In this weekly market analysis, we will review the following assets and possible trade setups, key areas and reversal levels for each of them:
Forex: EURUSD, GPBUSD, GBPJPY, USDCAD, AUDUSD, NZDUSD;
Metals: Gold Spot / XAUUSD;
Indices: Dow Jones Industrial - US30/YM Futures;
Energy: US Crude Oil.
EURUSD 4H Chart - Pause & Rally again?
EUR has been in a strong uptrend in the past 2 weeks despite the ECB's move for further stimulus which in theory would have devalued the currency anticipating a boost in consumer spending. Market most likely gained due to weakness in USD and the effects of the ECB's infinite QE will most likely kick in soon, causing a wave of selling in EURUSD.
Technically speaking, we are tracking the nature of this pullback towards the Fibonacci confluence area 1.1250-1.1230 to see whether buyers will support that zone or not, having being a resistance previously. As long as price manages to close above 1.1230 on the hourly timeframe, we might see another strong push higher in EURUSD towards 1.1500. In order to expect a deeper pullback or a reversal in the sentiment, price must close below 1.1230 level on the hourly and therefore expose lower levels again.
GBPUSD 4H Chart - Pause & Rally again?
The sterling gained considerably in the last 2 weeks and managed to close above a key resistance level - 1.2635. We are expecting a pullback to the 1.2600-1.2500 now support area to understand whether buyers will come back in or not. Possible short scalp for a pullback then shifting into a swing long position for further upside. Monitor hourly closes at 1.2635 level. If above, bullish; if below, bearish.
GBPJPY 4H Chart - Pause & Rally again?
The short-term pattern remains quite bullish, however, we need a pullback to 137.70 and 136.40 respectively before advancing further higher towards the 100% Fib. extension @141.00. We will position into short scalps until the pullback retests the breakout zone and thereafter maybe consider a long position.
USDCAD 4H Chart - Possible bottom and sentiment shift?
Dollar weakness against the CAD persisted with strong momentum even last week mostly influenced by the steady rally in Oil prices. Technically, the pattern is close to a key Fibonacci level at 1.3330, hence we will eye a short-term bottom near that mark. Confirmation will be a strong hold on the hourly timeframes above 1.3330.
AUDUSD 4H Chart - Short-term Top?
Indisputably, the Aussie was another strong market for more than 3 weeks together with its close relative, the Kiwi. Price has reached a key yearly resistance level at 0.700-0.7080 and we are looking for some profit taking and therefore, possible short-term pullback into this zone. Unless price sells off as soon as possible below 0.6670, all pullbacks will be bought for a squeeze towards 0.7440 mark.
NZDUSD 4H Chart - Approaching topping zone?
NZDUSD has slightly more upside left before we see sellers taking over. Price needs to reach the 100% Fib. extension at 06615, hence we will not sell until we get that retest. Selling prematurely in a strong up-trend leaves you without a clear stop loss area, something not recommended for small retail traders.
XAUUSD 4H Chart - Choppy weeks ahead in Gold?
Gold finally hit the 100% extension at 1675 which we where expecting since the end of May. In order to maintain bullish bias in this market, we must see price holding above 1660-75 on the hourly timeframe. Short-term momentum still favors sellers, hence, there is no confirmation yet on a bottom. The pattern from the highs to the Friday's low is a classic double zig-zag corrective move which may be traded on the long-side with stop at 1675 and target 1700-1710. Any break below 1660 might expose 1632 or lower.
Dow Jones 4H Chart - Rally to retest All-Time highs?
The FED came to light admitting that they will do whatever they can to support the economy and they did a fantastic job with their QE and corporate bond buying program in the past 6 weeks. Indices rallied sharply shrugging off negative economic data and pricing in the possibility of a quick recovery in the 2nd half of the year.
Technically speaking, this is not a seller's environment and most of them are being squeezed to the max; thus, being forced to liquidate and turn into buyers. 27k in DOW is the last line of defense from sellers before we have a V-Shape move towards the All-Time highs - 30k. If we spend time below 27k mark in the coming week, price might give us a pullback towards 26,650 support which we believe will be another dip-buy opportunity. Short scalp against 27k with tight stops.
US Crude Oil 4H Chart - Filling the Gap and Topping soon?
The steady rally in oil continued for another week and it is going for a gap fill towards the 41.00 level. The end of the lockdown period in most of the countries brought back the demand forces pushing the price higher and higher. Additionally, the OPEC+ agreed on extending the output cut for another month in order to boost the global demand. We closed our long positions at 36.00 resistance, anticipating a distribution coming up soon around the 41-43.80 zone, however, one must be cautious selling with full force. In uptrend, it is always easy making money buying the dips, especially in Oil and stock market indices.
A fair understanding of the fundamental analysis coupled with strong technical skills will help you position better in the market and therefore, avoid early entries or aggressive stakes. There is a common pattern among novice traders to always short into a strong market thinking the price went too high and must come back down or vice-versa. Unless you are a large institutional trader, you do not have the luxury and the execution speed to go against a trend.
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Until next time, be a mindful trader.