Weekly Analysis May 22nd – 27th 2017

The Previous Week

We had the privilege to be the first, who predicted the previous retracements occurred in the stock markets in our previous weekly analysis. Markets had retraced around 2.5%. Last week also we had seen enhancement in the UK inflation data, where the CPI came 2.7% vs expectations of 2.6  and the core CPI came 2.4% vs 2.3% expected. Moreover, the EU GDP came as expected and the previous 1.7% (YoY), and the Japan GDP came 2.2% vs 1.7% expected.

Next Week Outlook

The start of the week will be quite easy for those who want to adjust their mistakes or to take some scalps; however, starting from Wednesday the wind will start to blow. On Wednesday we have couple of speeches for Kuroda and Draghi, also we have the FOMC minutes release. On Thursday we have the UK GDP as well as the Japanese CPI. Finally on Friday we are going to be waiting for the US GDP.

Euro and GBP Pairs

I recommend strongly avoiding the euro pairs and the GBP pair hereon to the UK elections. Since a lot of swaps and hedge positions are going to take place against the Euro, the Euro will take a new path depending on the elections outcome.

Swiss Franc

Swiss Franc took a very bullish movement against all pairs, and specially the dollar. It seems that traders are using the Franc as a safe haven before the UK elections especially that the USD is facing long term bearishness and the franc is at historical support against all the other major currencies. In the next chart we can see that the USD/CHF pair had reached the bottom; in addition, the stochastic had formed a clear divergence on the 4 hour and daily chart. Now the pair is ready to bull back to the 23.6% at 0.9850.

DAX Futures

The DAX  and Nikkei as all other indices had retraced last week, as a result you have to be cautious during next week as all traders will start to jump into the indices to take advantage of this small retracement. The risk is still found; notwithstanding, the DAX will rise on Monday trying to recover. It will not be too far, until traders will average the risk and the index will start to retrace again.

More likely it will try to climb to the highest point before the risk aversion at 12800.