Weekly #forex Forecast: US Dollar Index,#SP500,#EURUSD,#AUDUSD,#USDJPY,#GBPJPY & #USDCHF (16-20 MAY 2022)
Get the Forex Forecast using fundamentals, sentiment, and technical positions analyses for major pairs for the week of May 16, 2022 here
The difference between success and failure in Forex / CFD trading is very likely to depend mostly upon which assets you choose to trade each week and in which direction, and not on the exact methods you might use to determine trade entries and exits.
So, when starting the week, it is a good idea to look at the big picture of what is developing in the market as a whole, and how such developments and affected by macro fundamentals, technical factors, and market sentiment. Read on to get my weekly analysis below.
There are a few strong trends in the markets, and following them might help put the odds in your favor, so it is an interesting time to be trading.
Start the week of May 16, 2022 with our Forex forecast focusing on major currency pairs here.
EUR/USD
The euro broke significantly to the downside over the course of last week, slicing through the 1.05 level. We broke down below the 1.04 level but then turned around to show signs of life on Friday. Regardless, I think that we will sooner or later get a bounce that gets sold into, especially near the 1.05 handle, and then the 1.06 level. This is a market that is negative for a reason, and until something fundamentally changes between the Federal Reserve and the ECB, I will be looking for rallies that I can short. Ultimately, this is a market that could very well go down to parity until the Federal Reserve loosens its monetary policy.
GBP/JPY
The British pound has bounced hard at the end of the week, as it looks like we are trying to stay above the previous resistance. That being said, the market looks as if we are ready to go higher, but we need to get above the ¥160 level. If we break above the ¥160 level, then it is likely that we will go looking to the ¥165 level. On the other hand, if we turn around and break down below the ¥157 level, it is likely that we could go looking to the ¥155 level given enough time. You should also keep in mind that risk appetite has a major influence on what happens here as well.
AUD/USD
The Australian dollar broke through significant support during the week, and it looks to me as if we are more likely than not going to go lower. Keep in mind that the Australian dollar is highly sensitive to commodity markets, and therefore global growth. The 0.70 level above should offer resistance as it has been that massive support we have been paying attention to. Because of this, I will be looking for signs of exhaustion anywhere near that area. On the downside, the 0.68 level is an area that could offer a little bit of support.
USD/JPY
The US dollar has fallen hard during the week to reach the ¥127.50 level. However, we have turned around to show signs of life again, and now we have ended up forming a bit of a hammer. That being said, the ¥130 level continues to be a bit of an issue, so I think we are more likely than not going to continue to see a lot of sideways trading, as we need to digest some of the excess froth from the parabolic move higher.
U.S. Dollar Index
The weekly price chart below shows the U.S. Dollar Index rose again last week, in line with the long-term bullish trend, printing a bullish candlestick that closed within the top half of its range, but showed a significant upper wick. This was again the highest weekly close seen since March 2020. Dollar bulls will be encouraged that momentum trading continues, and the price has continued to advance to new highs. However, the pace of the increase has continued to slow down, which hints that the bullish momentum may be declining.
Despite the seeming decline in bullish momentum, it will probably be wise to take trades in favor of the US Dollar in the Forex market over the coming week.
The greenback is the second strongest major currency right now, after the Japanese Yen.
S&P 500 Index
The world’s most important stock market index, the S&P 500 Index, fell again last week, after having traded very close to a 20% drop from its all-time high, and again made its lowest weekly closing price seen in the past year. However, the weekly candlestick in the price chart below is arguably a bullish pin bar, showing the price rebounded strongly later in the week. There is certainly a long-term bearish trend, but traders looking to go short here will probably do best to wait for a bearish turn on shorter time frames.
Trading major stock market indices short is a difficult challenge, but experienced traders might want to be looking for short trades here.
USD/CHF
The Swiss Franc fell strongly last week to reach very close to a new 3-year low against the US Dollar, and to reach and surpass parity with it. European currencies excepting the Euro are generally weak, but the Franc is showing standout weakness.
The fall in the Swiss Franc has been unusually strong, being a firmer directional trend over the past few weeks than any other currency excepting the US Dollar. This is unusual as the Swiss Franc rarely trends strongly.
With a still-strong US Dollar, and non-USD currencies (especially European currencies) looking weak, the price may rise further over the short-term. However, bulls should beware of two factors:
- The price hit and rejected the old key resistance level at $1.0050.
- The Swiss Franc rarely trends for long.
I will not take this trend trade, but it may be attractive to other speculators.
0 comments:
Post a Comment