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Weekly Forex Forecast - 3/11: (Charts)
(MENAFN- Daily Forex) Fundamental Analysis & market SentimentI wrote on 27th October that the best trade opportunities for the week were likely to be:
Technical AnalysisUS Dollar IndexLast week, the US Dollar Index printed a bullish pin bar type candlestick which rejected the resistance level at 104.15. The Dollar has been rising for a few weeks, and continued to trade quite bullishly last week, but was held by that key resistance level.The price is above its level from three months ago, but below its level from six months ago, suggesting a long-term mixed trend in the greenback, which suggests uncertainty.It is also worth noting that despite the recent bullish momentum, the price is trading right in the middle of a consolidating triangle chart pattern. This is suggestive of ultimately ranging behaviour.This week's outlook for the US Dollar is very unclear, as there are two huge events taking place this week: the US elections, which will see a new President elected and might see either or both Houses of Congress change hands too. After that, the US Federal Reserve will be holding a policy meeting at which it is almost unanimously expected to cut rates by 0.25%.I recommend being very careful in trading the US Dollar long this week, and to wait until the US election result becomes clear. EUR/USDI expected the EUR/USD currency pair to have potential resistance at $1.0897.The H1 price chart below shows how the price action rejected this resistance level with a large inside bar, marked by the down arrow within the price chart below. This rejection occurred during the overlap of the London / New York sessions, right at the start of the New York session last Friday as crucial US economic data was released. This can often be a great time to find reversals in major currency pairs such as this one.This trade has not quite reached a floating profit as large as the risk, if they stop was placed just above the swing high which was at the high of the week.This currency pair is likely to be affected by the US election results which will begin to emerge at the end of Tuesday, as well as Eurozone and US economic data. A Harris victory in the Presidency will likely see the price rise, and there could be some legs in that as Trump is currently a marginal favourite in the betting markets, so the surprise momentum could be on the Harris side. AUD/JPYI expected the AUD/JPY currency cross to have potential support at ¥99.55.The H1 price chart below shows how the price action rejected this resistance level with a large inside bar, marked by the up arrow within the price chart below. This rejection occurred during the overlap of the London / New York sessions last Thursday, right at the end of the London session.This trade has not quite reached a floating profit as large as the risk, if they stop was placed just below the swing low which was at the low of the week.Both the Australian Dollar and the Japanese Yen have been relatively weak currencies recently, so don't expect to see exceptionally directional movement here. Instead, it will likely be a good environment to trade reversals from support and resistance levels. XAU/USDI have been bullish on Gold for weeks as it has continued to make bullish breakouts to new highs. The upwards trend which got strong a few weeks ago has produced a very profitable trade on the long side for trend traders.Many assets reversed strongly last week against a resurgent US Dollar at the end of last week, and Gold was no exception as it fell quite strongly after making a new record high on Wednesday. However, Gold has fallen by less than many other assets, which suggests a residual strength in the precious metal.Despite Gold's reputation as a risk hedge, historically, the price of Gold has tended to be positively correlated with major stock market indices.Gold could move quite strongly over the coming week as markets digest the US elections on Tuesday and the FOMC meeting which is expected to produce a rate cut after that. I think Gold will be more likely to rise strongly if initial results suggest a Trump victory for the Presidency rather than a Harris one, simply because Trump will probably boost risk-on sentiment.I still see Gold as a buy, but only following a daily close at a new record high closing price above $2,787. S&P 500 IndexDespite making a new record high two weeks ago, the rise in this major stock index seems to have run out of momentum, at least for the time being. The price action last week was bearish, suggesting that the price has further to fall.The next step for this equity index is likely to be the result – or at least the initial result – of the US Presidential election this Tuesday. Betting markets are narrowly favouring Trump, although the polls are extremely close. Betting markets saw a small but significant swing towards Harris over the weekend.A Trump victory is more likely than a Harris victory to produce a strong bullish move here, although any new President tends to enjoy a bullish domestic stock market for a while.Due to the long-term bullish picture and the upcoming US election, I will be eager to enter a new long-trade here if we get a daily close at a new all-time high above 5,878. I will be more confident in this trade if Trump wins or seems likely to win when the new high closing price is made.There could be good support around 5,680 which might produce a significant bullish bounce, possible even to new high prices. Bottom LineI see the best trading opportunities this week as
- Long of Gold in USD terms following a daily close above $2,750. This set up at Tuesday's close and produced a loss over the rest of the week of 1.37%. Long of the S&P 500 index following a daily close above 5,878. This did not set up.
Technical AnalysisUS Dollar IndexLast week, the US Dollar Index printed a bullish pin bar type candlestick which rejected the resistance level at 104.15. The Dollar has been rising for a few weeks, and continued to trade quite bullishly last week, but was held by that key resistance level.The price is above its level from three months ago, but below its level from six months ago, suggesting a long-term mixed trend in the greenback, which suggests uncertainty.It is also worth noting that despite the recent bullish momentum, the price is trading right in the middle of a consolidating triangle chart pattern. This is suggestive of ultimately ranging behaviour.This week's outlook for the US Dollar is very unclear, as there are two huge events taking place this week: the US elections, which will see a new President elected and might see either or both Houses of Congress change hands too. After that, the US Federal Reserve will be holding a policy meeting at which it is almost unanimously expected to cut rates by 0.25%.I recommend being very careful in trading the US Dollar long this week, and to wait until the US election result becomes clear. EUR/USDI expected the EUR/USD currency pair to have potential resistance at $1.0897.The H1 price chart below shows how the price action rejected this resistance level with a large inside bar, marked by the down arrow within the price chart below. This rejection occurred during the overlap of the London / New York sessions, right at the start of the New York session last Friday as crucial US economic data was released. This can often be a great time to find reversals in major currency pairs such as this one.This trade has not quite reached a floating profit as large as the risk, if they stop was placed just above the swing high which was at the high of the week.This currency pair is likely to be affected by the US election results which will begin to emerge at the end of Tuesday, as well as Eurozone and US economic data. A Harris victory in the Presidency will likely see the price rise, and there could be some legs in that as Trump is currently a marginal favourite in the betting markets, so the surprise momentum could be on the Harris side. AUD/JPYI expected the AUD/JPY currency cross to have potential support at ¥99.55.The H1 price chart below shows how the price action rejected this resistance level with a large inside bar, marked by the up arrow within the price chart below. This rejection occurred during the overlap of the London / New York sessions last Thursday, right at the end of the London session.This trade has not quite reached a floating profit as large as the risk, if they stop was placed just below the swing low which was at the low of the week.Both the Australian Dollar and the Japanese Yen have been relatively weak currencies recently, so don't expect to see exceptionally directional movement here. Instead, it will likely be a good environment to trade reversals from support and resistance levels. XAU/USDI have been bullish on Gold for weeks as it has continued to make bullish breakouts to new highs. The upwards trend which got strong a few weeks ago has produced a very profitable trade on the long side for trend traders.Many assets reversed strongly last week against a resurgent US Dollar at the end of last week, and Gold was no exception as it fell quite strongly after making a new record high on Wednesday. However, Gold has fallen by less than many other assets, which suggests a residual strength in the precious metal.Despite Gold's reputation as a risk hedge, historically, the price of Gold has tended to be positively correlated with major stock market indices.Gold could move quite strongly over the coming week as markets digest the US elections on Tuesday and the FOMC meeting which is expected to produce a rate cut after that. I think Gold will be more likely to rise strongly if initial results suggest a Trump victory for the Presidency rather than a Harris one, simply because Trump will probably boost risk-on sentiment.I still see Gold as a buy, but only following a daily close at a new record high closing price above $2,787. S&P 500 IndexDespite making a new record high two weeks ago, the rise in this major stock index seems to have run out of momentum, at least for the time being. The price action last week was bearish, suggesting that the price has further to fall.The next step for this equity index is likely to be the result – or at least the initial result – of the US Presidential election this Tuesday. Betting markets are narrowly favouring Trump, although the polls are extremely close. Betting markets saw a small but significant swing towards Harris over the weekend.A Trump victory is more likely than a Harris victory to produce a strong bullish move here, although any new President tends to enjoy a bullish domestic stock market for a while.Due to the long-term bullish picture and the upcoming US election, I will be eager to enter a new long-trade here if we get a daily close at a new all-time high above 5,878. I will be more confident in this trade if Trump wins or seems likely to win when the new high closing price is made.There could be good support around 5,680 which might produce a significant bullish bounce, possible even to new high prices. Bottom LineI see the best trading opportunities this week as
- Long of Gold in USD terms following a daily close above $2,787. Long of the S&P 500 Index following a daily close above 5,878.
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