Hi, as I have explained many times all markets are interlinked. The more you understand how confidence and money flows, the better trader you will become.

At the start of the year we saw $ strength for at least the 1st quarter as I showed in the live session on the 4th of January.

At that time the $Index was a big clue that the USD would continue to go up and the trends in the majors forecast more €uro & Gbp weakness. Then we had the recent major drops in stocks, bonds & crypto as the Fed started to raise rates. The bigger concern was that they were also trying to reduce the balance sheet at the same time as out of control inflation. So interest could go as high as 4% this year (even though you are still losing money due to inflation being a lot higher) and the $ strengthens and cash flows out of riskier assets such as stocks.

SO what happened on Friday to change that (temporarily at least)?

The consumer spending figure in the US came out ever so slightly stronger than expected for April. Also, inflation went up, but not as much as last time! When you take into account that March’s figures were adjusted down, then it was not again. However, the markets decided this was a good sign and cash flowed out of the USD and back into the stock markets. Woo Hoo the crash is over. The “buy the dips” strategy worked yet again!

https://www.reuters.com/markets/europe/global-markets-wrapup-1-2022-05-27/

However. Did actual spending increase, ie are people buying more goods and services

OR

could it be that the slight matter of 9% official inflation (19% unofficially) means that people are simply having to pay more for the same or less?

I have been involved in financial markets for 30 years.

It didn’t take too long to realise that it’s all a game and often is very silly. I don’t believe this current, 1-day rally is sustainable without a lot more positive news.

I have recently bought quite a few stocks, unusually for me that included Apple & Amazon. I have bought mining stocks which I will keep, However, I am tempted to take the profit and run on conventional stocks. Even if there is a more sustained rally the stock markets were long due a correction and all the money printing has come to an end around the world, the party is over!

The good news as traders we can make money whether prices are going up, down or sideways.

In the video I have shown some more cross pair opportunities (this type of pair has given us the most profits in recent months) but we might just see some bigger pullbacks on the majors. As ever patience and especially discipline is key.

The Forex Week Ahead

Monday is the Memorial day bank holiday in the USA. In the UK it’s Spring Bank holidays Thursday and Friday, so those days could be slow. For those trading the Cad best advice is to wait until the interest rate news is out of the way before getting involved (it’s messy at the moment anyway).

Finally, it is NFP Friday (US jobs) which is forex at its craziest which we never trade, so all in all ts going to be tricky.

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MAJORS

Remember I am looking for “A” grade trades from daily charts that I can place and then just walk away. We have been waiting weeks for a setup, they might arrive this week. I also show in the video some levels to watch for those who want to trade them on smaller timeframes.

If you insist on trading the majors and are not willing to hope/wait for bigger pullbacks then I recommend that you focus on smaller timeframes- explained in the video.

EUR/USD: Bias is only to short,” I was hoping for a pullback to 1.1000 which has not materialised thus far, but if is more possible now. Other area to watch intraday (see the video) 1.0830

The only way I would trade this if it doesn’t do the big pullback would be to go down to 4 hour or even 1 hour charts.

USD/CHF: I said a couple of weeks ago as it hit parity that under no circumstances would I long it and it was probably, at the very least, pullback. It has pulled back now as I expected. I only want to long it. However, it is a pair to watch. I do not feel confident to place forward orders just yet. The levels I will watch on 4 hour charts are 0.9500, 0.9440 & 0.9270 (my preferred)

GBP/USD: I only want to short. The “A” grade short will still be 1.3070 which seems unlikely now. This is a “B” grade for me for now. 1.2930 to 1.3000 will be my first area to watch.

AUD/USD: Only looking to short at the moment and 0.7270 is the sweet spot. Intraday 0.7160 is worth watching too.

NZD/USD: Brokedown. The “A” grade is back up at 0.6750 to 0.6790. I will split the order in half there.

Aud/NZD: Looks like a better option BUT it overreacts to news so be careful. 1.0820 is the area to watch for a long OR if it breaks and closes below 1.0780 on a daily then I will consider a short.

USD/JPY: Possible “head & shoulders pattern suggests 400+ pip move. I show in the video options to play it. A more aggressive version is to use the current mini range for entry. If you take it at the top make sure to move the stop to at least entry when it nears the bottom. See the video

USD/CAD: I have warned for months how this pair always struggles when it gets near 1.3000 and even though it pierced it last week, there is now a weekly reversal pin bar suggesting down not up this week. However, it has probably got a limited upside and there are a lot of emas below it. It is messy- see the video

CROSSES

Eur/Cad: I said last time that “I will short at 1.3780 for multiple reasons. It worked last week for 50 odd pips. Looking the same place this week. Don’t trade it near to the Cad news on Wednesday.

NZD/CHF: worked well a number of times in recent weeks. I will watch the same area, 0.6300 to 0.6320 to short it. If it fails then I will only long after news if the emas and trendlines clearly break and close on a daily candle later in the week.

EUR/GBP:  It is too messy now. 

AUD/NZD: 1.0820 for a long.

AUD/CAD: I am looking to short at 0.9200.

YENS: Still too far away from anything in order to trade with the trend. However, I showed last time how you could go to 4 hour charts and quite a few worked. Not for me but see the video for my thinking.

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