This, among other things, gives USD bulls still hope into the next few weeks. The other thing is that friday’s London fix played in their favor, too. We saw strong topping at EURUSD, GBPUSD and every other major USD related pair. EU now touched the old bullish trendline for the 3rd time…first and second time we got good pullbacks…so considering the PA and chart setup, we should see a 3rd pullback. The question is how deep it will go. I am still having the same bear target on EU, which is 1830. Friday’s NFP move didn’t change it, just gave me an opportunity to get better entries. GBPUSD again tested the 1.40 area, as so many times in the past few weeks, since february, and was rejected every time before…and again today. And since “all good things come in threes”, we have USDCHF re-testing the 9000 area again, which is a very strong support! All these things considered…shorting dollar from this point on is very risky and offers a very bad risk to reward ratio.
This week worked out nicely, with the reversal starting on thursday, after FED. USD bulls can’t celebrate yet, because friday was the last day of the month, so that might have played a role in the spike, too. Next week, I expect some correction and then looking for good entries will be the key. EU should re-visit 2050-2080 and GU probably 3850-3900, but the market has to decide on that. My targets are unchanged from last week. If you follow my twitter or telegram, you saw me posting the reversal points on thursday. My USD target is still 93+.
EU bears have been suffering for a while. 2 weeks ago, it was expected…one week ago, it was expected…but this week, I didn’t expect it at all! Technically, this week made no sense and it can be best illustrated by the fact that the biggest hourly candle happened during the FIRST London hour of the week! We had an ECB week, along with fundamental data…and yet, the first hour of the week made the biggest candle, without a re-test of 1975 whatsoever. Something is not right with this move…and I am expecting it to correct very soon…and after that, it might do another crazy thing and drop even more when people start buying it lower. Because in my experience, a “crazy” move in euro is mostly followed by even a crazier one. And right now, we have an uptrend of 400 pips with ZERO correction on the daily chart, so without any profit taking. Here is the interresting part…MAY is many times a reversal month and whatever direction starts in may, in many cases goes on until the end of the year. Next week will give me a first clue in this, as its the last week of april, with a FED meeting in between. Since 1980 was easily broken to the upside this week, my analysis from 2 weeks ago comes to play now. I expected the high to be between 2050-2150, which I think will stay as the high and the correction should start from this area. And like I predicted, I already read some “analysts” talking about 1.30 and higher this week. 🙂
Other USD pairs are showing strong bearish signs on bigger time frames, so this should all help dollar to gain some next week or to reverse alltogether. AUD, NZD and GBP are all bearish into may…
Last 2 weeks worked out well, with my bearish USD bias, but now I am looking towards longs again. Look at EU…2 weeks ago, when it looked super bearish below 1750, all analysts were bearish, retail was super bearish…and then every little jump up, people were selling. 1840 was shorted heavily, 1900 even heavier…and now? We are at a possible triple top at 1980 and people seem to be buying. Can you believe that? Selling the lows and buying the tops is a neverending retail story, it seems. I am not saying we can’t break 2000…and if we do, it will most likely go towards 2100, but the chances are way better for a short right now, especially when you see retailers and analysts turning long. Because if this 1950-1990 area doesn’t break upwards, it will create a TRIPLE top on the daily chart! And that can be very nasty for bulls…with a possible downmove of 300-400 pips. Next week we have ECB on thursday, so its hard to predict what will happen before that…if the market keeps ranging or if it starts a trend before the meeting, but either way, I think the 1880-1920 area will be reached next week.
Another reason for EU bears are other correlated USD pairs. GU is close to a good short area now…it might even be there now, but even if it goes 50-100 pips higher in some quick move, its still a short in the medium term, 3560-3600 is still a number I am waiting for to be re-tested. GU closed at 3840 on friday and I expect a retracement towards 3760-80 minimum early next week and from then on it depends if this area is defended or not…and if even 3680-3700 breaks, bulls might end up very badly. Monday will give a first clue…
UJ also worked out well this week, I had a target of 108.50 and 108.60 was hit, so I gladly got rid of all shorts, in case we’ll will keep ranging upwards again, for a while, but if we come close to 111 or even above 110, I might start looking for shorts again.
USD ended up last week as expected, but the week was still weird and confusing. Mainly because many pairs were out of sync, so its not easy to make a prediction for next week. EU would normally look like a good short, but GU looks like a good long, at least short term, while UJ is still a short. The pairs that are correlated, were acting differently last week and I am always cautios when this happens. It is hard to imagine for GU to go up, UJ to go down and EU to go down at the same time. Some of those pairs was “wrong” this week and I need to wait for next week to determine which. GU and UJ are the reason why I wouldn’t short EU just yet. Another reason is that more than 60% of retail is still short…so it would be good to squeeze them out a bit more. EU is kind of in the middle…too high to go long and too low to go short. 30-50 pip scalps are good early in the week, but I prefer bigger setups than that, so I will keep waiting for the charts to be more clear. If my prediction is right and GU goes up next week, along with UJ going down, then EU should re-visit 1980 and if broken above, opens up 2050-2150 as good short opportunities. I can imagine market will be panicking by then and all the so called analysts will start “predicting” 1.25, 1.30 and more again, like last time at 1.23. That will be a good time to start shorting again, medium to long term.
My main pair to watch for the week remains UJ. We finally broke below 110 and since then tested the area many times, as you can see on the H1 and H4 chart. So 110 became resistance, which is a good sign for bears. We could re-test this area again next week, or even take a quick look above, but looking at the weekly chart, bears should take over anyway and break below 109. My target for the week is 108.50 or lower.
USD came very close to my target of 93.50 this week and now I think its time to go down. Short term, at least. EU is still within the planned range and found a strong support at 1750 today, shortly after strong NFP data. Volume wasn’t big today, since its Easter holiday, so its not easy to make conclusions based on today and monday will be most likely a slow day, too, but the price action gave me some idea what to expect next week, anyway. Retail now only sees EU shorts, all “analysts” tell people to short and even banks tell people to short EU…what could go wrong, right? I see something else…a bullish pattern building between 1700-1750 and the nearest problem is the 1785-1800 area, which was a strong resistance all week long. But if we take 1800 out next week, I expect EU to go well above that level. My first target would be 1870-90 and final target around 1940-90. I wouldn’t start shorting, if we reached the final target, though…first I would want to see if we break the strong resistance at 1990, which was created during a FED and ECB event some time ago. If this level is broken, next would be 2050-2100, where I would start looking for shorts again. All these targets seem too far away now, so lets take it little by little…1800 is an important level to break first. Below you can see the prediction from 2 weeks ago, its still valid for next week.
The other pair to watch is UJ, it is now overstreched beyond all logic and close to a big reversal area. I thought we will retrace towards 107, before breaking 110, but here we are at 110.70 and very close to areas, which “produced” big drops last time they were hit. The first one above 112 ended up with a fast UJ dump of 1100 pips and the second above 111 ended up with a 900 pip drop! Now we are above 110…so buying would be very risky…there is only one trade on UJ now and its a short…the only question is not IF, but only WHEN and HOW MUCH it drops. I think 107 is still a good target and 105 as a very likely target to be hit, too.
In march, Biden’s administration signed bills to spend almost 4 trillion dollars, first 1.9 trillion mid march and now the so called 2 trillion infrastructure plan, even though don’t know what infrastructure will be build with the money. But what we do know is that the FED will have to print another 4 trillion, inflation will go up and dollar will most likely keep dropping for a while. I would still buy USD, if the index goes back towards 89-90, but not much before that. So the EU long and UJ short are both technical and fundamental trades at this point.
Dollar index is stuck in a tight range between 91.30 and 92.00 and I still expect a break upside, as predicted 2 weeks ago on the chart below.
But it might not come right away, because EU is showing some signs of bullishness below 1900, at least in the short term. The problem is, 1990 was strongly rejected after both ECB and FED, formed a nice double top on EU, so I would target around 1950 on EU for now, just to be safe and look for bearish momentum there or a little above. My EU target is still 1770, but looking at the chart, the area around 1730-50 might be a good long entry, again just short term, but still.
EG was a pain in the ass last week, even though it confirmed its bottoming and now ready to take off and spike up, PA last week was very annoying, so I will leave the pair alone for now and just use it to analyze EU and GU trades. If EG really spikes up, GU should make a good dive, towards 36xx or less. If it starts dropping, do not try to “catch a falling knife”, might be nasty.
Even though US dollar had a nice bullish candle last week, UJ finished the week with a bearish candle. UJ is “overbought”, even if I hate that term. So, if USD continues its upmove next week, UJ might still go up a little, but it has troubles to stay above 109, so it will be sold most probably, anyway. And if for some reason the big boys want to spike it to 110, there should be enough short orders there and enough stop-losses above, to make it drop towards 106.xx, or at least 107.xx. And if USD starts the week bearish, UJ will drop right away. So bears are still fine, with a proper money management, even in case of a spike up, before the move down. To me, 106.90-107.50 is a safe target, no matter what happens fundamentally.
This past week, EURUSD has reached my past targets, except the one at 1770, which will still happen later, but I am not going to focus on it now. EU is still a short trade, medium to long term, but short term it will be most probably ranging, before it breaks out again. I will wait for the reaction of 2000 or above, if it happens. BUT, looking at the EG chart, that looks to be the easiest trade for the coming weeks, with a SL below 8500, to be safe. If nothing extraordinary happens next week, 8550-8565 is a good area to get into longs. First bigger target is 8710 and the final target is 8850-8900, but that will take some time, most probably. Why is this EG chart so important? Because if it works out, it will make the shorts on GU much better than shorts on EU. While on EU, the small range might be good for 50-100 pips, on GU, the short targets are HUNDREDS of pips away. So I am favoring GU shorts in the coming weeks, over EU shorts.
The next good pair to watch is UJ, as bulls need to correct some, before they break the strong trendline, which you can see on the monthly chart. I think, we will see 107 minimum, but if I wanted to go long, I would rather wait for 105 or close to it, to not enter too early. There is a possibility that it will break the trendline first and then turns bearish. My 2021 target for UJ was hit this week, much earlier than I expected, so I will be trading the ranges the pair creates from now on. So, if we have a spike towards 110 this week, before a meaningful correction below 108, I will be bearish on this pair until 105-107. Either way, bears should be fine now at 109, if they are not too greedy and don’t hold for too long.
Next week we have FED on wednesday, BOE on thursday and BOJ on friday, with many smaller fundamental events in between, so the volatility should be good, for both bears and bulls on all pairs!
This week, USD hit my first target of 92, but there should be a little correction, before it resumes the uptrend towards 94-95. First reason is friday’s PA after NFP release, where bulls didn’t do much anymore, even though the numbers were outstanding and the second was the strong London fix topping on the same day. In other words, bulls looked a bit tired, after a strong week and now need to rest a bit, before they take over again. ECB week is perfect for that. EU did a quick dip below 1900 and instantly resumed above and afterwards did some heavy bottoming around 1905-1910. That makes me believe that it will retrace a bit next week. Its hard to say if we’ll have a “typical” ECB week, with EU going up all week and then dropping on thursday, or if its going to be a range week. I can see 2000-2015 to be hit again and thats where I would be looking for shorts again. Other than that, it will be safe to wait until thursday and plan the biggest trades for then. The chart will be more clear by then also.
USDCHF was the bigger gainer this week. It definitely needs to correct some, but I wouldn’t hold the shorts for too long. 9300+ is a good spot to short scalp, though. In theory, I can see even 9140 to be re-visited again, but its probably safer to wait for 9200-9220 only, maybe 9250 even. The best time to be long on EU and short on UCHF should be early in the week, after that I would just let it be and wait for ECB.
UJ started a strong uptrend and almost hit my 2021 target, even though I thought it will take months to get there, as seen on the chart below, from january. Anyway, its a good time to short scalp it early in the week, too, most retail traders started shorting around 106, so shorting now, above 108, is much less risky. But short term only, UJ still has room to go to the upside.
US dollar made another move below 90 this week, just to reject it strongly, maybe for the last time. My target of 94-95 now looks to be near, so this week might be good to look for good entries on EU shorts. On UCHF, my target of 9100 was hit this week, so I will leave this pair alone now and focus on the others, which didn’t make their big move yet.
The biggest surprise last week was the jump on pound of over 100 pips during asian session, which didn’t move EU at all, at the same time. I suppose, it was the only way to end this bull trend, to wipe out as many shorts as possible, before a big downmove. Looking at the chart, 3450-3500 now looks as a good level to wait for, even though GU was showing some signs of bullishness on friday, after breaking 3900, so a little retracement may be in the cards.
AU and NU had the biggest daily bear candles on thursday and friday after a long time. When it almost seemed impossible to stop the bull on AUD&NZD, 8000 did the trick on AU, where smart money had obviously a lot of orders placed. It took a long time with fundamentals to catch up with technicals on these pairs, but they should be both in bearish mode now, so definitely too risky to start buying at the moment.
The main pair to watch next week is EU. The week closed at 2070, a little overstreched bearish move, so I am expecting a little correction upwards first. London fix was 2140 on friday, very strong bearish action at those levels, so that would be my first place to look for shorts, if it manages to go up there. Second would be 2160, which was London session top and third 2185, which was asian session top. So early in the week, it will be interresting to watch how high bulls can take it, before bears take over again. Bear targets are still the same, 1920 and 1770, and we might finally be heading for them!