The difference between success and failure in Forex/CFD trading depends primarily on which assets you choose to trade each week and in which direction, rather than the exact method you use to determine trade entries and exits. Very likely.
Therefore, at the beginning of the week, it is a good idea to get a complete picture of what is unfolding across the market and how that development is influenced by macro fundamentals, technical factors, and market sentiment. Recommended.
See weekly analysis below.
As I wrote in the previous article 3,rd Here are September’s likely best trading opportunities of the week.
- Long USD/JPY. The currency pair rose by 1.05%.
- Long WTI crude oil futures. Futures rose 1.34%.
The total return was 2.39% and the average return per asset was 1.19%.
Over the past week, market sentiment regarding the United States has begun to waver. A week ago, sentiment was positive as data showed the U.S. economy was cooling and there was no need for the Fed to raise interest rates again. However, the latest US economic indicators suggest that the US economy has not cooled down enough and that this week’s CPI (inflation) data will show inflationary pressures persisting rather than declining. is currently increasing. . Therefore, even if the Fed does not raise rates at its meeting later this month, it could increase the likelihood that it will do so at its next meeting in November.
Markets are keeping an eye on this week’s release of US CPI (inflation) data and the European Central Bank’s policy meeting. Year-on-year inflation is expected to rise again to 3.6% from 3.2%, while the ECB is expected to keep interest rates unchanged at 4.25%.
Very little important data for the foreign exchange market was released last week, and as a result, market directional volatility was very low.
The main events last week were policy announcements by the Bank of Canada and the Reserve Bank of Australia. Both banks kept interest rates unchanged as expected, but the Bank of Canada’s comments were a little more hawkish than expected. However, overall, policy announcements had little impact on national currencies.
The US dollar continued to look strong last week, with several commodities rallying, most notably WTI crude oil hitting a multi-month high.
Other important data releases from last week include:
- Australian GDP – met expectations.
- U.S. unemployment claims – slightly better than expected.
- US ISM Services PMI – Slightly better than expected.
- Canada’s unemployment rate – slightly better than expected.
- China’s CPI (inflation rate) – slightly better than expected.
Next week’s market is likely to see significantly higher levels of volatility than last week as the summer season finally ends and we return to a more heavily traded market. This week’s major data releases, in order of importance, are:
- US CPI (inflation)
- US PPI
- US retail sales
- US preliminary unit consumer sentiment
- European Central Bank main refinance rates and interest rate statement
- U.S. unemployment insurance claim
- industrial production in china
- US Empire State Manufacturing Index
- UK GDP
- Trends in the number of claimants in the UK
- australia unemployment rate
The weekly price chart below shows that the U.S. dollar index rose strongly last week for the eighth consecutive week, closing at an almost six-month high and continuing its long-term bullish trend. A few weeks ago, it made a bullish breakout above the upper trendline of a long-term descending wedge pattern, just as I expected.
Prices ended the week near the high end of the range. Although this is a bullish sign, we should note that the price is approaching a key resistance area above 105.
The dollar is in a long-term bullish trend, evidenced by prices trading above levels from three and six months ago.
I see bullish momentum in the US dollar. This means it’s probably a good idea to focus only on long USD trades this week.
The EUR/USD currency pair recorded a bearish candlestick and ended near its low, marking its lowest weekly close in six months.
Despite these bearish factors, traders should proceed with extreme caution here as price still needs to fall below a cluster of support levels around the approximate $1.0600 area before it actually starts to look properly bearish. recommend to. We may see a bullish reversal here instead, as it was a very important area when we hit it a few weeks ago.
Another element of uncertainty is that the European Central Bank will hold a policy meeting, which could bring surprises in wording and monetary policy, although it is very unlikely that interest rates will change from 4.25%. there is a possibility.
If this pair retraces resistance, it could be a good candidate to short during day trading, but long-term traders should wait for the price below $1.0600 before going short.
The USD/JPY currency pair recorded a bullish engulfing candlestick that reached its highest level in the past 10 months, showing that the long-term bullish trend that has been going on since early 2023 remains strong.
I believe this currency pair remains a long-term buy due to the Bank of Japan’s very accommodative monetary policy and the Yen’s long-term downward trend. With the US dollar remaining strong, this currency pair is at the heart of the forex market and has been very easy to profit from in recent days and weeks.
Bulls only need to worry about two things:
- The Bank of Japan said over the weekend that it may not maintain negative interest rates if inflation falls to its 2% target.
- The big number of 150 yen caused a strong bearish reversal the last time it was reached, and it could do so again.
Current WTI crude oil futures have seen another bullish move over the past week, closing at a nine-month high for the week. This is a clear volatility breakout from the prevailing price range.
There is growing optimism that the Fed has completed its rate cuts, which is likely helping to slow last week’s strong bullish momentum. However, OPEC’s recent announcement that some supply restrictions will continue is a bullish factor.
Trend trading, trading long when a commodity makes a bullish breakout to a new long-term high, has historically been a highly profitable trading strategy.
I still think WTI crude oil is a buy. However, this rally may not last much longer.
I see the best trading opportunities this week regarding USD/JPY and WTI crude oil.
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