EUR/USDBearish
GBP/USDBearish
AUD/NZDBearish
XAU/USDBullish
SPX500Bearish

EU struggles to pass 1.2000s as US markets fall from overvalued prices in the stock market. The pair is back in a support zone showing that price wants to go lower. A break in that support zone (which is a common pattern we see in a couple other pairs) would be a sign that we are in for continued downtrend.

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GU comes back for a second test on support without making a promising rally on the daily chart. GU has very strong support on the daily chart with June support and the 200 DMA. A bounce would seem likely, however, a break would be very bearish for the pair that's been running up since March.

AUDNZD falls to another low as it comes up to resistance. Key support is not very clear on the daily chart except for the 200 DMA way down at around 1.6000s. Gold continues to fall as well which is not good for the Aussie.

Gold now breaks through support, and a close below it would be more bearish for this metal. No clear support lies on the daily chart until the 200 DMA as well. A short term bearish bias is definitely viable for gold, but only because USD rises in times of panic or crisis. USD will continue to rise as markets fall, but that will not last over the long term in my opinion. For reasons stated in the other articles I've written, USD will fall again due to the immense amount of money printing we saw earlier this year with inflation rising. Gold also tends to outperform the markets and is less volatile. This pair is definitely a safer place to put your money.

Before I continue, do you see a pattern here? All these pairs are dropping, but why? What all these pairs have in common is their correlation to US equities. When the US market falls, these pairs drop as well. When the market saw its largest bull market in history, so did these pairs.

After creating lower lows on the daily chart, the market continued to sell off hard as soon as it opened this morning. SPX500 is currently hovering on support, but key support lies on the 200 DMA. If price comes down here, we will definitely see a bounce, but the question is: will it be enough for another bull rally? The market historically uses that moving average as a place to long again, but uncertainties with the election, coronavirus vaccine, cases rising again, lack of stimulus, inflation, suffering economy, etc. is aligning for a fearful market. After a season of greed, fear steps in and takes over market sentiment. With September being a month of selling also contributes to bearish sentiment. This is because the months before are usually high-profit periods for investors.

Regardless of the fear taking place, I think this downside movement is healthy for our market. A correction like this was a long time coming, but the bulls wouldn't let it drop. What we're seeing is just a big flush out of stocks so the market can find a balance at 'reasonable' prices for investors to find more attractive. If you plan on investing or putting some money in to the market now, the best thing to do is to dip your toes in. Don't be swayed one way or the other, just be ready to hold whatever you have for the long run. With a small amount of your portfolio in the market or major pairs, you can always long again if prices continues to work against you.

Remember, this is not a time to panic like most sellers. Keep a cool head and trade on! With proper risk management, there is nothing to worry about; especially in the long run. Stay safe and trade safe.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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Last week was rough for the market as the S&P and Nasdaq draw lower lows on the daily chart. The Dow Jones Industrial was the only index to look in the best shape as tech continues to fall under pressure.

NAS100 on the daily

The main drivers for the market, which have been carrying pairs like GBPUSD and EURUSD, are tech stocks. In order to see a rebound in US indices and those major pairs would be for FAANG to have a good week, which might be the case. One factor to consider for Monday morning is the sentiment around Battery Day.

Tesla's Battery Day

This Tuesday will provide further insight on the development and advancements Tesla has made for their battery. The company is hyping up the news around the event as the EV maker will announce their new "million mile battery". This would be a huge breakthrough for Tesla and its stock, but will it be enough to push the markets and major USD pair up?

What to consider

A Barron's article analysts sounds uncertain for Tesla's rebound. He holds a price target of $272 a share which is nearly half of what the stock is worth now. However, quoted from the article, the author states that, "Anything below $100 per kilowatt hour, along with a credible plan to get there, should be a win for Tesla shareholders." Other analysts mentioned in the article provide a more generous PT in the $300s.

On top of this, COVID cases are rising back again as worldwide and US cases reach new heights. Profit-taking is another factor after the bull rally. The upside of investing now is very minimal considering the unlikeliness of reach all time highs again. As investors take their money off the table, the bigger question remains where those profits go back in to. Interest may move from heavy tech investments to dividend stocks. Portfolios may lessen the stake in the market overall. Next week will definitely be interesting for the market.

Conclusion

From a macro perspective, I'm looking at what could happen over time. I am also writing at the time of the futures market opening. Futures are dropping early on, and already down 14 points for the SPX500, but a lot can change over night and throughout the week. Tesla's rebound from lows shows investors are excited about the battery day report, but overall demand for stocks seems to be getting weaker. With analysts expecting tech to correct further, this week may be volatile.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

GBP/USDBearish
XAU/USDBullish
SPX500Bearish

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GBP/USD

GU broke a long term upward trend line on the daily and 4H charts which dipped price below key support. With poor Brexit news and an uncertain US economy, the pair is stuck near a decision point. The pair has been climbing for months after the crash in March, but now faces heavy resistance. Bad retail sales reports on USD is probably what's causing this rally up to resistance, but my overall sentiment remains bearish, and a possible future lower low will come out of this on the 4H chart.

Indices will have a volatile day as the Fed chairman is set to speak at 2:30 EST with FOMC economic projections at 2:00. The SPX still hovers below resistance on the 4H chart after its steep decline starting from 2 weeks ago. Today will provide further insight on the market's direction from now up until the election. The 200 SMA on the 4H chart suggests that price is very uncertain on where to go. It seems to be taking turns stabilizing just under or over the moving average as investors wait for the FOMC projections. I remain bearish for the week unless price breaks over that resistance level around 3430s.

After breaking out of former wedge, gold makes higher lows on the 4H chart and hovers around the 200 SMA. In the long run, gold outperforms the benchmarks, but still dips a little with each market retracement in the short run. Big money and analysts think that this metal has the potential to climb as US economy and USD decline. I remain bullish on this metal and believe that a test at 1990s would be likely in the next few weeks. However, poor US economic data could hinder the stock market which could adversely affect gold. The dips are not as momentous and recoveries outperform indices.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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After the steepest drop in US equities in history back in February, the stock market rebounded 63% and passed all-time highs from pre-crash levels. With an economy that was once booming turned into a recession, but the market did not seem to care from the belief that the Fed would keep money flowing in and the banks, during a period of almost 0% interest rates, had nowhere to put their money except in the stock market. Led by tech, the market climbed higher than ever before. USD pairs got crushed as GU and EU skyrocketed. Although the S&P has already dipped over 6% in the past week, it seems that the time to buy is not that attractive to investors. Here are some reasons why:

Illusion of the Fed

The Fed, with seemingly unprecedented power to fuel the equities market, made investors feel backed by the central bank to where the market had nowhere to go but up. There was an illusion that the Fed would never let stocks dip whatsoever, but that can only go so far. Fueling the market means printing money, which means increasing debt and inflation. If interest rates rise, the market will tumble as well, so interest rates need to stay low while the USD deals with inflation rising. Keep in mind that interest rates were already very low to begin with as Trump promised the best market we have ever seen. Once corona hit, interest rates only had so far it could go before it reaches 0% or negative. Yes, it is true that missing this most recent bull run killed bearish sentiment, but the bears aren't going to sleep forever. The Fed won't keep printing money forever, and at some point, it is not up to them where the market decides to go.

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The lack of new stimulus

Millions of Americans are still out of work, even more so than the great financial crisis of 2008. The unemployment numbers have been greater than 2008 for over 6 months now, and companies are still having lay-offs. Initial jobless claims data shows that the economy is not really recovering. We finally dipped below 1 million a few weeks ago, but the number each week has now been hovering in the 800,000s. The damage done is irreversible, and will take a long time to recover. Some analysts expect 8-10 years to be fully recovered. However, this will not necessarily affect the stock market and major pairs as much. The fact that Americans have been out of stimulus payments since early August shows the true colors of Congress as Democrats and Republicans continue to debate over which package is best. Now is not the time to push agendas or make Capital Hill look bad. It's time to put differences aside and help the people that need it.

Vaccine Drawbacks

News on vaccine has definitely been a major driver in the market's direction this year, but failures in the trials have brought fear back in to the minds of investors. After one patient in a voluntary vaccine trial came down with an unknown illness, the market freaked out and dipped hard with big tech leading the drop. The first step in this biological crisis is to find either a vaccine or efficient treatments to the virus and stabilize the number of cases. The number is still rising now that schools and universities are calling students back to campuses. The University of Georgia made business news when cases spiked over 1,400 positive tests. Sports teams are postponing games, some teams are not playing at all, and billions of dollars in revenue could be lost if cancellations continue.

What will tomorrow bring?

Tomorrow and next week will be interesting. Last week had moments of short-term uptrends forming before price got wiped out again. This pattern happened a lot last week. The bulls are losing momentum with all this crazy news coming out, and tomorrow may be grim. The market is following the same pattern from February: sell offs begin to bring price down before that big correction happened of -34% on the SPX500.

You can tell that the dips are becoming successfully more aggressive the higher we climb. The red candles are now overpowering the green and this recent dip has already wiped out 3 weeks of gains. The healthy thing would be for the market to correct making stock prices and value reach closer to equilibrium. Otherwise, we will see a bull market run completely by FOMO investors who want to make a quick buck on each swing up, and an inevitable correction farther in the future will be worse than if it were to do so now. Since the market has dipped back into correction territory, it's time for it to make a decision. Will we continue to buy in to the Fed-fueled rally, or will we let the market healthily correct so that it makes more sense to start investing again?
We will find out soon.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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GBP/USDBearish
AUD/NZDBearish
SPX500Bearish

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GBP/USD

GU broke a long term trend line on the Daily chart, sending price below support around 1.30460s. Today's rebound happened synonymous with the US market, which occurred for no clear reason other than investors might have been looking to buy up to level out their accounts before another major sell off. GU also sank with poor news on Brexit which may continue GU's decline. Possible short setups look clean at 1.30460s.

AUD/NZD

This pair looked to be recovering off the 200 period moving average on the 4H chart, but it is now showing some clear rejection from the candles. Gold is still trading mostly sideways so, there is a different reason for the pair to continue its dip below highs. We have a short term bearish sentiment on this pair as Aussie is still favored by most investors, but a down trend looks probable in the short run.

SPX500

The 4H chart shows clear rejection on that falling trend line, but a lot can change from now until market open. Jobless claims reports, which have been major drivers of market direction, is expected to be a little lower than last week's. This could be a good sign for bulls if claims are as expected or better, but a greater problem looms: big tech is now losing momentum after a long August run. A break in that trend line would be good news, although it does not look like it has enough momentum to carry passed that level. Shorting the market is always too difficult as the market tends to sell off hard before it recovers twice as much. With the newly mounting millions of retail investors trying to place a stake in the game this year, strategists see this as a possible concern for the market since it's brought stocks up to well overvalued. What we may likely see over night on smaller time frames is the price creep up before a big sell, and repeat.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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AUD/NZDNeutral
USD/JPYBullish JPY
USD/CHFNeutral
XAU/USDBullish

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AUD/NZD

Another wedge forming on the pair as it hovers in consolidation zone. A breakout could be bullish for Aussie, but GDP q/q report this Tuesday is expected to be much worse than last quarter at -6%. AUD does have an advantage over the New Zealand dollar which would stem from their gold industry. Gold is looking more valuable to investors now that the USD is going to keep depreciating over time. AUD's report on GDP today will be big in picking a direction, and if the report is as-expected or worse, we can count on this pair to continue to fall.

USD/JPY

USDJPY sentiment is still bearish mostly from weakening sentiment on the USD. Analysts seem to be favoring the yen as the Bank of Japan has record high debt issuance and while the US now has limitations on their businesses to work with Chinese companies. Here on the 4H chart the pair is struggling to break that 200 period SMA all while stuck in a wedge. We see a potential short set up on that moving average as well as the top of the wedge and a close/break below the rising trend line.

USD/CHF

The pair crossed below long term support from back in May 2015. Now price is coming back up to the new resistance. Despite this, investors are bullish on the pair. It looks like price is trying to break that hard trend line where next key resistance lies around .93750s. A breakout would be good news for the pair, so we're remaining neutral until movement is decided.

XAU/USD

Gold seems to be up against resistance on a key Fibonacci level around 2000. Although technicals are important, we don't believe them to be too notable for this pair since the Fed's recent actions regarding inflation and extreme stimulus measures. One analysts sees price over 2000 by the end of the year with the possibility of it outperforming the market once again. 2000 is the major level it needs to break which would be the biggest bull sign on the metal.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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Gores Metropoulos Inc. (NASDAQ: GMHI) has marked a deal with global leader in artificial intelligence on highway autonomy, Luminar, and is going public on this merger worth over $3 billion.

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A little about Luminar Tech

Luminar works in the field of highway safety using various AI tools for detection of objects up close or even from a considerable distance. One of their products, the Iris, can detect objects from a max distance of 500 meters away.

https://www.luminartech.com/

Just from clicking on the website, you can get an idea of the kind of technology that Luminar is working with without the use of many words. The front page is an interactive picture of a city street that the users can look around with. Immediately, the site can not only grab the users attention, but expose the advanced technology without explaining it in depth.

The company is well-established in the private sector with 50 partnerships including several of the top Original Equipment Manufactures in the world.

GMHI

Gore's most recent earnings report came as a surprise to a lot of investors in a good way. On top of that, the size of this merger is a little bigger than Nikola's merger with VTIQ earlier this summer. This might be a good sign to traders now that the market cap sits at a little over $1 billion. The new valuation of $3.4 billion might drive the price up. Luminar will receive an immediate $170 million in finance as the ticker will change from GMHI to LAZR on the Nasdaq. The deal is expected to close at some point in the 4th quarter.

GMHI on the 1D chart. For those who are trying to trade this pre-merger, support can be found in the 10.70-80s price range. Price hasn't been able to break above the $12 mark yet, so a potential retest could happen come merging time. 14-Day RSI stands little under 60.

I am currently holding a position on this stock, however it is small. Remember that anything can happen in these unpredictable markets, especially the SPACs, so it's important to keep a level head and risk what you are willing to risk.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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AUDBearish
NZDBullish
USDBullish
GoldBullish

AUD/NZD

Candles look like they're creating a wedge on the 4H chart. Signs show that the next few candles want to come up to test the falling trend line. 14-Day RSI hit all the way up to 83 before coming down last week, and it seems like the downtrend is likely to continue with the lower highs and lows that have been showing up on this time frame.

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USD/JPY

UJ on the daily taking the opposite approach of AUDNZD as higher highs are created. The long term downtrend may show that the 200 day moving average will contribute to some considerable resistance. It may also respect that falling trend line starting from March earlier this year. USD did see a rally today, so we are thinking that the movement is going to continue for now.

Gold

Gold on the 4H chart looks to be coming back down to support in the low 1900s with that 200 period moving average which price has been respecting thus far. Gold on its way to make a third test of the moving average, so a critical direction point is going to be decided soon. 14-Day RSI (not the RSI shown on the chart above) came down to 50 since new highs suggesting that price could move in either direction now.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

Warren Buffett, one of the most successful and richest investors of all time, long-time owner of the established conglomerate, Berkshire Hathaway, and mega bull has recently turned bearish on the US stock market. Granted, he has been saying this since the April rebound, but he finally put his money into action.

Although Buffett would probably never short the market, he decided to get rid of his bank stocks by dumping JP Morgan, Wells Fargo, Goldman Sachs and other banks with smaller positions. He sold over 250 million shares, hundreds of billions of dollars worth in total, but that's not all.

https://www.cnbc.com/berkshire-hathaway-portfolio/

The oracle of Omaha had also replaced his stake in bank stocks for a gold mining company, Barrick Gold Corp (NYSE: GOLD).
But why sell bank stocks when the Fed has funded them with trillions of dollars and pushing the S&P passed all-time highs?

Surprisingly enough, bank stocks have largely under performed the market in this latest bull rally. This is due issues regarding credit and debt; Analysts expect banks to be close to $900 billion in losses by 2022, according to CCN.

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https://www.advisorperspectives.com/dshort/updates/2020/08/04/market-cap-to-gdp-an-updated-look-at-the-buffett-valuation-indicator

Here's the indicator Buffett uses to measure the Wilshire Stock index valuation compared to overall GDP. The way it's measured on this site (which is the accurate way) is by taking the annual GDP from Q1 and using that as the denominator throughout the year. So, it is basically the index divided by Q1 GDP.

In most recent numbers, GuruFocus has us at 179%, which they consider 'significantly overvalued' for the market. They also predict a 2.9% decline in stock market returns this year.

https://www.gurufocus.com/stock-market-valuations.php

What Now?

It's hard to predict what is going to happen in the market with tons of factors at play. For example, two weeks ago, jobless claims dropped into the 900,000s range, and investors believed the economy was recovering. The market shot up. Last week, jobless claims (which have been driving the market either up or down) reported back over 1 million at 1.1 million. Despite bad news, the market shot up harder than the previous weeks.

The problem investors are running into is that Wall Street will tell you that the economy doesn't reflect the stock market. And when there's bad news about the economy, the market tends to go up. However, when there's good news about the economy, that news matters all of the sudden, and it causes a buying frenzy. As an investor who's got most of their money sitting on the sidelines since April, it's frustrating to try to get an idea of when is the best time to buy. Do we brush off the fact that the US is in a recession? Do we join the hype train and ride with the bulls?

The answer is painfully simple: Bull and bear markets all come to an end eventually before it resets. Look past the trees and view the whole forest. Is a vaccine going to fix the damage already caused by the pandemic? Most stocks on the S&P 500 are showing negative returns expect for a certain few. There is lasting damage to the economy, and if you were forward-looking, it would make sense to see the market reflect that in stocks. Some analysts are talking years of rebuilding before the economy 'normalizes' again.

Here is the US30 on the 4H chart showing long wicks on both the tops and bottoms of several candles. That is a big sign of uncertainty where investors can't decide on what to do. No one really knows what is about to happen in the next week, month or year, not even Buffett himself. It's about being rational and understanding what makes sense in the long run.

Put yourself in an unbiased position and ask, 'should the S&P really be at all time highs right now?' The obvious answer should be no, but again, the market does not always make sense.

What to Look Out For This Week

Watch for vaccine news: This week may see another frenzy of buyers as a successful breakthrough on treatments to the coronavirus will most likely become approved by medical officials.

Watch Big Tech: The stocks like Amazon, Apple, Google, etc have been the main drivers of the market. Analysts are finding long entries on all of these companies excluding Netflix.. Traders are likely to follow.

Watch Technicals: This is definitely a trader's market now. News does affect price, especially good news, but indices are respecting lines of support, resistance, breakouts, wedges, etc. On the 4H chart, the US30 broke above the wedge with a strong green candle. A break in highs could mean that the SPX500 might want to continue its run for now.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

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AUDNeutral -> Bearish
USDBullish
EURBearish
GoldBullish

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AUD/NZD

AN coming off highs from 2018 after RSI hits a significant level of 83. The pair is looking more volatile now as the 4H candle closes below the rising trend line. Analyst at HYCM, Giles Coghlan, mentions that the pair moves similarly to the S&P 500 which has recently broke all-time highs. However, gold is also taking a break amidst the ending of the so-called 'shortest bear market' for US stocks. This also affects Aussie pairs due to a gold-heavy economy. 65% of traders are net short according to DailyFX and sentiment is mixed now that price has been climbing higher for the past several months.

USD/CAD

Despite the punishment this pair has taken recently, we still remain bullish with the thesis that USD will see a rally soon. The daily candle showing some pressure to the upside, and a close above the trend line would be a good sign that price wants to start moving back up again. Cutting production has boosted demand for oil and has fueled the CAD sending this pair in a downtrend. Any news on oil will most likely affect this pair as the USD rally may be able to start.

EUR/JPY

EJ continuing to push lower here on the 4H chart. German and French PMI news is to be reported for this month with mixed forecasts. Some forecasts are suggesting a lower PMI data for the German economy and higher for the French. 4H candle crossed under the rising trend line, showing signs of weakness on the up trend. 53% of traders are net short on the pair so sentiment is still mixed, but traders may start going back to risk-off sentiment and hold the yen as it is considered a safe haven.

Gold continues further to the downside as it approaches its 200 period moving average. The Federal Reserve decided not to cap the yield curve which investors took as bad news. A weakening dollar is still impacting lots of pairs like USD/CAD, so it might seem odd that we are bullish on gold yet expecting a rally in the USD. Gold seems to be the move in the long run, but the USD might see some more demand as the US economy is slowly deteriorating due to combined risks with China, inflation, unemployment stimulus expiring, and much more.


Disclaimer:

Please note that this email is my personal opinion only. I am not a licensed financial advisor, and any information shared or discussed is not to be construed as investment advice. Trading and investing involves a degree of risk, and is not suitable to all investors. Please consult with your financial advisor before making any sort of investment decisions.

A1 Trading Company

A1 Trading Company is a financial services and media business founded in Atlanta, USA.
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