The USD news has been a very mixed bag.
Softer (weaker) inflation news + negative GDP + better job earnings = confusion in the markets.
My biggest advice is that you don’t mistake all of this ‘good’ news for prolonged USD weakness. The overall picture still very much favours a stronger USD and a more ‘risk-off’ environment. It’s probably a good idea to not be too greedy with your profit targets as I suspect it might be quite choppy for a while.
Let’s look at the facts….
-Inflation remains VERY high around the world.
-Oil prices are still high and Europe has an energy shortage
-The US is probably in a recession already.
-The war in the Ukraine rages on…will they stop by the European winter…who knows.
-Europe is facing a massive drought. LINK
DXY chart -don’t mistake a pullback or price struggling at a big level for a bearish bias. This is still a VERY bullish chart 🙂
A lot of commodities seem to have found some buyers this month. To me this means we might be seeing a stronger AUD. Remember a weaker dollar usually means higher commodity prices.
As shown in the live session this week, Gold is struggling at 1800. I believe that a break above this level could see a big rise in price, but with the mixed news of lower inflation, this might take a while.
Also affected by the mixed inflation news, oil has now fallen below the 200 ema. A cheap oil price doesn’t make sense to me fundamentally though.
Seemingly found some buyers at the 23000 price level. Could this be a short squeeze? I tend to lean towards this scenario. I hope I’m wrong…
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The Forex Week Ahead
Big one for the week ahead is US retail sales on Wednesday (below time is GMT +2). Remember that even though the AUD and NZD news is ‘on tap’ (available already), there are no guarantees in Forex, so stay cautious.
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EUR/USD: Big resistance at 1.0370. If it breaks above this level, I’d look for longs on the smaller timeframes. A grade short from around 1.08300
USD/CHF: Will look at the open for a potential short. Not looking to be too greedy with the take profit though (see video)
GBP/USD: Same idea as the Eur/Usd. 1.221 is big. If it can brake above this level I’d look to long on the longer timeframes. A grade short from 1.27500
AUD/USD: Be very careful with this one. The current position looks good for a short, but with commodity prices increasing we could see an even stronger AUD. 0.700 was a huge level that has now been broken.
NZD/USD: Highly correlated to the AUD/USD, but keep an eye on the 0.65500 level for a short
USD/CAD: A little messy now with the mixed news, but I’m looking at a new range now. 1.27500 is key. If it breaks below this level, I’d look to short to around the 1.2500 level and then to long from this level (see video)
USD/JPY: Looking to short from the current position on the smaller timeframes. (see video)
EUR/GBP: Worked last week, but unfortunately on Friday. Same area for a short 0.84800
AUD/CAD: Same advice as the AUD/USD -0.91000 for a possible short
AUD/NZD: Still looking for a countertrend trade from 1.12200. Long from 1.0880
EUR/CAD: A grade for me is a short at 1.37600 (far away though)
NZD/JPY: On the 4H chart, I’m looking at 84.900 for a long.
GBP/JPY: Long from 160.00
EUR/JPY: Long from 135.400
GBP/CHF: Looking at the weekly, I like the look of a short from 1.2100
As always, remember correlation! -Especially when taking more than one JPY trade!
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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):