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difference between success and failure Forex/CFD trading is very likely to rely primarily on: Choose which assets to trade in which direction each weekis not the exact method you might use to determine trade entry and exit.
So, at the beginning of the week, it’s a good idea to get an overview of what’s unfolding across the market and how that development is influenced by macro fundamentals, technical factors, and market sentiment. Recommended. There are currently some valid long-term trends in the market that can be exploited to your advantage. See our weekly analysis below.
As I wrote in my previous article 4,th We expect the best trading opportunities this week in June to be:
- Long on the Nasdaq 100 index. The index ended the week largely unchanged.
- Longing the USD/JPY currency pair follows a pullback at key support levels such as: ¥139.05. As there was no such backlash, the transaction did not go through.
- Long GBP/USD currency pair after strong daily close above $1.2500. The stock closed above this level on Thursday, ending the week up 0.15% from the same point.
My forecast yielded an overall gain of 0.15%, with an average gain of 0.05% for each highlighted asset.
Markets are currently most focused on issues of recession, central bank interest rate hikes and inflation. And all of this is now beginning to be affected by the meetings and releases of the Federal Reserve Board in the United States, the world’s major capital markets. U.S. Consumer Price Index (CPI) data due out this week. Speculation is growing that the Fed will raise rates by another 25bps at this week’s meeting Last week saw a similar surprise rate hike by the Reserve Bank of Australia, followed by a similar hike by the Bank of Canada. But the market is still suggesting a 30% chance that the Fed will raise rates again.
Another major item is the continuation of some global equity bull market, especially in the United States, where the S&P 500 index has risen 20% from its recent lows, signaling a new bull market. is technically supported. A commonly used metric. The Nasdaq 100 Index has reached this level of gains from its May lows. The question is, will the US economy slip into recession, how much more will the Fed raise rates, and what effect will that have on the stock market? In any case, the Fed is widely expected to raise rates again in July, if not this month, and the terminal rate is reaching a level where risk-free returns are not far from the stock market’s average annual returns. However, this ignores the fact that inflation is still relatively high, and is still below inflation, making such risk-free interest rates less attractive.
The Nasdaq 100 index closed at a one-year high last week, while the borderline S&P 500 index closed at a 10-month high.
Other important data releases from last week include:
- Australia’s GDP – slowed further than expected, rising 0.2% month-on-month when expected to rise 0.3%.
- Swiss CPI rose 0.3% month-on-month as expected.
- US ISM Services PMI slightly worse than expected.
- US unemployment claims were slightly higher than expected.
- Canada’s unemployment rate was slightly higher than expected, at 5.2%, significantly higher than the US unemployment rate.
Next week will likely see significantly higher levels of market volatility compared to last week, with central bank meetings in the US, Eurozone and Japan, plus the release of US CPI (inflation) data. This week’s key data releases include:in order of importance:
- European Central Bank Key Refinancing Rates and Monetary Policy Statements
- Bank of Japan Policy Rate and Monetary Policy Statement
- US PPI
- US retail sales
- United States Provisional Unit Consumer Sentiment
- Chinese industrial production
- UK GDP
- new zealand GDP
- U.S. Unemployment Claims
- UK unemployment insurance applications (number of applicants)
- Australian unemployment rate
Monday is a public holiday in Australia.
The weekly price chart below is The US Dollar Index showed a small bearish candle last week in line with the long-term bearish trend.
Dollar Remains Within Technically Valid Long-Term Bearish Trend Range, the price is a little cheaper than both 3 and 6 months ago. However, the bears should watch out for the support level 102.801 indicated by the blue horizontal line in the price chart below, which could be a solid support.
Still nervous about trading against the US dollar next week Because it still looks very strong, or at least more likely to be firm than down. However, some relatively strong currencies such as the Canadian dollar, Swiss franc and British pound have shown some strength.
of course, Technical analysis may not be very useful for US dollar trading this week as it depends heavily on US inflation data and whether the Fed will hike rates. at the meeting this Wednesday.
We saw a further increase NASDAQ 100 Index For the past week, for seven consecutive weeks. However, the price barely moved up, spending most of the week below its weekly opening, suggesting the market may be losing its bullish momentum. However, the situation here probably remains bullish for the following reasons.
- Weekly Candlesticks Ended UpIt was the highest closing price in a year for four weeks in a row.
- Weekly Candlesticks End Not Far From High.
- Equity markets generally bullishthe S&P 500 index is also technically bullish, but not by much, ending last week at a nine-month high, with all the general indicators confirming a bull market.
The price has a lot of upside potential as there is no significant resistance level until the 15000 area.
Despite these bullish statements, it’s worth noting that in the short term much depends on whether the Fed will raise rates at this week’s meeting and what new US CPI (inflation) data show. For example, if the Fed postpones rate hikes and inflation falls more than expected, we can expect a rally in the stock market. An even bigger surprise would be if the Fed hikes rates by 25bps and inflation remains high, which could trigger a significant drop in stock prices. Therefore, technical analysis may be of limited use this week.
If there is a surprise this week, I think it will most likely be on the hawkish side.
The Nasdaq 100 still feels like a buy to mebut the bulls should be concerned if it retreats below 13730 soon.
USD/JPY currency pair went down a little last weekprinted the bearish inside bar and closed a little lower.
The closing price three weeks ago was the best weekly closing price in six months, showing that the long-term bullish trend is still in effect. However, the USD as a whole is not bullish in the long run, and there are some contradictions here.
We have witnessed a long period of weakness in the Japanese yen, but there are early signs that the Bank of Japan is starting to reverse this long period of weakness.
As a trend trader of major currency pairs, I am long this currency pair and would like to stay long unless I see a big drop. But while the grounds for this long-term deal are fading, things could change dramatically if the Fed raises rates at this week’s meeting, and even more so if U.S. inflation data are released at unexpectedly strong levels. can change significantly.
A buy is likely if the currency pair returns to key support levels and rebounds firmly. Especially 139.03 yen.
GBP/USD currency pair The bullish candlestick ends near the high of the range, which is a bullish sign.The British pound stands out as a relatively strong currencyperhaps even the strongest.
Despite questioning the direction of the US dollar, The pound is in a long-term bullish trend and we currently see the price not too far from a long-term high above $1.2600.
Technically, we see some bullish momentum, perhaps supported by fundamental analysis, suggesting policy divergence between the US Federal Reserve and the Bank of England. .the BOE has a more hawkish view, while the Fed looks more likely to vote on rate hikes at this week’s meeting.
The pair is usually a good place to trade in breakouts, and as the price was seen rising firmly above the large $1.2500 round number, This currency pair looks like a buy. Of course, if the Fed raises rates and U.S. inflation remains strong, it could trigger a sharp drop in prices.
AUD/USD currency pair A very bullish candle indicates that it has closed near the high of its range, which is a bullish sign.The Australian dollar stands out as a relatively strong currencywithout a doubt, even the strongest.
The most interesting technical feature is the price position It is not a weekly candlestick. Prices have been below this level for the past few weeks. There is a very strong resistance area around $0.6750, the big number for the quarter.
Current prices may be very high main point And a confirmation of Wednesday’s Fed meeting may be needed to decide whether to definitively break through this resistance zone or make a decisive bearish reversal.
This means There may be good opportunities to enter new trades The rest of the week remains to be seen if it will be long or short.
Cocoa futures hit a multi-year high and closed just above the range this week. The price chart below shows how a strong linear regression channel has kept price well contained over the past 40 or so weeks, showing how steep, orderly and powerful bullish this is.
Demand for cocoa remains strong as usual, but supply problems have increased expectations of a crop failure this year in Côte d’Ivoire.
The trend is probably so mature that buying now can be risky. However, the strength of the bullish momentum here is so strong that it is tempting to get involved and trend traders probably don’t want to miss this long trade.
I think the best trading opportunities of the week are:
- Long the Nasdaq 100 Index.
- Longing the USD/JPY currency pair follows a pullback at key support levels such as: ¥139.05.
- Long the GBP/USD currency pair.
- Cocoa futures long.
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