The dollar has had a rather bullish week start of March. This was especially accelerated by the non-farm payroll (NFP) released on Friday where we had the employment numbers change from 481k to 678k and the unemployment rate reduced by 0.2%. This has made the DXY continue soaring higher since breaking the resistance zone around 97.465. As we move on to the new trading week awaiting J. Powell’s testimony on Semi-Annual Monetary Policy report the next level of significance to watch-out for is 99.925
XAUUSD On gold our sentiment from last week continue. We were able to get in on a long position at 1936.220 on retest of the level. Still holding on to the position. Presently we see another entry opportunity present itself (c) on the retest of the resistance level at 1979.076 with the target around 2065.447 which is rather significant as price last tested the levels on August 2020 which would make this the ultimate upturn of the longer term downtrend on the pair between 2020 and 2021.
Last week we discussed gold as XAUUSD approached 1912 resistance level looking to pick up long positions. On Thursday we observed a major rejection spike on the daily with the bears trying to push price lower still. Start of the new week the bulls make another attempt to break this level to push price higher.
Keep in mind it is a very volatile time in the market hence it’s important to wait for a retest of supply zones before getting into a position. An important level to note on the pair is 1973.935 which marks the highest high last week and coincides with a previous resistance zone last tested mid September 2020.
The two possible entry points on the pair are; a) a retest of the downward trendline. b) A clear break and retest of the resistance zone around 1912 with a stop loss 1ATR below previous support. My bias remains long as long as price does not break beyond the upward trendline on the daily. Remember, for early entries track price on the lower timeframes as well. Leave a comment and let us know what your thoughts are on the pair.
As we come to the close of the trading week we see gold definitively break out of the consolidation zone to the up side. As mentioned earlier this is the signal we had been waiting for to pick up long positions on gold. On Tuesday XAUUSD retest the downward trendline which provided for an aggressive entry point at 1889.800.
Now towards the end of the trading week, the pair is approaching a resistance zone at 1916.502. On the break and retest of this level we’d be looking to pick up long positions targeting 2035.662. Overall on the weekly chart we look at this as a continuation of the long term bullish trend on the pair.
Heading to the NewYork session what’s your sentiment on XAUUSD?
This week we are looking at a very eventful week over all in the markets. Most of the setups we were watching last week and the week before we anticipate to get some entries this week.
DXY
The dollar index is showing a lot of dollar strength ahead of the trading wee. Last week we had a break of the previous high/resistance of the ranging zone around 96.900 which we’re looking at a retest within the trading week before trending higher. We also have NFP release come Friday amongst other economic news.
EURUSD
For the pair similar to DXY we’re looking at the same kind of setup with a potential short entry at 1.11865 with SL above previous resistance.
GBPUSD
The pond strength has really dwindled against the dollar causing the pair to fall back into the channel we had been trading for the better part of late December early January. We had a break of the top of the channel for which we were waiting for a retest around 1.36200 to pick some long positions. Price instead broke back into the channel continuing the long term sell. We are looking to get in on short positions with our target around the 1.31898 support zone. Entry triggers within the channel would be retracement for retest of demand zones or break and retest of minor trend lines on lower time frames (flag patterns).
XAUUSD
Gold against the dollar the hasn’t been much change in the pair’s performance since our Friday analysis. We’re still waiting and watching for a definitive break of the confluence support zone around 1787 to have price fall back up into the consolidation zone, or a break out of it to catch some pips on the sell side. Until then, we are indifferent on the pair.
GBPJPY
Pound Yen, if you have been following our analysis on this pair over the weeks then you may have caught an early around entry around 157.100. We are now looking at a retracement around 155.270 which provides for another entry continuing the trend down. Remember it’s important to look for confluence in lower time frames to get better entries on your trades.
USDJPY
With the dollar strength, USDJPY seems to continue it’s long-term uptrend. Even so, there are no clear entry points for us until the pair breaks the resistance level around 116.340. However looking at the Fibonacci retracement we see a retest of the 61.8% level at 115.257 for an aggressive entry, remember to look for confluence in lower time frames. Another entry would have been at 114.683 at the open of the first bear candle that forms after the break of the downward trend line
Gold has been consolidating within a wedge for the recent past and the trend traders have not really had a chance to get into any positions. The dollar has had some major boosts as well as letdowns from a fundamental perspective in regards to the economic status of the country which has led to the pair being range bound within this wedge.
Yesterday we had XAUUSD test an upward trendline for the forth time at 1792 where it has consistently held forming higher lows since September last year. The bulls on Tuesday this week were also unable to break the downward trendline on the second retest at 1854 causing price to rally back down within the last two days.
As we close the trading week, we await to see whether the trendline will hold yet again and the bulls prevail or price will finally break this level and we may start looking for short opportunities. It is also noteworthy that this level coincides with a support zone on the lower time frames (H4) which makes it of key importance to watch as you trade the pair.
Since the the BOJ news release last week we’ve seen a change of tide on the EURJPY where the pair has consistently been making lower lows and lower highs. We are now looking at the pair fall back into a previously persistent range zone for the better part of last month approaching a rather strong support level around 127.530.
Should the pair break this zone, we will register the lowest lows we have seen since January last year and on retest of this it may be valid to watch out for short opportunities.
Important releases to pay attention to is the German manufacturing and services numbers released on Monday that came in higher than expected which is good news for the Euro and we see the currency fight back against the Yen in the wicks registered on Monday and Tuesday.
However, the Yen is proving to be quite resilient, and attention is on the support levels s1 and s2 before we can pick any positions on the pair.
The Bank of Japan just released their stand on inflation which was pretty hawkish and the markets certainly did react to it. To give a brief recap of the currency’s performance in the last month, we observed EURJPY maintain a very strong support level between mid November and Mid December ’21 at 127.515 within a range with the resistance at 129.625.
Since December 20th ’21 the pair has registered consistent gains up until early this month at the resistance zone around 131.436 which has since been tested multiple times. As previously mentioned, the BOJ report was hawkish on the Yen which did push price down back to the now support zone at 129.474. My bias on the pair however remain bullish up until 133.100 levels where we are likely to see stronger bearish momentum especially with the confluence between the downward trendline and the supply zone forming a strong resistance point.
Heading on to the third trading week of the month we’re looking at a relatively quiet week from a fundamental perspective. To watch out for is the GDP report in regards to the Chinese Yuan (CNY), outlook report and speech from the Bank of Japan and England respectively, GBP and CAD CPI data, as well as employment status data for the Australian Dollar (AUD).
Technical analysis
DXY
Last week the index was pretty week and the USD had a thorough slashing in comparison to other major pairs. Towards the closing of the week the index did test the 94.678 support zone which held giving a healthy retracement to the upside. Heading into the week we a looking for a retest of the zone before heading higher.
GBPUSD
On the pound dollar we saw a clean break out of the downward channel with in which price has been ranging. Heading to the new week we’re looking for a retest at 1.13112 to go long targeting 1.38261 and 1.39850 respectively for TP1 and TP2.
GBPJPY
The bulls’ momentum on the Pound/Yen may be exhausted with the recent highs being the highest price has been since 2018. Looking at the daily chart, the resistance at 157.860 indicates a double top which coincides with overbought conditions on relative strength index (RSI) which further supports our short bias. For entry we’re looking at a retest of the resistance at 157.860 for a short position, alternatively, a break and retest of the support level at 155.077 would also give us a chance to cash in on the move down targeting 149.590.
EURUSD
In the last trading week the Euro did best the Dollar breaking the top of the range zone at 1.13837 with a lot of momentum. We are currently seeing a retest of the downward trendline on the daily which provides for an opportunity to go long with a stop loss just below the previous resistance turned support with the next resistance zone at 1.15955
XAUUSD
Looking at gold on the daily chart, the pair has been consolidating for quite a while as indicated by the consistent higher lows and lower highs. Important levels to note on the pair is the 1680, 1721 support zones, and the resistance at 1828. The overall trend on the weekly chart is long, but until price definitively breaks out of either of these levels, we are looking at prolonged ranging market for the pair.
USDJPY
Following the dollar’s weakness last week we saw the pair fail to break top of the channel at 115.695, instead price retraced breaking the support at 114.975 headed to 113.261. Presently we are looking at a retest of the bottom channel for a short term move down to the support level at 113.261 TP1 and 112.725 TP2 before resuming the long term uptrend on the daily chart. It is also important to pay attention to the outlook report on the economic status from the Bank of Japan on Tuesday as it will likely impact the performance on the market.
Following our start of week analysis, the dollar index had been in a range since November. We saw really strong support and resistance zones between 95.530 and 96.900 respectively. From a fundamental perspective we had the Fed Chair Powell testify whereby the remarks were dovish causing the pair to break out of the range with a lot of momentum to the downside.
Moreover, on Wednesday we had the release of the monthly consumer price index (CPI) which came in lower than the previous month by 0.3%. There was minor improvement in the core CPI of 0.1%, followed by drop of 0.6% in the PPI on Thursday.
Still to anticipate with the open of US session today is the core retail sales m/m as well as the retail sales both of which are expected to come in lower than in December.
Turning back to the technical aspect, the index is approaching the next support at 95.634 after cruising past all other supply zones above the level. Should this zone give in to the bears, we’re looking to fall even further to the next level at 93.820.
As always my question to you is, what leverage do the bulls have going for them, or is this the reversal looking to potentially wipe the gains for the index since June 2021?
Following NFP’s release last Friday, the dollar index has been bearish and is approaching a support level at 95.635. We are anticipating for it to bounce off the support level and head for 96.654 level. This would mean we will be looking for shorting opportunities in pairs like GBPUSD, EURUSD, XAUUSD and buys on USDJPY should the currencies fail to rival the dollar in the week ahead.
GBPUSD
Looking at the pair on D1 we are the top of the downward channel once again. Narrowing down to H4, the top of the channel coincides with a very strong resistance point at around 1.36993. At this point we are looking for a short entry should the resistance hold continuing the overall downtrend on the daily chart. If the bulls break the level we’d be looking at a short rally up to test the next resistance point at 1.36886.
GBPJPY
The pair is still very bullish. We’re looking for the pair to rise up to 158.004 to look for reversal signals to short the pair. The level is quite important as it is the highest point we have seen since October 2021 and earlier before that January 2018. Alternatively we could see the bulls break the level in a bid to go higher and if that happens the safest bet would be to wait for a retest.
EURUSD
Looking at the Daily chart, at first glance the pair has been ranging between 1.11899 and 1.13824. From a fundamental perspective, following the NFP release on Friday with the employment change being way lower than was expected, the pair pushed higher and we might see a break of the range to the upside in course of the week. If the bulls fail to break the range to the upside we might see bearish pressure at the top of the range at 1.13824 pushing price down.
XAUUSD
From a technical perspective, gold formed a double top on H4 and broke the neckline at 1797.17. The pair is currently pulling back to the neck line and we will be waiting for a sell signal to short the pair to the next support around 1765.57.
USDJPY
Following the anticipation of the DXY index to bounce of the support at 95.500, we looking out for buy setups on USDJPY. Currently the pair seems to be in a pullback state and approaching a supply level at 115.205. We shall be waiting to see if the supply level holds and for the break of the downward trend line before getting in on a buy.
