Weekly #Forex Forecast – #NASDAQ100 Index,#Silver,#USDJPY,#Copper,#Cocoa Futures (23-29 July 2023)

Posted by Clara Mellor on 10:56 with No comments

Markets turned bearish this week after the earlier rally saw overbought conditions, triggering a strong rally in the US Dollar and a selloff in risky assets like stocks and some commodities and currencies, despite the continuing falls in inflation seen in major global economies.

Fundamental Analysis & Market Sentiment

I wrote in my previous piece on 16th July that the best trade opportunities for the week were likely to be:

  • Long of the NASDAQ 100 Index. The Index ended the week lower by 0.80%.
  • Long of the EUR/USD currency pair. The pair ended the week lower by 0.90%.
  • Long of the GBP/USD currency pair following a daily close above $1.3142 with the close in the top quarter of the day’s range. This did not set up.
  • Long of CC1! Cocoa Future following a daily close above 3414. This trade set up on Wednesday, but the trade ended the week down by 0.52%.

NASDAQ 100 Index

Last week saw quite a drop in the price of the NASDAQ 100 Index after reaching a new 18-month high. The week closed down, printing a pin bar, which can be argued to have rejected an area of resistance. The candle closed very near the low of its range, and these facts are bearish.

The price may be oversold and due a deeper retracement, but it is important to remember that there is a strong long-term bullish trend that has seen massive gains during 2023, when this Index has increased in value by approximately 40%.

The next thing to watch will likely be where the price will stay above the former resistance level at 15156.2 which will now be likely to function as support.

It may be wise to stand aside for the time being while we see how much deeper this retracement goes.

A bullish bounce at the support level of 15156.2 could be a good entry opportunity to enter a new long trade.


USD/JPY

The USD/JPY currency pair rose strongly last week as the US Dollar made a strong comeback, and the Japanese Yen weakened strongly as the Bank of Japan backpedaled on its rhetoric about tapering off its ultra-loose monetary policy.

We see strong short-term bullish momentum here and quite a lot of volatility which will make this currency pair interesting to traders, but it is not in a valid long-term trend which makes direction quite uncertain here.

This pair will likely be best suited to short-term trading opportunities based on sentiment and momentum.


Cocoa

The price of Cocoa has been advancing strongly for a long time – since October 2022 – with a firm and predictable bullish trend. The price has risen by more than about 50% during this period, which is a large rise.

The Cocoa futures price chart below shows a linear regression analysis study applied to the trend since October, showing the price action is very predictable and has remained within the regression channel. This is suggestive of a persistent trend.

The price rose last week and broke to a new significant multi-year high price. This is a bullish breakout and might be a good signal to enter a new long trade.

There is strong global demand for cocoa and problems with some crops in Africa which are helping to drive the price higher.

Cocoa futures remain a buy.


Silver

Silver initially tried to rally during the course of the trading session, showing signs of bullish pressure. However, we have turned around to show signs of negativity, and of course exhaustion. That being said, the previous week was extraordinarily bullish, so I think a pullback makes quite a bit of sense. Nonetheless, I do think that value hundreds will show up toward the end of the week, perhaps near the $24 level. Alternatively, if we were to break above the top of the candlestick for this past week, it opens up the possibility of a move to the $26 level.


Copper

I don’t normally cover copper, but quite frankly it’s an important commodity. While a lot of you may or may not trade the market, it is something worth paying attention to as the market tends to show us where economic growth may or may not be heading. The $4.00 level above continues to offer resistance, right along with the 3.75 level underneath offers support. If we break down below the 200-Week EMA, which is basically at the bottom of that range, then it’s likely that we go down to the $3.50 level. On the other hand, if we turn around break above the $4.00 level, that would be very bullish and it could open up a move to the $4.25 level, but perhaps more importantly, that markets in general could be “risk on.”


Bottom Line

I see the best trading opportunities this week as:

  • Long of the NASDAQ 100 Index if we get a bullish bounce from 15156.2 following a deeper bearish retracement.
  • Long of the EUR/USD currency pair if we get a strong bullish bounce at a plausible supportive area.
  • Long of CC1! Cocoa Future.


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