Weekly Analysis – EUR/USD, GBP/AUD, USD/JPY, FTSE and S&P500

Previous week overview

On Tuesday we saw the IMF report concerning Greece, which caused the EUR/USD and Yen pairs to be tumble. As I noticed that euro gave different reactions towards the accident, which is called decoupling. This was not the only decouple acceding during the week. The last three days in the week oil raised from 51.00 to 53.80 on the other hand USD index raised from 100 to 101 during the same period. Repetition of the same phenomena more than a time would raise red flag concerning trading in the FOREX market on the long term. Also the meeting between Trump and Abe strengthened the dollar previous week.

Weekly Outlook

The most important event next week is going to be Yellen’s semiannual testimony under the Capitol Hill. Analysts will monitor her words closely, trying to abstract the next rate hike date.

At the week opening we have Japan’s GDP, also on Tuesday we have UK inflation numbers which I believe will put a lot of weight on the Pound, followed by the Euro GDP. For the rest of the week we will watch the G20 finance ministers meeting.

EUR/USD

I am not going to be exaggerating if I will say that EURUSD had become a risky asset. Yes it is, since it will be too vulnerable to a) Greece VS TROIKA.  b) French – German – Netherland coming up elections and all regarding issues (i.e. FREXIT, NEXIT, GREXIT, ….). Today we have Yellen’s speech which will add more volatility to the pair.

From technical view the pair stands a very strong support and resistance level at the same time, which will make it volatile. It is more likely to be bullish on the short term; however on the medium and long term definitely we will see bearish EUR/USD.

The previous chart shows the long bearish direction from 1.1600 to 1.0333, with 38.2% retracement level at 1.0830 formed bullish direction. Followed by correction to the 38.2 level 1.06377 which is the same 23.6 retracement level for the bearish direction closing the week there. This point is a very powerful point will lead the market to some consolidation, with range trading optimistically. I may go long to 1.0770 to be closed 2 hours before Yellen’s speech anyway. (Not favorable pair to trade)

GBP/AUD

This pair has excellent chance for short trading this week. If the CPI numbers on Tuesday are over expectations, the GBP may rise for short period. Eventually, I believe that pair is going to close under the previous week’s closing

The price currently is on 78.6 retracement level at 1.6260 (closing price). If it breaks below it we will test the 1.5780 .

We can see that the pair couldn’t break the channel and is going towards the strong historical support level. I am comfortable with this trade, as FTSE futures are heading up.

Yen Pairs

If you have read my article “IT IS NOT EASY TO TRADE THE YEN” you must have a background for what I am about to say. President Trump and prime minister Abe had a summit with no big titles leaving direct effect on the markets. That is exactly what is happening with Yen pairs. Next weeks we will see no clear direction for those pairs due to different fundamental and technical reasons.

Watching the USD/JPY you will see it moving within sideways channel between the 38.2% retracement level of the rising trend, and 61.8% retracement level for the downtrend at 116.00. it is a good hedging opportunity between the current price and both levels. Same thing applicable for CHF/JPY and CAD/JPY.

FTSE futures

We can see clearly that the chart is forming a clear rising wedge, which is accompanied with the world indices. Longing to the 0% at 7280.00, then get ready to down free fall.

S&P futures

S&P chart showing same idea shown in FTSE chart, a bigger rising wedge from 2008. Volume as well shows dropping trend from 8/2015. This stock became very risky at moment. It is advised to stay away till the renounce occur, it is more likely to take 1-4 weeks till we can see free fall to the 2000 level.

Good luck