US Dollar had another bullish week and both EU and GU have been suffering. But the more they stay in the current range, the higher my final target will be for the upcoming bullish move. Initially, I was looking at 1.12, now I am considering 1.15+ even, possibly higher. US dollar is overstreched and Powell’s speech on friday might have been the final nail on its coffin. Even though Powell was slightly hawkish, US Dollar stayed in the daily range and started dropping after London fix. So EU is still trading around 1.08 after all those hits it has been getting over the past few weeks. Now should be the time for a move up. Gold already did its bottoming and turned bullish on a weekly reversal, which should help EU, too.
Last week we had a hidden bullish divergence on both, EU and GU, but after a dip we ended up where we started. We got rid of some weak bulls…and now the hidden divergence turned into a regular bullish divergence. There are no fundamentals to support dollar until thursday/friday, when we have inflation news, so EU/GU bulls might want to try to break some resistance barriers until then. There is an important resistance of 1050 on EU, which if broken, could turn into new support for bulls. EURCHF is also in a good buy area, long term, which helps the euro case, too.
One more day and this month is over…finally…for a summer month, it was very hard to trade. When we learned something this month, its that when FED raised rates, USD immediately dropped…then ECB raised rates and EU dropped…and next week BoE is supposed to raise rates, you know what will probably follow. And now imagine, if BoE doesn’t raise rates…wouldn’t want to be long on GU after that. But that is on thursday, long time for bulls before then. If GU managed to get towards the 3050-3150 range before the BoE meeting on thursday, it would be a good short, rate raise or not, doesn’t matter. Either for a scalp, before US news on friday or for a swing trade. Both EU and GU are showing a hidden bullish divergence on the chart, but looking at EG, back in the heavy demand zone, I would prefer EU over GU longs next week. Most of the time when EG goes up, its because pound is dropping, not because both EU and GU are strong. And if nothing significant changes on the EG chart until thursday, it might spike up after the BoE meeting. But we have a lot of news next week, pretty much every day, so it should be scalper’s heaven. All starts with chinese manufacturing on monday, which will be important for EURO, as we Europeans are fully dependent on the commies, sadly. 😉
My plan for next week is easy…first I expect EU to go up towards 1.12 and then drop towards 1.10 or below. With some EU data on monday, but the most important events on wednesday and thursday, it should be a volatile week and provide opportunities for both bulls and bears. We have a FED meeting on wednesday, where its expected that FED will raise rates by another 25bps and ECB on thursday, where the same rate increase is expected. It doesn’t really matter what happens and what will be said on either event…all that matters is what big boys do with the market liquidity and where they’ll take the price. Some fake moves are expected, so better be prepared for everything. As always, money management is the key.
This week, the chart speaks louder than any analysis I would write. The USDCHF chart is finishing bottoming on both daily and weekly chart and should spike up soon. This would also bring down stubborn EU and take it possibly towards 1.07xx. On GU, if the current top stays unbroken, we should re-visit 2600 again, possibly lower, if it breaks. There are no major news on monday and tuesday for EU, but important unemployment news for GU on tuesday morning. The forecast is very optimistic and since the UK economy is turning into a disaster, I don’t expect the numbers to be anywhere as good as predicted. The most important days next week will be wednesday and thursday, as we get important inflation data from the US. I expect EU and GU to correct down until then…and then it all depends on the data. If the US inflation increases above the expectations, both EU and GU should drop hard, if not, we might get a new bull run. But the price action shortly before the news will give us an idea about whats going to happen, as it does in most cases. Right now I would be only speculating, as first we need to wait on how the week starts. But looking stricly at the charts, USD bulls are better positioned into next week.
p.s. EURGBP chart favors GU bears over EU bears, when we get a bearish week. Important to watch that chart also.
Dollar’s monthly range has been set in the past few months and probably won’t break either way during the summer. But even if this summer will be low on volatility and range breaks, doesn’t mean it won’t be good for trading. It might be actually a great time to make some relatively safe trades with low risk, especially if we stay in the current range. 100-200 pips either way will be a good opportunity for scalpers. Looking at next week, first I expect Dollar to correct up a little and then it will be upon the market to decide whats next. I really can’t tell if it goes down or up from then on. But we have FED minuted on wednesday, which is never a big mover, but mostly sets the tone for thursday and friday, when we also have the most important data of the week. So if EU and GU drop early next week, nothing major probably won’t happen after that, until the end of wednesday. And thursday/friday, we might get the biggest moves of the week. So I wouldn’t recommend to over-leverage into any direction until then, as it wouldn’t be safe into the news.
Last week was bullish for both EU and GU, like expected, but GU kind of went above what I expected and what would make sense. Too big of a move, especially within the last 2 days, without any corrections. Didn’t make much sense to me and even though it might look super bullish, I expect it to drop next week. Not sure how much, but it could be a lot. When I learned something from trading the pound, its the fact that the scarier and bigger the upmove, the bigger the drop afterwards. It always feels like bulls or bears are trying to get the other guys out of the way first and then go the opposite direction. Next week the only news that are worth mentioning, are UK CPI on wednesday and BoE rate decision on thursday…and the market has been rallying because of bullish BoE talk, apparently, but this could be one of those “buy the rumor, sell the news” things…so no matter what BoE does on thursday, a drop should come. If it doesn’t come before that already, either way, I expect a correction towards 1.27 and below. EU chart is the same, bearish butterly on the H4 chart, which should take EU back below 1.08. As for USD, my target from 2 weeks ago was hit, so now bulls can take over again and lets see how far they will go, if I am right.
This week was very bearish for both EU and GU, but bears didn’t really do much. All fundamentals were working in their favor, but they only managed to make 80-100 pips out of it during the whole week. Even “green” inflation numbers on friday didn’t do much damage to bulls. EU was at 750 before the news, dropped to 700 within 3 hours, but bears couldn’t even break below and bulls took over after London fix and took it back above 725. So bears managed to make 25 pips out of this event, which makes me believe that they are done and finished for now. Unless something major happens over the weekend, bulls should take over next week and keep it up all week. If they manage to break and stay above 830 on EU, then the bullish trend is back and we should see a re-test of 1.10 and possibly start a new bullish run into higher numbers.
Both EU and GU finally corrected some last week, but the question is, if it was a trend turnaround or just a correction. On the monthly chart, they are both strongly bullish and this month, even if bearish, is only in the middle. So we will need to wait until the month’s end to see how the final candle looks like. For now, friday’s move was a little overextended, so I am expecting both EU and GU to go up early next week. The drop on friday didn’t make much technical sense, but it was friday and that day rarely makes a sense, anyway. US data was beyond horrible, but someone big just kept selling, so it didn’t make a difference. I am expecting EU to go back above 900 and GU to go back above 2500, before its more clear, if bulls want to continue upwards or if bears take over again. No big news until thursday, with unemployment data and friday with Powell’s speech, so market will probably get into some position before that.
For the past few weeks, EU and GU bulls kept the higher range, but it looks like their time might be over for now. Long term, looking at the monthly chart, they can still climb 1000 pips or more…but short to medium term, a correction is more than overdue. I am not expecting much from EU or GU bears in the coming weeks, even though they might surprise me, but there should be money to be made there. 200-300 pips down are surely doable, maybe more, before bulls take over again. And Gold bulls look to be done now, too…most attempts to stay above 2000 have failed…and what doesn’t go up, should go down.