EURUSD Forecast: A week of 90 pips as the result of Brexit optimism, not a self-strength.



The summary of the past week: A week of 90 pips as the result of Brexit optimism, not a self-strength.

Fundamental Analysis:

USD ended the week lower against all of the major currencies on the back of softer economic data. DXY ended the week at 95.88.

After the mixed employment report released in the previous week, and weaker-than-expected US data released throughout the week. US CPI increased by 1.5% YoY in February, while the core reading printed 2.1%, below the previous estimate of 2.2%, slightly below the market’s expectations. Inflation at factory levels also increased by less-than-expected according to the PPI figures, while Durable Goods Orders were mixed, as the headline reading was better-than-expected, but the ex-transportation sub-component was a miss. And New Home Sales decreased by 6.9% in January vs. an expected 0.6% decline. Instead of improving, the Empire State Manufacturing Index dropped to a 22-month low in March while industrial production grew less than expected. The University of Michigan Consumer Sentiment index increased but the improvement also fell short of expectations.

In response, Treasury yields turned lower and the dollar headed south.

Things in the EU were not much better, although there were not many relevant releases. German inflation was also softer-than-expected up by just 1.5% YoY. Eurozone Data is still not promising.

EURUSD gains were the result of Brexit optimism, as GBP rally added pressure on USD. Nevertheless, investors can’t find a reason to go long in the EUR, leaving the pair confined to the range established in the previous week.

Slowing global economic growth, contradictory headlines related to the US-China trade war, and Brexit chaos, were behind the absence of a clear trend.

Money is looking for a place to go. One of the primary reasons why the dollar outperformed in the first quarter is relative weakness abroad but as some big uncertainties subside, money could flow back into riskier currencies and riskier assets.

GBP: The UK still doesn’t have a Brexit deal but at least we know that they won’t be spinning-out without an agreement.

CHINA: Slower growth in China has been a big problem for the rest of the world but tax cuts could provide a big boost to the economy.

The prospect of improvements could make other investments more attractive, easing demand for US dollars even as the US economy outperforms. However, in the long term, demand for USD should remain strong as the Fed continues to be the only major central bank to raise interest rates this year. ( BoE may join FED depending on Brexit )

We have an interesting week ahead: The FED and BOE Interest Rate Decision and Monetary Policy Statement.

Some analysts believe that “low inflation” will lead FED to take more Dovish stance. However, the latest comments of FED members was putting it straight. ” Inflation would not be the FED’s main concern anymore ”

The FED isn’t expected to make fundamental changes to its monetary policy, with attention shifting to the dot-plot and any revision to future rate moves. Market players believe that at least one rate hike is still in the docket for this year. More relevant the Fed will offer new forecasts on inflation and growth, following the December update. Back then, the central bank reduced chances of rate hikes from three to two, but ever since then, the dovish ‘patient’ stance has dented hopes of such happening.

On the Euro Side: The most relevant macroeconomic data will be the German ZEW survey, expected to show that Economic Sentiment deteriorated further in the Union, and preliminary March Consumer Confidence. By the end of the week, preliminary Markit PMI for both economies will be out. EU numbers posted a modest bounce in February, but not enough to spoke the ghost of slowing economic growth. As long as Eurozone data remains unpromising with all aspects, the EUR has no chances of posting solid gains against USD.

Summary: We are talking about EURO vs USD. There are two legs of this equation. On the one side, there is FED continues to be the only major central bank to raise interest rates this year. On the other side, there is a slowing down economy and continuous unpromising macroeconomic figures. Under the current macroeconomic fundamental conditions, EURUSD can not have a sustainable ” bullish ” move. All temporary bullish moves will be used as a selling opportunity by the investors.

Technically:

I will not add any indicators on to the chart. The picture and the levels are clear enough. The pair has been trading in a descending channel for two months.

On the upside, the key resistance resides at 1.13600. A firm break and close above 1.13600 would send the pair 1.14200 and 1.14800.

The pair has attempted several times to break above 1.13300, although it failed to sustain gains above it. In the weekly chart, the price is now just below a directionless 200 SMA, while the 20 and 100 SMA remain above the larger one.

We can say that EURUSD is in a ” No Trade Zone” as the technical indicators in the mentioned chart offer a neutral stance, heading nowhere right below their midlines, with the risk still skewed to the downside in the longer run.

On the downside, the levels that Bulls will try to defend are 1.12900 and 1.12600. Breakout of 1.12600 will trigger the bearish move.

On the smaller charts, a bearish Butterfly Pattern is in action. – Area of the entry 1.1344-1.13520- The pattern has reached its structural targets.

Our trading strategy is to sell the bullish attempts towards 1.13600. We have published a triangle pattern on Friday and we plan to add short at the breakout of the triangle 1.12900.

Closing above 1.13600 can be used as a buying opportunity with the targets 1.14200 and 1.14800 shorter-term.

We will publish the fresh trade setups for the members as soon as they appear on the charts.

XAUUSD Gold Technical Overview H4 Chart

Date: 06-24-2019

Time: Pre Asia

H4 Chart Overview is updated prior to London and New York Opening.
This is just a technical summary of the said pair/instrument on the mentioned chart timeframe.
Please note that the fundamentals and Economic Calendar Data Flow may have a strong impact.

Current Value: 1398.89

Technical Indicators

RSI(14) 69.824 Bullish
STOCH(9,6) 72.904 Bullish
STOCHRSI(14) 50.408 Neutral
MACD(12,26) 15.530 Bullish
ADX(14) 54.050 Bullish
Williams %R -16.786 Overbought
CCI(14) 88.4942 Bullish
ATR(14) 12.9143 High Volatility
Highs/Lows(14) 16.0392 Bullish
Ultimate Oscillator 56.371 Bullish
ROC 4.033 Bullish
Bull/Bear Power(13) 31.4900 Bullish
Buy: 9 Sell: 0 Neutral: 1
Summary: STRONGLY BULLISH

Moving Averages:

SMA12: 1390 / Bullish

SMA 20: 1374 / Bullish

EMA 50: 1358 / Bullish

SMA 100: 1337 / Bullish

SMA 200: 1312 / Bullish

The first Moving Average Resistance:

The first Moving Average Support: 1390 SMA 12 1375 SMA50

Summary: Price is above all main Moving Averages. Strong Bullish. Potential pullbacks towards 1375 SMA 50 can be used as a buying opportunity.

 

Bollinger Bands Readings

Bollinger Bandwidth(20): 90.66

Bollinger Bands %b(20:2): 55.2869

Summary: Gold is trading in the upper channel of BB. Bullish. Bandwidth does not send a clear reversal/retracement signal. Next two H4 Candles may give us a better view.

 

Ichimoku Readings:

Senkou Span A: 1342

Senkou Span B: 1339

Tenkan-sen Kijun-sen: Bullish

Ichimoku Summary: Tenkan-sen support 1395.71. Break below may send the price 1390 and 1382.

Support / Pivot / Resistance

                        S1 S2 S3 P R1 R2 R3

Classic 1383.09 1387.97 1393.89 1398.77 1404.69 1409.57 1415.49
Fibonacci 1387.97 1392.10 1394.64 1398.77 1402.90 1405.44 1409.57
Camarilla 1396.83 1397.82 1398.81 1398.77 1400.79 1401.78 1402.77
Woodie’s 1383.61 1388.23 1394.41 1399.03 1405.21 1409.83 1416.01

 

Murrey Math Calculations ( Support / Pivot / Resistance ):

Upside Levels: 1406.25 MM 6/8 Major Pivot Reverse 1421.88 MM 7/8 Weak Stall Reverse 1437.50 MM 8/8 Ultimate Resistance

Downside Levels: 1390.63 MM 5/8 Hourly Support 1375.65 MM 4/8 Major Support

Summary: Potential price movements towards 1421-1430 can be used as a selling opportunity. Potential pullbacks towards 1375 SMA 50 can be used as a buying opportunity. H4 Closing below 1375 could send the price 1359.

Divergence ( Regular / Hidden)

RSI: None

MACD: None

OSMA: None

STOCHASTICS: None

AWESOME: None

CCI: Bearish Divergence / Confirmed – Signal 2 candle before –

Candle Patterns ( Confirmed Only )

Bearish Harami

Breakout and Harmonic Patterns

Symmetrical Triangle H1 Chart / Emerging Not Validated Yet

Double Top M30 Chart / Emerging Not Validated Yet

Bearish Butterfly Pattern D1 Chart / Pending Entry Starts @ 1420

Inverse Head and Shoulders M30 / Emerging Not Validated Yet

Technical Summary H4 Chart:

Bullish Scenario: XAUUSD may retest latest high @ 1412. If it breaks above 1412, it is likely to test 1421 resistance which is the area of the entry of the Bearish Butterfly on the Daily Chart. This level can be used as a selling opportunity.

Bearish Scenario: If Gold breaks below 1394, it is likely to test 1390 and 1386. Firm closings below 1389 could send the pair 1375 which can be used as a buying opportunity.

We have different emerging patterns on smaller chart timeframes.

All potential intraday trading opportunities will be sent to members.

The technical summary will be updated prior to the London Session.

Good Luck

EURUSD Forecast and Technical Analysis Week July 8-12

Fundamental Forecast

After Friday’s Non-Farm Payrolls Reports, USD Bulls regain the control. On the other side, the unemployment rate increased and most importantly wage growth held steady at 0.2% instead of rising to 0.3% like economists anticipated.

The dollar index broke the critical resistance. The reason for the Dollar’s rally despite the FED’s shift to a dovish bias is clear: The U.S. economy is stronger than its peers.

The upcoming week will bring more clarity about the Fed’s path. Powell is due to testify before the Congress, while the central bank will release the Minutes of its latest meeting. The US will also publish CPI data for June, with core inflation seen steady at 2.0%.

Dollar Bears approach is different. They believe that job report reduces the need for an immediate interest rate cut, but it doesn’t eliminate it. Nearly half of the members of the FOMC feel that easing is necessary this year and they won’t be swayed by a mixed jobs report and this week’s FOMC minutes should remind us of the extent of the central bank’s dovishness. Their concerns center around trade and inflation and while the US and China agreed to restart trade talks at G20, only time will tell whether the progress is real.

On the other side, the latest Germany Factory orders data proved that the slow down in the Eurozone economy is not temporary. The ECB is likely to take more easing actions including a rate cut.

The FED is now expected to cut rate just once this year by 25bps, as a “preventive” move. Concerns about a global economic slowdown are still driving the financial world, but the US continues being the strongest ring of the chain. As long as the market keeps believing that the Fed will pull the trigger just once this year, the dollar will likely keep rallying.

Now its in Powell’s hands. Whether the pair could break lower will depend solely on Powell. Will he maintain its confident outlook and down talk chances of aggressive rate cuts. I bet on it 95%.

Technical Overview

The pair ended the week at 1.12240.

Technical Indicators of the Daily Chart

RSI(14) 42.747 Sell
STOCH(9,6) 40.562 Sell
STOCHRSI(14) 0.000 Oversold
MACD(12,26) 0.002 Buy
ADX(14) 33.633 Sell
Williams %R -80.687 Oversold
CCI(14) -89.9675 Sell
ATR(14) 0.0060 Less Volatility
Highs/Lows(14) -0.0055 Sell
Ultimate Oscillator 34.803 Sell
ROC 0.071 Buy
Bull/Bear Power(13) -0.0107 Sell
Summary: Strong Bearish. RSI has downside rooms.

Moving Averages Daily Chart

Summary: Strongly Bearish. The Golden Cut is being printed.

The first MA Resistance: 1.1255 SMA 100 Daily

The first MA Support: Downside is empty.

Murrey Math Calculations ( Support / Pivot / Resistance for Monday )

Upside Levels:

1.12650 MM 1/8 Weak, Stall, Reverse 1.12910 MM 2/8 Major Pivot Resistance 1.13200 MM 3/8 Top of the Trading Range

Downside Levels:

1.12000 MM 0/8 Overshoot, 1.11697 MM -1/8 Extremely Overshoot, 1.11400 MM -2/8 Bottom

 

Ichimoku Readings

Senkou Span A: 1.11750

Senkou Span B: 1.12770

Tenkan-sen Kijun-sen: Bearish

Ichimoku Summary: The price is inside the cloud. Cloud’s support is 1.117500 and breakout of the support will accelerate the sell-off. Cloud’s resistance is 1.1.12770 and pullbacks towards 1.12770 can be used as a selling opportunity.

Harmonic and Chart Patterns:

Ascending channel has been broken.

Emerging Bullish Cypher Pattern H Chart: 1.11170

Summary

Oversold RSI H Chart and Bollinger Bandwidth/Percentage confirm a minor retracement toward 1.12600 – 1.12800. This potential pullback can be used as a selling opportunity. Technically, the near term targets of the pair are 1.12000, 1.11800. Closing below 1.11700 would send the pair 1.11500 and 1.11200 medium terms.

We will update and send entry notification to members

USDCAD Forecast: Retracement or Major Trend Change?

Fundamentals: Battle of the dovish Central Banks. BoC kept the interest rates benchmark unchanged and injected a maple dose of dovish rhetoric into the market. On the other hand; FED is prepared to cut interest rates soon despite record stock prices, low unemployment and core inflation above 2.0% because it’s worried about the economy. After 2,5 years Core CPI moved above UST10. That’s why Fed Chairman Jerome Powell isn’t really focused on the economy itself — it’s doing OK, actually. He’s nervous about what economists like to call internal or external “shocks.” A trade war certainly qualifies as one.

Rising Oil prices support the Canadian Dollar. The BoC is expected to end 2019 without a single rate move.

The Surprise Index has been clearly positive for Canada. It puts a large weight on headline employment and the unemployment rate. But as we showed last week, the quality of those job gains means the apparently tight labour market hasn’t translated into particularly strong consumer spending or GDP growth. Indeed, 2019 GDP estimates for Canada have actually fallen further below those for the US even with the “positive” data surprises.

Economic Calendar of USDCAD

Tuesday: U.S Production Data Set

Wednesday: U.S Housing Data, Canada CPI and Manufacturing Sales

Thursday: U.S Philadelphia FED Manufacturing Index, Canada ADP Non-Farm Employment Change

Friday: Canada Retail Sales

Weekly Chart: Bearish.
Loonie ended the week below SMA 20, EMA50, SMA200. SMA 100 support resides at 1.29700. Inside the Ichimoku Cloud. Cloud support at1.29500.

Daily Chart: Bearish.
The price is below all main Moving Averages.RSI is above 30 and has downside rooms. Murrey Math 2/8 Major Support resides @ 1.29390.

H4 Chart: Bearish
The price is below all main Moving Averages.RSI is above 30 and has downside rooms. Murrey Math – 2/8 Extremely Oversold resides @ 1.29700

Intraday Key Levels:

Upside: 1.30460 1.30610 1.30920
Downside: 1.30150 1.30000 1.29700

Chart Patterns:

Daily Chart: Bullish Gartley and AB=CD patterns @ 1.29700

H1 Chart: Emerging Bearish Cypher Pattern @ 1.31200

Our Comments:

Break below 1.30150 could send the pair 1.29700. A potential breakout of the trend line and daily closing below 1.29500 would confirm the medium term trend change. 1.28170 will be the next target of the pair.

If the pair fails to break below 1.30150, it is likely to test 1.30900 resistance. However, the upside is capped by the SMA 100 H4 chart at 1.31200.

Medium Term Trade Opportunities:

Long Opportunity at 1.29700

Short Opportunity at 1.31200

We have published our near term trade plan for the members and we will send entry notifications.

Crude Oil Forecast and Technical Analysis

The picture is not promising for Crude Oil Bulls.

The main problem is the Global Oil Demand.

Geopolitical risks and OPEC+ Supply Cut can not help oil prices because there is a lack of demand.

IMF lowered the Global Growth projections. IEA reduces its Oil Demand Growth projections.

In the near term, geopolitical risks can be the only reason for the bullish market. Saudi Arabia needs higher prices for Aramco’s IPO. But if there is no demand, cutting the supply could only a temporary solution which is not sustainable.

Technically:

Near-term selling pressure remains as long as the prices stay below 58 $. Only a firm closing above 58 $ may change the near term overview and we may see the prices testing 59.40 $ – 60.00 $.

On the downside, we have two target levels: 55.40 $ and 54.70 $

Breakout of 54.70 will add weight on the prices and we could see 53 $ per barrel. At this level we expect the bulls to be more defensive.

We have a few patterns to trade intraday.

Our strategy is to sell the potential pullbacks and book profit at 53 $

Now we wait for the breakout to add short.