same time. The preliminary GDP in US was worse than expectations and Core Retail Sales in Canada was better than expectations. This is bearish for USD and bullish for CAD, so in consequence negative for the USCAD. So how did that play out?

USD/CAD Technical Analysis

USD/CAD Daily chart

From a technical point of view, it worked out great! For the past weeks, the USDCAD was drawing a Head and Shoulders pattern (yellow). Interestingly, the head itself was also a false breakout above the horizontal resistance on the 1.295 (blue). A false breakout is usually a great signal in the opposite direction and when combined with a head and shoulders pattern…wow. So most recently, the USDCAD managed to break the neckline (red) of the Head and Shoulders pattern, which in theory brings us a proper long-term sell signal.

USD/CAD Price Forecast

The target for this movement is on the long-term up trendline (black), which connects the lows from June 2021 and April 2022. With the current situation, getting there seems like the most likely plan. The sell signal will be cancelled, when the price comes back above the blue resistance but chances for that are now rather limited.

For a look at all of today’s economic events, check out our economic calendar.

One Last Support Left for the Major Sell Signal on the EUR/JPY

All we need to receive it is for the EURJPY to close below one mid-term dynamic support.

H&S for a Start

EUR/JPY 4 hour chart

Let’s start from the very beginning. The gray formation you see on the chart is the Head and Shoulders pattern which, in theory, ended the uptrend and started a bearish tone. Technically, it happened on May 12th when the EURJPY broke the neckline (green) of the H&S formation.

After that, the price entered the correction stage, which created a wedge pattern (blue). It looks like the wedge is coming to an end, as we’re currently testing its support after a successful bounce off the mid-term down trendline (red). The lower line of the wedge is the support I mentioned at the very beginning, the one that needs to be broken in order to receive a major sell signal.

Target for the Sellers

In case of a breakout, the target will be on the 133.1 support (yellow), which has already proven its effectiveness. The negative sentiment cancels when the price breaks the red down trendline, but chances for that happening are now rather limited.

For a look at all of today’s economic events, check out our economic calendar.

Indices Continue the Reversal

Indices and Forex Technical Analysis

SP500 pauses a drop precisely to the 38,2% Fibonacci. Potentially a nice double bottom in play.

Nasdaq with a similar situation but one level lower – on the 50% Fibo.

DAX holds slightly better but here we’re waiting for a bigger impulse, as the price is rather moving sideways.

EURUSD is finally allowing the small correction after few days of aiming higher. It’s precisely on a crucial resistance at 1.075.

NZDUSD climbs higher after the rate rises from the RBNZ. A crucial horizontal resistance is near.

GBPNZD escapes from the flag to the downside, that’s a proper sell signal.

Traders Edge: Market Briefing Video for 25.05.22

For a look at all of today’s economic events, check out our economic calendar.

EUR/GBP Moves Away From Crucial Long-term Support

Fundamentals and Latest News

News crucial for this pair is flowing in constantly, giving the EURGBP fuel for some nice swings. Yesterday, the Euro was lifted by rumors that the European Central Bank (ECB) will finally act and increase interest rates. Today, we received PMs from the Eurozone and from the UK. The important one was the UK PM, which was worse than expectations and brought us a bearish sentiment. Quite surprising if you ask me but hey, sometimes markets don’t even need a reason to move.

EUR/GBP Technical Analysis

EUR/GBP Weekly Chart

Today’s rise of the EURGBP is absolutely crucial from a technical point of view. The weekly chart shows us a long-term situation. The important thing here is the decisive rejection of the 0.83 support (green). This support is absolutely crucial for the long-term situation and as log as we are above, the main sentiment is positive.

Today’s surge, managed to break two crucial dynamic resistances (black). At some point, we can also see an inverse head and shoulders pattern (orange) but it’s not the handsome one which you can see on textbooks. Nevertheless, the bounce from 0.83 is a fact and the log-term sentiment remains positive and stays this way as long as the price stays above the black lines. It’s possible for the price to return below the black lines, but for now it’s less likely to happen.

Correction on USD and Indices Accelerates

Major Financial Markets Technical Analysis

SP500 started the new week with a possible double bottom formation and a promising movement to the upside.

Nasdaq is defending the 50% Fibonacci and is also creating a double bottom formation.

The DAX in a better situation with an inverse head and shoulders pattern. We are inches from breaking the neckline and creating a buy signal.

The EURUSD is climbing higher, after the price broke the neckline of the inverted Head and Shoulders pattern and the long-term down trendline (red).

The AUDUSD is in a very similar pattern and is also aiming higher.

The USDCAD dropped after the price created a false bullish breakout.

The GBPCAD joined the EURUSD and AUDUSD in an upward movement triggered by the inverted Head and Shoulders formation.

The GBPAUD tested the lower line of the pennant. The end of the sideways trend is near, and a breakout to the downside is currently on the table.

Traders Edge: Market Briefing Video for 23.05.22

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD One Step Away From a Major Buy Signal

Technical Analysis for the Euro vs US Dollar

Last week ended with a massive drop and the price closing at new long-term lows. This week was different, the price reversed and was aiming higher almost every single day.

EUR/USD 4 hour chart

This week’s rise created two, very convincing bullish patterns on the chart. The first one can be seen on the weekly chart, and is a bullish engulfing pattern. The second one can be seen on the H4 and is a handsome Inverse Head and Shoulders pattern. The formation is active as we’ve already managed to break the neckline (blue).

Trading Strategy for the EUR/USD

The situation looks really great but there is one thing missing. The price is still below the mid-term down trendline(red). It may still scare some buyers. Once the EURUSD manages to break the red resistance, we’ll get a full-fledged buy signal.

The price bouncing of the trendline and dropping below the neckline is still possible, but currently less likely to happen. Our view on the EURUSD is bullish.

Para ver todos los eventos económicos del día le recomendamos visitar nuestro calendario económico.

S&P 500 Reverses With a Handsome Inverse Head and Shoulders Pattern

That should help Americans but their decisions should also be affected by the retail sales print that will hit the screens soon. All we can say for now is that we’re anticipating this data to be on the green side of the market.

S&P 500 Technical Analysis

On SP500, it looks really optimistic from the technical side as well. On the chart, we have a very handsome inverse head and shoulders pattern (blue). The surge from today’s European session, allowed the price to break the neckline (blue) of this pattern, which in consequence gives us a mid-term buy signal.

S&P 500 Price Forecast

The closest target is currently on the mid-term down trendline (black) and the horizontal resistance on the 4155 (orange). As long as we stay below those two, there is no real long-term buy signal. So far, it’s just a correction. A promising one but still just a correction. The positive sentiment will be cancelled should the price drops below the neckline, but chances for that are now limited.

EUR/CHF Defends Crucial Supports

In some cases, like the EURUSD, it is still just a correction or at least looks like it but on other instruments, we may be witnessing something more promising.

EUR/CHF Technical Analysis

EUR/CHF Daily chart

In today’s piece is the EURCHF where we can see a really handsome bullish pattern. Since the end of February, the EURUSD was inside a symmetric triangle pattern, which was created after a strong down trend. May brought us a switch in the sentiment, which resulted in a bullish counter offensive, which managed to crash all major, mid-term resistances.

The first one, was the upper line of the triangle. That ended the correction and was the first step towards the bullish sentiment. Then, the price managed to break two horizontal resistances, pretty close to each other but each one seemed to be relevant and respected. The last one was the long-term down trendline (blue).

EUR/CHF Price Forecast

A breakout is one thing but stating the above is another. Last week, ended with a test of the broken resistances as supports. The test was positive for buyers and ended with the price aiming higher. That means that crucial levels were defended and the price should not drop any lower. It seems that in the next few days and weeks, the EURCHF should be aiming north. The positive sentiment is on the table, as long as the price stays above 1.033 (lower orange), the price coming back below would be a sell signal but chances for that are now rather slim.

For a look at all of today’s economic events, check out our economic calendar.

Forex, Gold and Indices – Usual Friday Correction

Major Financial Markets Technical Analysis

USDJPY overnight corrects the 50% of the most recent downswing.

GBPJPY also slightly corrects the recent slide and tests the major horizontal resistance.

It’s also correction day for the SP500 and Nasdaq.

DAX, German Index is doing much better than its American peers. The weak Euro is to blame, which is helping German exporters.

EURUSD joins the correction party as well. 1.05 on the horizon.

Gold breaks a major, long-term up trendline.

AUDUSD breaks the long-term, horizontal support on the 0.7. That’s pretty negative.

EURCHF drops to test a combination of three crucial supports, the down trendline, a horizontal one and the upper line of the symmetric triangle.

GBPAUD with a massive double bottom formation. The price is close to a neckline, so a breakout here would be a major buy signal.

Traders Edge: Market Briefing Video 13.05.22

For a look at all of today’s economic events, check out our economic calendar.

EUR/USD Ends the Sideways Trend and Drops Like a Rock

Not directly, because the data was released yesterday and the breakout just happened today. However, the increased momentum can definitely be contributed to Wednesday’s CPI.

Boring rectangle

EURUSD fell in a sideways trend at the end of April. The sideways trend can technically be described as a rectangle (orange). We had a horizontal resistance on the 1.058 and a horizontal support on the 1.048, around 100 pips range. Over the past few days, that boring sideways movement became even less interesting, and the volatility drop allowed for a smaller pennant (blue) to be created.

EUR/USD tango down

CPI helped to introduce some life into the price. After the initial roller coaster, the price chose the southward direction. We broke the lower line of the pennant and the horizontal support on 1.048. EURUSD managed to set new, long-term lows and trigger a refreshed sell signal.

At some point, we may see an upward movement which would be typical price action for testing the broken support as a resistance. As long as we stay below the lower orange area, the sentiment is definitely negative.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Drops Ahead of the Inflation Data

Major Financial Markets Technical Analysis

USDJPY breaks a major up trendline (blue). We anticipate the CPI having a negative sentiment towards the USD.

GBPJPY is fighting close to the neckline of the H&S formation.

Indices dropped again yesterday, but today traders tried to initiate a bullish correction. We’ll see how long that will last.

EURUUSD tries to break the upper line of the pennant formation.

Gold bounces off a long-term up trendline.

Brent Oil climbs higher after testing the lower line of the symmetric triangle pattern. It’s now time to test the upper one.

AUDUSD tries to establish a false breakout pattern. A close above the 0.7 will be a buy signal.

Traders Edge: Market Briefing Video for 11.05.22

For a look at all of today’s economic events, check out our economic calendar.

EUR/CHF Breaks Two Major Resistances and Aims Higher

EURUSD resisted, but of course the strength of the American currency didn’t help. EURUSD still suffered, but our hero today is the EURCHF, which is very strong and actually gave us a proper, long-term buy signal.

EUR/CHF Technical Analysis

Since March 2021, EURCHF is on a legitimate downtrend and since the end of February, the pair was in a symmetric triangle pattern (red). By the beginning of May, after a series of bullish candles, the price managed to escape from the triangle to the upside. That only encouraged buyers and increased the momentum allowing the price to rise further and break the mid-term down trendline (blue).

EUR/CHF Trading Strategy

Breaking those two resistances is definitely a great sign and an invitation to go long. The buy signal is here and stays on the table as long as the price stays above the horizontal support on the 1.035 (orange).

An alternative scenario includes the price coming back below the orange support, which would effectively give us a sell signal. But the chance of that happening are now rather limited.

For a look at all of today’s economic events, check out our economic calendar.

Most of The Major Instruments Await FOMC in Sideways Movements

Global Markets Technical Analysis

EURUSD is waiting for the FOMC inside of the symmetric triangle pattern.

USDJPY is doing pretty much the same but here, we’re waiting very close to the upper line of this formation.

GBPJPY is forming a descending triangle pattern. The price is currently flirting with the support of this formation.

Gold broke a crucial support on the 1872 USD/oz.

SP500 defended the neckline of the H&S formation with a hammer on a daily chart. A promising start for buyers.

EURGBP is also inside of the symmetric triangle. A breakout to the downside can be catastrophic here.

Brent Oil is also in the group of assets moving sideways inside of the triangle. We are waiting for the breakout..

AUDUSD is testing the neckline of the triple bottom formation. A breakout would mean a buy signal.

Traders Edge: Market Briefing Video for 04.05.22

For a look at all of today’s economic events, check out our economic calendar.

Gold Just Keeps Disappointing

Gold Technical Analysis

Gold traders aren’t having an easy life these days. Returns aren’t satisfying holders of this precious metal and most recently, it’s gotten even worse. The month of May started with the new mid-term lows and it seems that it’s not the end of the troubles.

XAU/USD Daily

What can be satisfying here is that Gold is respecting technical analysis principles in general, and the Fibonacci levels in particular. After we set the local top in March, the price has been in correction mode, a correction which is moving swiftly between Fibo levels. First, 23,6% acted as a resistance in April and most recently, 50% as a support and 38,2% as a resistance.

Trading Strategy

May also brought us a breakout of the 50%, which in my opinion, is a legitimate signal to sell. The first target is on the long-term up trendline (red) connecting higher lows since August 2021. It seems almost certain that we’ll get there as we’re currently not that far away. In case of a breakout, the next support will be on the 61.8%. What happens later depends on many factors, so let’s just focus on the nearest future. The future which for gold, does not look very bright.

For a look at all of today’s economic events, check out our economic calendar.