Hi guys,
I hope I kept you out of a loser last week. I mentioned in the forum that it wouldn’t be a good idea to short the EUR at 1.00. This is a MASSIVE area and for the first time since 2002 it has hit parity with the dollar.
A similar scenario to what we had with the USDCHF a couple of weeks ago when I explained that it was far more likely/probable to drop rather than break higher.
For the last year I have been cautioning the same thing about the Cad. I said in recent weeks that it needs a catalyst to break through and stay above on a weekly.
Warning alert!
I posted this on Tuesday*
“…., whilst I expect the Euro to break below parity I wouldn’t trade it in either direction right now. Remember buyers are looking for value, hence the current bounce. Bank traders still need to buy €uros for their clients. Market makers are looking for stops. The ECB & Fed talking heads will try to talk the €uro back up as it doesn’t suit either of them. On top of this, the current Dollar strength is nonsense. All told it’s anybody’s guess is what is going to happen intraday.
On a practical note as I explained earlier this year I have converted all spare €uros & Gbp into $ for the short term at least. If I am going to short any euro pairs this week, the Euro/Nzd looks one of the best after last week’s break. Don’t let the adrenaline get to you :)”
The DXY hit a major level of resistance from 2002. The S&P 500 has retraced but there is a trendline there and 4000 is a major area so it could play a major part in a further sell off.
Economic News
DOLLAR
The Fed’s Inspector General cleared Powell of wrongdoing in an insider trading scandal. This happened just one day after 5 Five Senators Accused Him of Hampering the Investigation. But if you have a closer look this Inspector was elected by Powell!
Inspected clears Powell of wrongdoing
FEDs Bullard (forever bullish) in a speech said the US economy is doing very well.
He mentioned that the labour market is strong and expects it to continue.
With inflation running at nearly 18% or 10% whichever you believe.
This will affect consumer spending.
Rising interest rates will affect the housing market, there are already signs that it is slowing down.
I’m not sure how long this will continue. The facts are out there but you are being misled & lied to by the governments. So do not believe a word they say. If you are living in the US, you know what is going on.
As I mentioned several times, DIG deeper, don’t just believe what the governments tell you. This is not a criticism of any particular country or party. They are all as bad and devious as one another. It’s the old “lies, damned lies & statistics” mentality.
Here is a chart from shadow stats comparing the official inflation rate against the old way of calculating interest rates. Again they are adjusting figures and calculations to fit their own version of the truth. There is even talk in the US at the moment that they might need to redefine the definition of a recession!
The EURO
The Euro looks more likely to go into a recession before the US. Italy already is, Germany is on the brink of it. So I wouldn’t touch anything to do with buying the Euro currency or stocks at the moment.
Here is a guy I follow on Twitter who is a German economist. He has pointed out many alarming statistics recently. One of which is that Germany is performing worse than Great Britain. Most “remainers” forecast that Brexit would affect the UK economy severely. However, the UK economy has overtaken Germany and is performing better (least worst) since last year https://twitter.com/Schuldensuehner
If Germany goes into recession then the Euro economy could be in an even bigger mess as they are a major contributor to propping up the poorer countries:
You can also follow me on twitter https://twitter.com/marcwalton
The Forex Week Ahead
The BIG events of the week are the GBP CPI on Wednesday and the EURO finance rate on Thursday. I would advise not to open any new trades and close open ones as anything could happen around this time. It is the perfect opportunity for the BIG boys to make their money.
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MAJORS
There is MACD divergence on the DXY and other major pairs. This is a clue that the price could reverse or at the very least pullback in the short term. Also as we are now in summer markets it is quite normal for prices to range.
Remember I am looking for “A” grade trades from weekly & daily charts that I can place the orders and then just walk away.
EUR/USD: Bias is only to short, but it is miles away from my A grade short. I wouldn’t touch it.
USD/CHF: I will look to Long this pair at 0.95100. Intra day you can watch 0.9600
GBP/USD: I only want to short. Not an A grade but watch 1.2200 intra day. Personally wouldn’t touch it, better opportunities elsewhere.
AUD/USD: I would look to short at 0.7000 and 0.7200.
NZDUSD: Only looking to short at 0.6660 but its a long way. Intraday you could watch 0.6200.
USD/CAD: I recommend not to long near 1.3000. Last week it would have won if you had got out near the top however for months it would not. Probability is not in your favour, nor does it have a good risk reward potential. ! I would only long at 1.2870 and 1.2750. If it does do a massive drop then 1.2560 is also an area to long for me.
CROSSES
EURCAD: A grade for me is 1.3750. Intraday I would watch 1.3380
EUR/GBP: Not at the moment as its too messy but there is a trendline. If it breaks on a weekly chart and closes then I would look to short below 0.8400- see the video
EURNZD: Interesting on a Daily to short at 1.6490 and 1.6520
NZFCHF: 0.62070 is the major area. 0.6200 is also an area to watch.
GBPNZD: 1.9100 seems like a good area for a long on Daily. This is a very volatile pair so I would advise to adjust your stops accordingly.
GBPJPY: I don’t trade this pair, but a member pointed out that 160.50 is a major area on the weekly.
AUDCAD: Short around 0.9090 to 0.9150, its a long way off right now, so probably won’t get there this week, but anything is possible in forex 🙂
AUD/NZD: 1.0840 and 1.0810 for a long for me.
AUDCHF: short at 0.67050
AUDJPY: the only YEN pair that is interesting for me. 91.90 & 91.50 split entries are a long for me.
As always, remember correlation!
We are NOT a “tipping service” our aim is to teach you how to trade for yourself.
Watch the video below for more detailed explanations of this week’s analysis and trade plan (click the 4 arrows bottom right to view full-screen):
Regards
Marc
