Weekly Trading Support & Resistance with #Forex Forecast,Fundamental Analysis & Market Sentiment (27 JUNE-1 JULY 2022)
Trading Support and Resistance
Get our trading strategies with our monthly & weekly forecast of currency pairs worth watching using support & resistance for the week of June 27, 2022.
This week I will begin with my monthly and weekly forecasts of the currency pairs worth watching. The first part of my forecast is based upon my research of the past 20 years of Forex prices, which show that the following methodologies have all produced profitable results:
- Trading the two currencies that are trending the most strongly over the past 6 months.
- Trading against very strong weekly counter-trend movements by currency pairs made during the previous week.
- Carry Trade: Buying currencies with high interest rates and selling currencies with low interest rates.
Let us look at the relevant data of currency price changes and interest rates to date, which we compiled using a trade-weighted index of the major global currencies:
Monthly Forecast June 2022
For the month of June, I forecasted that the US Dollar Index would rise in value. Since I made the forecast two weeks ago, it has decreased in value by 0.26%.
Weekly Forecast 19th June 2022
Last week, I forecasted that the CAD/CHF currency cross was likely to increase in value. In fact, it decreased in value by 0.16%.
This week, I make no weekly forecast as last week saw no major counter-trend price movements over the week.
The Forex market saw its level of directional volatility fall again last week, with only 15% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to decrease even more over this coming week as there are so few major data releases scheduled.
Last week was dominated by relative strength in the Canadian Dollar, and relative weakness in the US Dollar.
Key Support/Resistance Levels for Popular Pairs
I teach that trades should be entered and exited at or very close to key support and resistance levels. There are certain key support and resistance levels that can be watched on the more popular currency pairs this week.
Fundamental Analysis & Market Sentiment
I wrote in my previous piece last week that the best trades for the week were likely to be:
- Long of USD/JPY following a daily (New York) close above €135.47.
- Short of BTC/USD. This trade produced a loss of 4.16%.
- Short of ETH/USD. This trade produced a loss of 9.75%.
The crypto losses are far less than the huge wins made in crypto trades during the previous week.
The news is currently dominated by political items that do not have major economic impact. After more than four months, the war in Ukraine has faded away from its former place as a lead news item and appears to be having little effect on markets except possible weighing on global recession fears. There are fears concerning a potential blockade regarding agricultural commodities such as Wheat and Corn, but their prices are generally trading lower now.
Last week was dominated by a small rebound in risk appetite. It is noteworthy that “fear” indicators such as the VIX are showing much lower levels than were seen in previous bear markets. The US stock market is still in a bear market.
The past week has seen all the strong trends come off their highs and lows, with overall directional movement notably lower. As the end of the month approaches in just a few days, following a very active spring season in the markets this year, it may be that we are about to get into a summer lull of dull markets with no breakouts. This often happens during the months of July and August, hence the adage “sell in May and go away.”
Last week’s important economic data releases came in as follows:
- Chair of the US Federal Reserve Testified Before Congress. He said that recession was a possible outcome of the course of rate hikes, but this had little lasting effect.
- British CPI – an annualized rate of 9.1% was expected and reached. Cope CPI was a little lower than expected. Overall, this had little impact.
- Canadian CPI – a month on month increase of 1.4% was reported compared to the expected 1.0%.
- Reserve Bank of Australia Monetary Policy Meeting Minutes. Inflation expected to increase, rate hikes less than 0.25% per meeting over coming months also expected.
- German Flash Manufacturing & Services PMI. This came in slightly lower than expected.
- Canadian Retail Sales. This came in much stronger than expected. Taken with the high and increasing rate of inflation, this suggests that the Canadian economy is still overheating despite recent rate hikes.
The Forex market saw a minor selloff in the US Dollar last week while the Japanese Yen, whose weakness is still tacitly encouraged by the Bank of Japan, also looks weak. The Euro is the strongest major currency.
Rates of coronavirus infection globally again rose last week against the long-term downwards trend, suggesting that we may be seeing the start of a new major wave, possibly driven by the new omicron BA5 subvariant. The significant growths in new confirmed coronavirus cases overall right now are happening in Austria, France, Israel, Bahrain, Cyprus, Germany, Greece, Guatemala, Italy, Lithuania, Malta, Mexico, Morocco, Singapore, and the UAE.
The Week Ahead: 27th June – 31st June 2022
The coming week in the markets is likely to be much less volatile than last week. There are very few releases of high importance scheduled which have the potential to significantly move markets. They are, in order of likely importance:
- US Core PCE Price Index data – this might give some clues about inflation.
- US CB Consumer Confidence data
- US ISM Manufacturing PMI data
It is a public holiday in Canada on Friday 31st June.
0 comments:
Post a Comment