After last week's events, certain pairs look to be reacting heavily as volatility increases. Current behavior is starting to shape long and short ideas across the charts. Here are some of the best forex setups we are looking at right now followed by our analyses behind them.
Best Forex Setups
Swiss-Yen came down to support on a rising trend line on the 1D timeframe. Price has been falling until today when the Yen was stronger last week. The pair also has support around the 137.797 level where there is a previous top should it fall more. Heavy resistance lies up at the previous highs of 143.670s. If CHFJPY can bounce here and close above Friday's price, we might be able to see a shift back to the upside and a test on this level.
The image above shows GDP growth for the two currencies on the most recent quarter reported. Although both saw slight growth in GDP, Switzerland's economy is doing better overall because the economy is not shrinking despite the rise in interest rates.
Japan, on the other hand, is still seeing its economy shrink without even any aggressive monetary policy. The BOJ wants rates to hit 0% from -0.10%, but there is still no clear timeframe on when that move will occur. So, CHF still has a slight edge over the Yen even though they are two safe havens.
NZDCAD has come down to a support level on the 4H timeframe and is testing a previous bottom at 0.79480. A break and close under could mean significant more downside, but we would need to see that confirmation first. If price bounces, a double bottom will form and cause that level to become a stronger level of support. Also, a bounce could take the pair up to 0.80543 where there is some heavy resistance in the way. So, there are two considerable short setups around these two prices. One is betting on the break lower and the other is shorting the bounce.
Canada's economy has a strong advantage over New Zealand's. Both economies depend on commodity performance, but Canada seems to be going through expansion more so than NZ. Canada saw declining unemployment for the past year as it is now at the lowest level on record since 1976.
It's also true that NZ has falling unemployment, however, output is still stronger on the loonie's side. Canada's GDP growth is still higher than the kiwi's while inflation is not rising as harshly in Canada than in NZ.
Still, retail is vastly long this pair. Institutions want less and less to do with the kiwi, however. And over 60% of big money is short this pair.
GU touched a lower low in Friday's trading session and is now on the rise today. This could mean that price is going to try to test resistance around the falling trend line on the 4H timeframe. Because of price action and trend movements, it looks like the down trend will continue. So, a bounce to the upside could be a short setup to watch this week.
England's economic outlook has become worse after the recent leave of former Prime Minister Boris Johnson. The US and UK alike are suffering from slowing economic growth on a broad scale, but investors don't have faith that BOE will be able to curb inflation. The US has a better chance of doing so because of their central bank's policy to control it at all costs.
The UK's Consumer Price Index has reached record highs and is continuing to fly higher with each passing month. There is no sign of England getting anywhere near that 2% inflation target. Although the US has a ways to go as well, at least they're prioritizing this more even at the expense of slowing economic growth.
On Friday this past week, the United Kingdom’s Office for National Statistics released the latest reports on the UK’s Gross Domestic Product (GDP), a means of measuring economic output. It was revealed that their economy grew by -0.6% month-over-month, and -0.1% quarter-over-quarter, which entails a contraction for both timeframes. Although these numbers are less disastrous […]
This week the public received startling news: on Wednesday morning, month-over-month CPI (a proxy for inflation) in the United States had unexpectedly remained static, clocking in at 0% whereas a moderate 0.2% increase had been forecast. Core CPI (which excludes food and energy prices) likewise came in lower than anticipated at 0.3% month-over-month, while Thursday […]
Next Tuesday, the RBNZ will announce their new official bank rate which is expected to be 3%, a 0.50% rise from July. This hike will make it the highest yielding major currency on the market. Here is why you should consider buying the kiwi before Tuesday's decision as well as some strong NZD long setups. […]
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