Sample Category Title

USD/CHF edged lower to 0.8776 last week but recovered again. Initial bias stays neutral this week first. As long as 0.8923 resistance holds, further decline is expected. On the downside, break of 0.8776 will resume the fall from 0.9223 to 61.8% retracement of 0.8332 to 0.9223 at 0.8672 next. However, break of 0.8923 will turn bias back to the upside for stronger rebound instead.

In the bigger picture, with 0.9243 resistance intact, medium term outlook in USD/CHF is neutral at best. For now, more sideway trading is likely between 0.8332/9243. However, firm break of 0.9243 will indicate larger bullish trend reversal.

In the long term picture, price action from 0.7065 (2011 high) are seen as a corrective pattern to the multi-decade down trend from 1.8305 (2000 high). Strong rebound from 61.8% retracement of 0.7065 to 1.0342 (2016 high) at 0.8317 will start the third leg as a medium term rally. But there will be no sign of long term reversal until firm break of 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

AUD/USD's fall from 0.6798 accelerated to as low as 0.6513 last week but recovered after breaching 61.8% retracement of 0.6361 to 0.6798 at 0.6528 briefly. Initial bias remains neutral this week for consolidations. Further fall is expected as long as 55 4H EMA (now at 0.6631) holds. Sustained break oft 0.6528 will pave the way back to 0.6361 support next.

In the bigger picture, overall, price actions from 0.6169 (2022 low) are seen as a medium term corrective pattern, with fall from 0.6798 as another falling leg. Deeper fall could be seen to the lower side of the range between 0.6169/6361. But strong support should be seen there to contain downside. For now, risk will stay on the downside as long as 0.6798 resistance holds, in case of rebound.

In the long term picture, the down trend from 1.1079 (2011 high) should have completed at 0.5506 (2020 low) already. It's unsure yet whether price actions from 0.5506 are developing into a corrective pattern, or trend reversal. But in either case, fall from 0.8006 is seen as the second leg of the pattern. Hence, in case of deeper decline, strong support should emerge above 0.5506 to bring reversal.

USD/CAD surged to as high as 1.3848 last week and breached 1.3845 high, but turned sideway since then. Initial bias remains neutral this week first and some more consolidations could be seen. Further rally is expected as long as 55 4H EMA (now at 1.3755) holds. Decisive break of 1.3845 will resume whole rally from 1.3176. Next target is 61.8% projection of 1.3176 to 1.3845 from 1.3588 at 1.4025.

In the bigger picture, price actions from 1.3976 (2022 high) are viewed as a corrective pattern, that might have completed at 1.3176 (2023 low) already. Firm break of 1.3976 will confirm resumption of whole up trend from 1.2005 (2021 low). Next target is 61.8% projection of 1.2401 to 1.3976 from 1.3176 at 1.4149. This will be the favored case as long as 1.3588 support holds, in case of pullback.

In the longer term picture, price actions from 1.4689 (2016 high) are seen as a consolidation pattern, which might have completed at 1.2005. That is, up trend from 0.9506 (2007 low) is expected to resume at a later stage. This will remain the favored case as long as 1.2947 resistance turned support holds.

GBP/JPY's fall from 208.09 accelerated to as low as 195.84 last week, but recovered after breaching 38.2% retracement of 178.32 to 208.09 at 196.71 briefly. Initial bias remains neutral this week for consolidations. Risk will stay on the downside as long as 202.08 resistance holds. Sustained trading below 196.71 will argue that larger scale correction is under way to 185.49 fibonacci level.

In the bigger picture, considering bearish divergence condition in W MACD, 208.09 might be a medium term top and fall from there could already be correcting whole up trend from 148.93 (2022 low). Risk will now stay on the downside as long as 55 D EMA (now at 200.78) holds. Sustained break of 196.71 will pave the way to 38.2% retracement of 148.93 to 208.09 at 185.49.

In the longer term picture, outlook will stay bullish as long as 188.63 resistance turned support holds, or until a clear reversal pattern forms. Rise from 122.75 (2016 low) is seen as the third leg of the pattern from 116.83 (2011 low). Next target is 138.2% projection of 116.83 to 195.86 from 122.75 at 231.96.

EUR/JPY's fall from 175.41 accelerated to as low as 164.81 last week, but recovered ahead of 164.29 resistance turned support. Initial bias remains neutral this week for consolidations. Risk will stay on the downside as long as 169.98 resistance holds. On the downside, decisive break of 164.29 support turned resistance will indicate that larger scale correction is underway for 155.91 fibonacci level.

In the bigger picture, immediate focus is on 164.29 resistance turned support. Strong rebound from there will retain medium term bullishness for resuming the up trend through 175.41 at a later stage. However, decisive break of 164.29 will indicate that fall from 175.41 is at least correcting the rise from 124.73, with risk of bearish trend reversal. Deeper decline would be seen to 38.2% retracement of 124.37 to 175.41 at 155.91.

In the long term picture, rise from 114.42 (2020 low) is seen as the third leg of the whole up trend from 94.11 (2012 low). As long as 164.29 resistance turned support holds, further rise should be seen to 138.2% projection of 94.11 to 149.76 from 114.42 at 191.32. However, sustained break of 164.29 would risk deeper medium term fall back towards 55 M EMA (now at 145.09) even as a correction.

EUR/GBP's recovery from 0.8382 extended higher last week but outlook will stay bearish as long as 0.8498 resistance holds. Initial bias remains neutral this week first. Firm break of 0.8382 will resume larger down trend.

In the bigger picture, down trend from 0.9267 (2022 high) is in progress. Next target is 0.8201 key support (2022 low). For now, outlook will remain bearish as long as 0.8643 resistance holds, even in case of strong rebound.

In the long term picture, price action from 0.9499 (2020 high) is seen as part of the long term range pattern from 0.9799 (2008 high). Range trading should continue between 0.8201 and 0.9499, until there is clear signal of imminent breakout.

EUR/AUD's rise from 1.5996 accelerated to as high as 1.6642 last week but retreated since then. Initial bias remains neutral this week for consolidations. Further rally is expected as long as 1.6384 support holds. Corrective fall from 1.7062 should have completed with three waves down to 1.5998. Above 1.6642 will target 1.6742 resistance. Decisive break there will argue that larger up trend is going to resume through 1.7062 high.

In the bigger picture, fall from 1.7062 medium term top is seen as a correction to the up trend from 1.4281 (2022 low) and could have completed after hitting 38.2% retracement of 1.4281 to 1.7062 at 1.6000. On resumption next target will be 61.8% projection of 1.4281 to 1.7062 from 1.5996 at 1.7715. This will now remain the favored case as long as 55 D EMA (now at 1.6264) holds.

In the longer term picture, price actions from 1.9799 (2020 high) are seen as a long term decline at the same scale as the rise from 1.1602 (2012 low). Rebound from 1.4281 is seen as the second leg. As long as 55 M EMA (now at 1.5987) holds, this second leg could still extend higher. However, sustained trading below 55 M EMA will open up the bearish case for extending the decline through 1.4281 low.

EUR/CHF's fall from 0.9772 extended to 0.9519 last week but recovered since then. Initial bias is turned neutral this week for consolidations first. Further decline is expected as long as 0.9641 support turned resistance holds. Rebound from 0.9476 should have completed as a corrective move at 0.9772. Below 0.9519 will bring retest of 0.9476. Firm break there will resume whole fall from 0.9928 to 100% projection of 0.9928 to 0.94767 from 0.9772 at 0.9320.

In the bigger picture, with 1.0095 key medium term resistance intact, price actions from 0.9252 (2023 low) are seen as a corrective pattern. Fall from 0.9928 might be the second leg and break of 0.9476 would bring deeper decline to retest 0.9252 low. But strong support should be seen there to extend the corrective pattern with another rising leg. In any case, medium term outlook will be neutral at best as long as 1.0095 structural resistance holds.

In the long term picture, fall from 1.2004 (2018 high) is part of the multi-decade down trend. Firm break of 1.0095 resistance is needed to be the first sign of long term bottoming. Otherwise, outlook will remain bearish.

Monday, Jul 29, 2024

Tuesday, Jul 30, 2024

Wednesday, Jul 31, 2024

Thursday, Aug 1, 2024

Friday, Aug 2, 2024

• Global markets experienced a volatile week, influenced by a tech selloff, China growth concerns, and anticipation of central bank decisions and US earnings reports
• Despite the volatility and tech led selloff, US equity funds saw inflows.
• Central bank meetings, particularly the FOMC and BoJ, and US NFP data will be key drivers of market sentiment in the coming week.

Week in Review: Sentiment Overshadows US Earnings and Data

A tumultuous week for global markets fraught with risk, volatility and a whole lot of opportunity is drawing to a close. The tech selloff in US Megacap tech stocks accelerated in the early part of the week, compounded by concerns around growth in China. A rally on Friday by the SPX and Nasdaq 100 was led by a rebound in tech stocks with Meta, Microsoft and Amazon leading the way.

Despite the concerns around Big tech stocks US equity funds still experienced inflows of around $2.17 billion for the week, according to Bank of America research

Source: EPFR Global, US Domiciled Funds Only

Elsewhere Gold prices recovered late in the week as well after dipping as low as 2353.10 on Thursday to trade at 2388.25 at the time of writing. Oil prices also appear to have found support with Brent posting a weekly low just above the psychological $80 a barrel mark.

Market moves this week have baffled many and that is understandable. US data for the first time this year appears to be overshadowed by other factors which have been driving markets.

The lackluster reaction to the US GDP and PCE prints further highlight this recent phenomenon. It would appear that the effects of the tech sell-off, early positioning for the US election, and the unwinding of carry trades have created significant market movements that overshadow US economic data.

Whether these factors will overshadow a host of economic data events due next week, remains to be seen.

The Week Ahead: Central Bank Meetings and NFP to Dominate

US

Looking ahead to next week, there is a lot happening globally which could have an impact on financial markets. Market participants will pay attention to the FOMC meeting but it remains too soon in the eyes of many to expect a rate cut..

The NFP and jobs report on Friday may have a bigger impact on the US dollar next week. Depending on the rhetoric from Federal Reserve Chair Jerome Powell the data could be an important cog in whether the Fed cut rates in September as expected.

Europe + UK

The Euro Area will report its preliminary inflation numbers on Wednesday as market participants eye further cuts from the European Central Bank. A soft inflation print will go some to solidifying the belief that more cuts are on the way and could see the Euro fall further.

The UK and the Bank of England (BoE) will definitely be in the spotlight next week. As one analyst put it, next week’s BoE decision is just too close to call. Looking overall at the UK which has somewhat outperformed expectation in 2024, there is a growing possibility of a cut next week.

The UK inflation story is looking better despite some recent upside surprises in services. An excellent way of looking at it, two members of the nine-person committee have already begun voting for rate cuts. Two or possibly three others hold the opposite view and are clearly resistant to cuts. This leaves four or five members in the middle, who seem undecided.

June’s meeting indicated that some, perhaps most, of these officials believed the decision was finely balanced. However, since the general election was called in late May, we’ve heard very little from these policymakers.

This lack of commentary makes it difficult to predict Thursday’s meeting with confidence. Nonetheless, we continue to maintain our long-held base case that a rate cut will occur in August.

Asia Pacific Markets

The most anticipated event next week is the Bank of Japan (BoJ) policy meeting. The reason…rumors that the central bank will unveil a plan to halve its bond buying and may even debate a 15bps rate hike.

This news brought a lot of volatility and strength to the Japanese Yen this week. The economy has returned to a recovery trajectory following an unexpected contraction in the first quarter of 2024, and solid wage growth in May should bolster the central bank’s confidence.

The key for me is wage growth, a key gauge punted by Governor Ueda since he assumed office. The positive increases in wages coupled with an announcement this week of a new minimum wage cap are signs that the economy may be about ready for a rate hike.

Elsewhere, the Reserve Bank of Australia (RBA) and market participants will be monitoring the Australian CPI release. The data will play a key role in determining what steps the RBA needs to take at the upcoming August 6 meeting.

Inflationary pressure continues to plague the RBA and Australian consumers, something which RBA Governor Bullock acknowledged recently. The Governor seems to support the idea that domestic demand is too strong to permit inflation to decrease at an acceptable rate. Another uptick in inflation is likely to see rate hike bets ramp up for the RBA’s August meeting.

The US Earnings season continues next week with some heavy hitters on the agenda. Microsoft will release results after market close on Tuesday, followed by Meta on Wednesday and Apple and Amazon on Thursday. Significant volatility could materialize particularly in the S&P 500 and Nasdaq 100.

Chart of the Week

The chart of the week that I will be focusing on is the Nasdaq 100. Last week’s selloff continued, pushing the Nasdaq 100 below the ascending trendline before bouncing off the 100-day moving average (MA) on Friday.

Currently, the daily candle appears likely to close as a bullish engulfing candle, suggesting potential further recovery next week. However, a retest and rejection of the trendline could lead to new lows next week, depending on earnings reports and overall market sentiment.

For the Nasdaq to reach support at 18,400 and potentially lower levels, a break and daily candle close below the 100-day MA are necessary, with the 200-day MA resting at 17,656.

On the upside, resistance lies at the trendline, and a break above this level could bring 19,480 into focus, followed by the psychological barrier at 20,000.

Nasdaq 100 Daily Chart – June 28, 2024

Source:TradingView.Com (click to enlarge)

Key Levels to Consider:

Support:

• 18757
• 18400
• 17656

Resistance:

• 19247
• 19500
• 20000
• 20400