Weekly Trading Support & Resistance with #Forex Forecast,Fundamental Analysis & Market Sentiment (11-15 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 July 11, 2022.
This week I will begin with my monthly and weekly Forex forecast 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 July 2022
For the month of July, I forecasted that the EUR/USD currency pair and the GBP/USD currency pair would both decline in value. The results so far are as follows:
Weekly Forecast 10th July 2022
Last week, I made no weekly forecast.
This week, I again 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 rise last week, with 52% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to increase again over this coming week as there are several major data releases scheduled, including US CPI.
Last week was dominated by relative strength in the US Dollar, and relative weakness in the Euro.
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:
- Short of GBP/USD following a daily (New York) close below $1.1975. This set up on Tuesday and produced a losing trade of 0.65%.
- Short of BTC/USD following a daily (New York) close below $18,500. This did not set up.
- Short of ETH/USD following a daily (New York) close below $993. This did not set up.
The news dominated by the delayed resignation of British Prime Minister Boris Johnson and the assassination of former Japanese Prime Minister Shinzo Abe. News of Johnson’s resignation gave a small boost to the British Pound, which had been rapidly losing value over recent days. The murder of Abe had little effect upon the Yen.
After more than four months, the war in Ukraine has partly faded away from its former place as a lead news item and appears to be having little effect on markets except a possible weighing on global recession fears. Although there was much talk about a rise in the prices of agricultural commodities such as Wheat and Corn, recent weeks have seen strong falls in the prices of commodities.
The outlook regarding risk appetite is unclear. The US stock market is still in a bear market, but rose quite firmly last week, although the US yield curve remains inverted, and US stocks rose over the week. The US Dollar Index rose very strongly over the week, closing at a new 20-year high.
The past week has seen overall directional movement remain quite strong.
There were a few important economic data releases clast week, which is why market volatility picked up. The results came in as follows:
- US FOMC Meeting Minutes – the Fed expressed its determination to continue raising rates as much as necessary to bring down inflation. Markets reacted little, there were no surprises in the statement.
- US Non-Farm Payrolls data – this came in much higher than expected, with 372k new jobs created compared to the expectation of about 260k.
- Swiss CPI – this came in higher than expected, with a month on month increase in prices running at 0.5% compared to the 0.3% which had been expected, vindicating the SNB’s recent action of hiking its interest rates.
- Australia Cash Rate & Rate Statement – as expected, the RBA hiked rates by 0.5% to 1.35%.
- US JOLTS Job Openings – this came in slightly stronger than expected.
- US Employment data – the US unemployment rate remains historically low at 3.6%.
- Canadian Employment data – Canada saw a net loss of jobs, but its unemployment rate fell from 5.1% to 4.9%.
The Forex market saw another strong advance by the US Dollar last week. The Australian Dollar and the Japanese Yen were also strong currencies. The Euro was especially weak, and the EUR/USD currency pair reached a new 19-year low not far from parity.
Rates of coronavirus infection globally again rose last week against the long-term downwards trend, suggesting that we are in 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 Bangladesh, Bolivia, Belgium, Colombia, Croatia, Dominican Republic, Lebanon, Montenegro, Pakistan, Switzerland, Albania, Austria, Belarus, Brunei, Cyprus, France, Germany, Greece, Guatemala, Iraq, Italy, Japan, Mexico, New Zealand, Singapore, Tunisia, and the UAE.
The Week Ahead: 11th July – 15th July 2022
The coming week in the markets is likely to be even more volatile than last week, as there are several high-impact data releases scheduled this week, including highly important US CPI data. They are, in order of likely importance:
- US CPI – this has become the major market event, with markets strongly hoping that US inflation has peaked
- Chinese GDP data
- US Retail Sales data
- RBNZ Official Cash Rate & Rate Statement
- Bank of England testimony before UK parliament
- Bank of Canada’s Overnight Rate, Rate Statement, and Monetary Policy Report
- US PPI data
- Australian Employment data
- US Preliminary UoM Consumer Sentiment data
It is a public holiday in France on Thursday 14th July.
0 comments:
Post a Comment