Get Forex forecasts using fundamental, sentiment and technical position analysis for major pairs for the week of July 4, 2022 here.
The difference between success and failure in Forex/CFD trading is very likely to depend primarily on which assets you choose to trade each week and in which directionnot on the exact methods you might use to determine trade entries and exits.
So, as you start the week, it’s a good idea to get an overview of what’s developing in the market as a whole, and how those developments are affected by macro fundamentals, technical factors and sentiment. of the market. Read on to get my weekly analysis below.
Fundamental analysis and market sentiment
I wrote in my previous post last week that the best trades of the week were probably:
- Long USD/JPY following a daily close (New York) above €135.47. This set in on Monday and produced a losing trade of 0.15%.
- Short of BTC/USD after a daily close (New York) below $18,500. This has not been implemented.
- ETH/USD short after a daily close (New York) below $993. This has not been implemented.
The news is currently dominated by political topics that do not have a major economic impact. After more than four months, the war in Ukraine has faded from its former place as the main topic of the news and seems to have little effect on the markets, except perhaps to weigh on fears of a global recession. Although there is much talk of an increase in the prices of agricultural products such as wheat and maize, recent days have seen steep declines in commodity prices.
Last week was dominated by low risk appetite. The US stock market is still in a bear market. The first half of 2022 was the worst for the US stock market since 1970. The US dollar is strengthening.
The past week has seen significantly lower overall directional movement, although valid trends remain effective in the Forex and Cryptocurrency markets. As it is now July, we may be about to enter a summer lull of lackluster markets with no breakout. This often happens during the months of July and August, hence the saying “sell in May and go”.
There were very few major economic data releases last week, which is why market volatility was so low. The results came in as follows:
US Core PCE Price Index Data – increased by 0.3% over one month, lower than the 0.4% expected, giving some hope that US inflation may have already peaked.
Eurozone annual inflation is expected to be 8.6% in June 2022, from 8.1% in May according to an EU rapid estimate.
US CB consumer confidence data was a little weaker than expected, suggesting that consumer demand is waning.
The US ISM – Manufacturing PMI data came in a bit lower than expected, which is generally bearish for the US Dollar.
The Forex market saw another rally in the US Dollar last week. The Canadian dollar, Swiss franc and Japanese yen are also hard currencies. The other major currencies are all weak, especially the British pound.
Global coronavirus infection rates rose again last week against the long-term downward trend, suggesting we are in for another major wave, possibly driven by the new omicron subvariant. BA5. Significant increases in the number of new confirmed coronavirus cases are currently occurring in Albania, Bangladesh, Brunei, Croatia, Iraq, Israel, Lebanon, Pakistan, Qatar, Switzerland, United Kingdom, Austria, Bahrain, Cyprus, France, Germany, Greece, Guatemala, Haiti, Italy, Mexico, Malta, Morocco and United Arab Emirates.
Next week: 4e July – 8e July 2022
The week ahead in the markets is likely to be considerably more volatile than last week as there are more high impact data releases expected this week. These are, in likely order of importance:
US non-farm payroll data
Australian cash rate and rate statement
US JOLTS Jobs
US employment data
Canadian employment data
It is a holiday in the United States on Monday 4e July.
US dollar index
The weekly prize chart below shows The U.S. dollar index printed a bullish outer bar after falling to end the week at a new 20-year high, in line with the long term orient oneselfwhat is bullish. This is important because breaks at new high closes suggest that the price will rise further over the next few days.
It should be noted that the long-term uptrend of the US dollar has been driven, so far, by rising inflation and interest rates. However, the closer the US economy gets to a statistical recession, the more downside pressure the US dollar may come under.
It seems wise to trade the US dollar long-term over the coming week unless it gets hit hard by the release of the FOMC meeting minutes, which is unlikely.
US dollar index weekly chart
Bitcoin fell again last week, but not significantly, after spending the previous week doing a small consolidation after falling very sharply recently, in line with its long-term downtrend. The week ended with a bearish engulfing bar trading very close to its low, suggesting that a stronger bearish break could be very close.
It looks like Bitcoin is at risk of falling further over time. The price could easily reach the $13,000 area technicallymeaning a short here could still be an interesting trade.
I am ready to enter a short position if we get a daily close (New York) below $18,500 during this week.
The price chart below shows that $13,788 looks like the technical support level, which could mean a full Bitcoin bubble burst.
BTC/USD daily chart
Just like Bitcoin, Ethereum also fell last week and remains near its low, in line with a long-term downtrend. which caused it to lose a lot of value – up to 30% two weeks ago.
It looks like Ethereum is still likely to drop further down the road, and the time for the major crash seems near. The price could easily reach the $571 area technicallymeaning a short here could still be an interesting trade.
I am ready to enter a short position if we get a daily close (New York) below $993 during this week.
The price chart below shows $571 looking like the technical support level, which could signify a full burst of the crypto bubble.
ETH/USD weekly chart
Over the past few weeks and months, the U.S. dollar has generally strengthened, but the pound sterling has also stood out as a particularly weak currency lately due to inflation expectations soon reaching over 11% as well as other economic issues, making GBP/USD currency pair exciting to trade short.
The price recently hit new technically significant 2-year lows and closed last week at the lowest weekly closing price seen in 2 years after falling during the week.
There are good reasons to be bearish here, but technically we saw some big buying last week when price briefly traded below the round number at $1.2000. Therefore, I recommend waiting for a daily close below the support level at $1.1975 before considering entering a short position. here.
GBP/USD weekly chart
- Short of GBP/USD after a daily close (New York) below $1.1975.
- Short of BTC/USD after a daily close (New York) below $18,500.
- ETH/USD short after a daily close (New York) below $993.