Next week is a FED week, so expecting some range play until wednesday and other than weakness early next week, I won’t predict much. EU and GU should gain a little on monday, 50-60 pips, maybe more and other than that I would advise to wait for wednesday. It can easily happen that USD will weaken before FED, then gain some during the meeting, just to continue weakness from thursday again. But that is just my speculation, so lets focus on easier trades before that. EG did some heavy bottoming over the past 2 weeks and should move up towards 8500 and higher. But this is a tough pair to trade…it can stay in small ranges for a long time, so I hope it won’t get stuck below 8400 for too long. Once 8400 breaks, 8450 should be an easy target…after that lets see what happens. Eventually 8570 should be taken out, but like I said…its impossible to predict the time when it happens. Easiest trade of the week could be EURCHF, as it arrived at a strong demand zone, on a friday, with some good bottoming during the US session…so the upmove could start as early as monday. Some German data is being released on monday, so if that is positive, it could provide the necessary boost. And following the data coming out of the EU lately, its been highly positive, so monday’s news should be “green”, too.
Past few weeks have been slow on the EURO chart, it has been heavily accumulating during the holidays and looks like its about to break upwards soon. But the current range might hold early next week, as I expect some correction of friday’s NFP move. The question is where it stops and if it finds some new strong support above the previous ones around 1300. But even if we see one more major drop below 1300, I am staying on the bullish side and buying the dips, the lower it gets, the better. GU might help this move a bit, since its somehow overstreched and should correct towards 3500 or even possibly towards 3300. Its at an important level, if you check the daily chart below. It will break upwards eventually, but it might not be right away…3600 might provide some resistance for now. The pair that finally started the downmove is UJ, which is in a good “sell the spikes” mode. So if it manages to climb towards 116.00 next week or even higher, its another good short opportunity…my first bearish TP is below 114.00. Looking at UJ bearishness and GU below a strong resistance, might make GJ the best pair to pick to short. Its at a strong supply zone…so placing a SL above this zone gives a good risk to reward ratio. Once GJ starts a direction, hundreds of pips come quick…but of course the risk with this pair is also the highest, so trade it with caution.
On black friday, we have seen a massive USD sell-off, when it looked like it won’t come anymore. Mostly, turnarounds are painful to watch, but this one was very extreme. The way EU was dropping for weeks, without any corrections, didn’t make any sense technically or fundamentally. The problem with such moves is, that it might be followed by an illogical move in the opposite direction next. My EU bull target hasn’t changed from 1720, but I would like to see a strong rebound towards 1600 first. Buying dips should be the way forward on EU and GU and selling them on UJ. GU has more work to do on the upside and might be a better choice, since its moving faster than EU, when a move starts. Early next week will tell, if we start with a correction down first or if we start bullish right away. Either way, I will be looking for buying the dips.
This week we had an important FED meeting and NFP on friday. And neither did help USD much. The dollar is slowly ending its upmove…and all that could have helped him to go higher, is now over. Tapering now seems to be fully priced in, even Powell can’t take USD much higher anymore. And NFP on friday had some excellent numbers and soon after we had a small dollar sell-off even. What does it mean? It could simply mean that the dollar bulls are tired and need some rest. This could be a perfect opportunity for bears to take over…all the big USD related pairs are in favor of this. GU bounced off a strong support around 3420 and can now easily go back above 3600. UJ is topping for a while now and is still a good “sell the spike” trade above 114. Eventually it will break down and might keep dropping for a while. With all this in mind…I will look for buy opportunities on EU next week. Targets remain the same, 1720 and 1820.
This week was good to leave EURUSD out, as I mentioned last week and the weekly chart now confirmed the bullish reversal. Also EURGBP confirmed the bullish cypher pattern and should keep climbing up next week. Thats why I wouldn’t buy GBPUSD and just focus on Euro next week. We have ECB on thursday, so before that it might be the time to look for long entries, but the main move will most likely happen on thursday or friday, anyway. The current support zones on the hourly chart are 1620 and a very strong one around 1580. Even if both break next week, I think buying the dips into the ECB meeting is the best thing to do. My bullish targets are 1720 and 1820.
EU was finally bullish this week, but the bulls were so weak, its almost unbelievable. GU, AU, NU made nice gains…Euro bulls were a joke compared to all other USD pairs. And this tight range around 1600 might prevail a bit longer. There are no major events next week, so with bulls having a hard time breaking higher and bears having a tough time to break below 1580, 1550 and 1520, I don’t expect much with this pair. The week after that we’ll have an ECB meeting, so thats when EU might start moving properly. Until then, it might be better to look for GU trades and EG trades. GU looks like its ready for some drop…it should easily drop 100 pips or more…at the same time EU has many strong support zones every few pips on the way down, so its downmove should be limited. Which makes a good case for EG longs, as the pair is extremely overstreched, with no corrections.
The past 2 weeks were horrible for EU bulls. To me, the move, as it happened, didn’t make any sense both technically and fundamentally. FED taper talk is only talk, nothing more…its now 99% sure no tapering will happen this year, EU’s data is good, no more easing planned, no covid issues…and yet, Euro was losing against all currencies 2 weeks in a row. If next week isn’t bullish…I will be very surprised!
1800 didn’t provide the support needed on EU, as I posted in my last analysis. I didn’t want to make new forecasts, until the chart was more clear to me. Now after FED and strong bottoming around 1700, along with strong bottoming on GU and Gold, I think we have found our spot to finally bounce from. On wednesday, Powell again mentioned tapering and market jumped right on it, with buying the dollar some more…but I knew that the move would be short lived. Too many people jumped on it, even though nothing he said was really hawkish. And you don’t even need to read between the lines to see that. He used phrases as “IF PROGRESS CONTINUES, TAPER MAY SOON BE WARRANTED.” So he couldn’t even confirm tapering was a done deal, if the numbers keep getting better. What do you think will happen if they get worse? FED is just looking for excuses for real tapering to start, not to create a big mess on the markets. I don’t think any tapering will happen this year, next meeting should be about new excuses why it can’t happen yet. But even if they did start…november is still far away and that should help dollar bears to get into better positions until then. On the other hand, BOE meeting was hawkish, with another member voting for tapering, so there we have some real decisions, not just talk. Pound turned bullish and looking at the daily chart, we have a strong tripple bottom in place! Unless the current lows break, GU is on its way back towards 3845-3900. Gold was also strongly bearish the last couple of days, but bulls managed to protect 1750, so I am expecting another run towards 1800 and higher, along with the expected dollar weakness in the coming weeks.
This week was weird. Initially, both EU and GU did what they were “supposed to” and that was going down until mid week. I expected a bounce there, which only came for GU…EU kept struggling between 1810-50, mainly because the NY guys were fighting with every London’s upmove. But now with ECB and US inflation numbers behind us and bulls still protecting 1800, next week might turn things around. I wouldn’t buy GU at this point, even though when EU goes up, GU will most likely go up, too. But it might be at a different “speed”. GU is limited by a very strong resistance around 3900, it can’t break upwards for quite some time now. And it might still struggle early in the week, so I prefer a long on EG, which should go towards 8570-80, at least. Once pound bulls break 3900, its going to be a bull party and that should help EU bulls to break their biggest enemy, the 1900 level. These levels will be important to break, if bulls want to turn this around and start a new uptrend. EU bulls now have a tougher job, since they are at 1810, so we need to take it step by step…on the hourly chart, my target is 1850, on the H4 chart its 1890…and beyond that…lets see. But this coming week the magic might happen.
EU formed a nice bullish engulfing pattern this week and to me EU is still bullish and about finding good spots to buy. All you hear lately is about tapering and how EU is supposed to be dumped once FED finally starts with it. But people are forgetting that the talk about it is going on for months now…and it seems to be fully priced in, anyway. And the funny thing is…it might not even start so soon…so all this taper hype might fade very quickly and leave EU bears trapped for weeks or months to come. Next week is important for several reasons, its the end of the month on tuesday and we’ll have big US news on friday, some on wednesday, too. So it might be good to wait for the monthly close, to have a better idea whats going on and what are the good spots to enter a trade. If you are bullish or bearish, first 2 days of the week might be tricky to trade. The safest bet will be to wait until friday, when the chart will be surely much easier to read. But I expect a support zone to form around 1750-60 on EU. 1800 is a very important resistance to break…it opens up the way towards 1900.
Gold keeps to be bullish as expected and its very near 1830, which is a big resistance, which failed to break many times in the past few weeks. Once it breaks…it opens up a way towards 1900.