Hey everyone! Welcome to this week's forex forecast for the week ending September 10th, 2021. I'm TraderBart with A1 Trading, and this week I'll be looking at USDJPY, EURUSD, GBPJPY & XAUUSD.
Price has been consolidating between 109-111 over the past couple of months, and we recently saw price bounce off the range's support back to the middle of the consolidation zone. Look out for a clear break above or below this structure to catch the new trend, following subsequent retests and rejections.
Huge moves rejecting the channel's top last week on E/U as price breaks below 1.18 and is now nearing the major key horizontal level 1.17. This level has been seen as major support over the past year or so, so look out for how price reacts to this level once we see price clearly enter. It's likely we could see the trend continue and price reaches the channel's bottom, before potentially retracing and making a move back towards 1.18.
Looking at the long-term trend on G/J price has recently touched and rejected off the previous high in this range at 156.0 and is now potentially making its move towards the downside. Currently, we have an ascending channel where price is actually at the bottom, and we're now waiting on clear confirmations whether price will break or respect this channel. If we see price break outside the channel, we'll likely see price continue the long-term trend and head towards the downside.
Price is once again back at the bullish order block at 1740, where financial institutions will push price towards before a reversal to take out traders who went long early, most likely at 1765. If we see price break below this zone, this area will become a breaker block, an area to go short off following subsequent retests and rejections.
The Euro-Dollar pair is down over 0.5% today after several days in the red. Today's speech by EU president Lagarde mentioned how the economic recovery had come quicker than expected six months ago. This was praised by the prompt vaccine distribution so citizens could get back to work. Across the pond, the US just saw a slowing in inflation and an increase in retail sales which were expected to be negative this month. Both sides seem to be recovering well.
The USD looks like it could be the better play here because at least investors are getting hints as to approximately when the Fed will start tapering and raising rates. Lagarde said that Europe is far from recovery, but they are impressed with the pace so far. However, whatever has been said so far, it doesn't seem like investors are taking this all too well and are flocking to the USD today. The pair's general price action has also been relatively weak for the past three months.
EU fell under its 50 DMA and is on support around 1.75400s. If price breaks this level, it could be a catalyst of another significant drop. If this level of support does not break, there could be more consolidation between this support and resistance level.
A quick look into the ECB Press Conference which took place on Thursday the 9th of September, 2021.
As expected, the ECB stood pat on rates and held the size of its PEPP envelope at €1.85T. The key adjustment to the policy statement was that purchases under PEPP were to be conducted at a “moderately lower” pace compared to Q2 and Q3; some commentators have suggested this would equate to around €60-70B p/m vs current circa €80B.
At the follow-up press conference, President Lagarde noted that the Euro area economic rebound is in an increasingly advanced stage, and output is set to exceed pre-pandemic levels by the end of this year.
Subsequently, for the accompanying economic projections, the central bank’s 2021 growth forecast was upgraded from 4.6% to 5.0%, with the base-effect spill over resulting in a minor tweak lower to the 2022 growth view, from 4.7% to 4.6%, while 2023 growth view was left unchanged at 2.1%.
The ECB still characterises inflationary pressures as transitory, however, its 2021 inflation projection was lifted from 1.9% to 2.2%, 2022 CPI forecast was raised from 1.5% to 1.7%; 2023 was revised up a touch from 1.4% to 1.5%, and thus it still sees inflation below target at the end of its forecast horizon.
Lagarde went on to state that the decision to slow purchases, and the wording in the statement, was unanimously agreed. For those looking for clues on “life after PEPP”, the President remarked that discussion will take place at the December meeting.
That said, Lagarde reassured markets that when PEPP "was done,” the job of the ECB would still not be complete, as the Governing council attempts to reach its inflation mandate.
Overall, Thursday’s release failed to deviate much from market expectations, with the ECB slowing purchases in Q4 and refraining from giving much in the way of clues as to how PEPP will most likely transition into a beefed-up annual payment plan.
I've been sharing my thoughts on E/U over the past couple of weeks, and have been pointing out the bearish order block underneath 1.19, which we did indeed see price reverse from a couple days ago.
Currently, we're seeing price hold just underneath this medium-term descending channel where we're now waiting on further confirmations as to where price could be heading next.
If price continues to stay below the channel's top, and slowly push lower, it's likely we could see the trend continue and price head towards the channel's bottom. If we do see yet another break higher, the order block will become a breaker block, and essentially an area to go long from.
Let's look at the news event's we've got lining up this week...
The Reserve Bank of Australia is expected to keep interest rates on hold at 0.10% this week at their Rate Statement. We may see some negative remarks considering the number of states placed back in lockdown over the past month.
Also, note that the GDP fell short of expectations in Q2 slowing from the previous expansion at 1.9% to just 0.7%; although the unemployment rate declines, it was mostly due to a fall in labour force participation. With this, policymakers may delay their tapering plans as they cited they will adjust to any "significant setback" for the economy.
No interest rate changes are expected from the Canadian central bank, and officials will likely standstill ahead of the national elections after seeing the unexpected 1.1% contraction in Q2 GDP. Also, note that number crunchers are predicting a monthly GDP contraction for July mostly due to the disruption in the auto industry supply chain and weaker residential investment.
The European Central Bank is also expected to keep rates and bond purchases unchanged. Analysts are divided on whether or not the central bank will be making tapering plans, as the PEPP is scheduled to finish in Q1 next year. Scaling down the size of the purchases could make for a smoother transition to their regular QE program, but policymakers might still decide to defer any actual decision until later this year. Also, any significant revisions to growth and inflation forecasts at this time could impact taper speculations.
The Employment Change report is a measure of the change in the number of employed people in Canada. Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity. The number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labour-market conditions.
Job creation is expected to show a slower 75k gain in hiring versus the earlier 94.5k increase, which should be enough to bring the unemployment rate down from 7.5% to 7.3% in August.
Hey everyone! Welcome to this week's forex forecast for the week ending September 10th, 2021. I'm TraderBart with A1 Trading, and this week I'll be looking at EURUSD, GBPUSD, GBPNZD & XAUUSD.
Price has closed off for the week in the bearish order block just underneath 1.19, and we're now waiting on further moves to take place, to establish whether price will either respect this zone and reverse or continue breaking higher from the descending channel it has just broken out of. Most retailers by this point have been stopped out who went short at the channel's top and are likely going to go long now; however financial institutions usually reverse once more and head back towards the original position.
Price is back once again at this 1.388 key horizontal level which has been seen as clear support and resistance over the past couple of weeks. I made a deep dive on this pair as price was forming the descending triangle, and now that price completed that pattern move, price is now once again back at this level and just under its resistance. If price manages to break higher, we should wait for a confirmation of a retest before going long.
Over the past couple of months, price has been consolidating around this breaker block between 1.96 - 1.98 and we're finally beginning to see a break out of this zone. Price is currently heading towards the previous resistance and new support level from the ascending triangle at 1.92, and liquidity is likely pulling price towards this level. There is an order below where price will likely head to swell to stop out retailers who will go long early before potentially reversing.
Price has closed off for the week just below the resistance in this consolidation zone I've been pointing out between 1800-1835. We're now waiting on clear confirmations whether price will either respect of break this level and if we see a break of this trend. If price closes above 1835, we'll likely see price head higher towards the liquidity void ant around 1890. If price does in fact respect this level and go below, we'll likely see further consolidation on this pair.
1.17 is a key horizontal level to look out for in E/U. We can see in the past 3 years that price has always either fell way below or pushed way higher once price has made a breakthrough from this level. Price is back at this level, and therefore we could expect a big push or pull to either direction over the next upcoming months.
Price is currently sitting at this key horizontal 1.17 level where we can see in the past has been seen as great support, price has been bouncing off this level, and heading higher. Price did recently reverse off this level but has made a retracement back down again - usually a sign of failed support.
There is a descending channel formed in the short-term, and price is currently at the bottom of the channel. We did see price bounce off a couple days ago, but price has since retraced the full move and is just above 1.17. Most traders are likely waiting on price to show further rejections and look to continue the trend, however I believe it's possible we will see price head lower, as we've just had a failed breakthrough attempt.
Looking at retail sentiment, as expected most traders are actually long on E/U and expecting price to push higher from here. We know most retailers are losers and therefore financial institutions are likely to be playing with their positions, and will likely push price lower to take out their trades.
Over the next week, we've got a few news events coming out for both the EUR and USD, some notable ones being USD's unemployment claims and PMI numbers for the Euro next week.
Macroeconomic data for the USD continues to disappoint, yet it's still strengthening against major currencies. After Tuesday's USD Retail Sales event, E/U still declined to the 1.17 level. This illogical behaviour of the greenback is explained by the growth of anti-risk sentiment in the market, and the dollar is the beneficiary of the current situation, despite some problems.
Data on the growth of US inflation was published on Sunday which also did not impress investors. The consumer price index has slowed down its growth, which has been observed over the past four months. The focus is on the tapering debate and whatever clues policymakers would provide on the timing for a tighter monetary policy.
Beyond this, there is an overall concern that the Delta variant will continue to cause major issues, as the world is seeing an increase in that infection rate, which has people worried about whether or not the economy is going to pick up locally as well as globally.
Hey everyone! Welcome to this week's forex forecast for the week ending August 20th, 2021. I'm TraderBart with A1 Trading, and this week I'll be looking at EURUSD, GBPNZD, EURAUD & XAUUSD.
A bearish flag pattern has formed on E/U after a descending channel has formed following an impulsive selloff in mid-June. Price has recently hit the channel's bottom and is now more than halfway heading towards the channel's top. We have a bearish order block at 1.187, where we could likely see a reversal towards the bottom from this zone. Look out for price action confirmations once price does reach this zone, look out for rejections before going short.
Price has been consolidating around and within this bullish breaker block zone for months now, and no significant move has yet to be made. Price did form a medium-term ascending channel where it's currently at the bottom, and I'm now waiting on price action confirmations of a rejection and a move potentially to the upside. If price breaks this formation and goes lower, it's likely we could see a new trend form, or price may go to retest previous horizontal levels such as 1.92 or potentially collect orders from OB's lower.
Price has recently broken out of the short-term ascending channel and is potentially forming a new descending channel if price fails to go higher than 1.61, forming the new lower high. Price has been moving pretty slowly in this market, and no breakthroughs have happened. 1.585 is a pivotal level to watch how price reacts; a break lower suggests we could retest 1.568, whereas if price holds this level as support, price is likely to stay above, and long positions could be a good idea.
Gold made a huge move in the past week, dropping more than 5% and then retracing the entire move plus more by Friday. Price has closed off for the week just above the channel's top, and in-between two horizontal levels, I've had my eyes on 1765 and 1795. Look out how price reacts to this current level to decide whether to go long or short. If price stays above the channel's top, we could likely see price head higher towards and above 1795, whereas if price comes back inside the channel, it's likely we could see some consolidation in the zone at 1740.
Hey everyone! Welcome to this week's forex forecast for the week ending July 30th, 2021. I'm TraderBart with A1 Trading, and this week I'll be looking at USDJPY, EURAUD, NZDCHF & XAUUSD.
Price has recently broken out of the ascending channel, and we've already seen a retest and the impulsive move to the downside. However, we're once again seeing price approach the channel's bottom and nearing short-term resistance at 110.6. Look out in the week ahead for price to either break through this level, where it will likely continue travelling inside the channel. However, if we see price fail to break this level and instead reject, we could likely see a new trend form to the downside as this could potentially be the next lower high.
Price has closed off for the week touching and retracing the channel's bottom. Now that price has broken out of the consolidation phase following the ascending channel break, it's likely we could see this ascending channel continue as price heads to new highs to complete the long-term ascending channel pattern. We may get a much clearer touch of the channel's bottom before this move happens, so look out for proper touches and rejections before going long on this pair.
Price is now touching the descending channel's bottom and is already showing rejection to this level. If price continues to fail to break above, this could be a good position to go short. However, this may not be the best idea as looking overall and long-term, price is actually travelling in a bullish flag pattern, and we're currently in the flag, the position right before the impulsive upside move of the chart pattern. If we see price break above the channel, we'll likely see price head higher and complete the chart pattern.
Price is consolidating above the descending channel's top and is currently waiting on some sort of catalyst to make the next month. If price continues to stay above the channel, we will likely see price be bullish and travel higher towards the Liquidity Void at around 1900. However, if price closes back inside the channel, we'll likely see a retest of the bullish OB at around 1750.
Look out traders! On Friday the 23rd of July, the Euro will be printing their monthly PMI data so here's what to expect...
The Purchasing Managers' Index (PMI) is an index of the prevailing direction of economic trends in the manufacturing and service sectors. It consists of a diffusion index, which essentially summarises market conditions viewed by purchasing managers if they are expanding, staying the same or contracting. The PMI aims to provide information about current and future business conditions to company decision-makers, analysts, and investors.
The headline PMI is a number from 0 to 100. A PMI above 50 represents an expansion when compared with the previous month. A reading below 50 represents a contraction, and a reading at 50 indicates no change compared to the previous month. The further away from 50, the greater the level of change.
As a whole, the Euro has expanded significantly in their PMI readings. The Eurozone is doing very well combatting the pandemic and the crisis it's caused on their economy. However, we're now beginning to see a significant recovery.
We're expecting to see another round of potential declines in Manufacturing PMI's all round, however we're also expecting to see another round of potential inclines in Service PMI's all round too. This could potentially mean we won't see a very one-sided direction following the results as half is expected to be good news, and the other half is expected to be bad news.
If the results come out as expected, I'm expecting high volatility in both directions. As mentioned, this is mainly because we're expecting a decline in Manufacturing PMI but an incline in Service PMI's. So it's good news mixed with bad news. There likely will be spikes, but I'm expecting this is both directions. I would suggest looking out for the released actual numbers before deciding to trade this event.
Over the past couple of months, price formed an ascending triangle pattern, which we saw the initial breakout in the middle of May. Ever since, we had price consolidate between the chart pattern's resistance and the breakout's high at 1.566 - 1.585. We saw this move continue for over a month.
Recently, in early July, we did see price make a huge rejection to the old 1.566 resistance level, new support level, and price ended up breaking above the recent high at 1.585.
In the short-term, we can see price has formed an ascending channel as it's heading higher from the long-term break of the ascending triangle pattern. Currently, price must go below the previous higher high at 1.596 to make a touch and rejection off the channel's bottom, to continue the trend's formation.
Later today, the European Central Bank (ECB) will publish its monetary policy decision for July. As parts of the Eurozone experienced flooding and the Delta variant limited the momentum of economic recovery, its like the ECB President will continue to look at the foreseeable future before making hard decisions. This won't be all negative though, as increased vaccinations and restriction easing will continue to the Euro's economic activity.
The Australian Dollar on the other hand, continues to battle with rising coronavirus cases and the possibilities of more lockdowns in cities.
For this reason, unless the ECB turns out more dovish than expected, we'll likely see E/A head higher and continue the trend. I'm looking out for a touch and rejection of the channel's bottom for this.
Looking at retail sentiment, E/A traders are actually quite mixed on this market, as there isn't a clear one-sided bias yet. Sentiment is mixed and traders are essentially waiting on the next confirmation before we see a one-sided market.
Over the next couple of weeks, we're got a few high and mid-impact news events coming out, more so for the Euro. The Euro essentially has a chance to out-perform the AUD, and depending on the outcome of these events, and the state of their economy, we could see the Euro gain strength and continue heading higher in EURXXX markets, such as E/A that we're looking at.