The difference between success and failure in Forex / CFD trading is very likely to depend mostly upon which assets you choose to trade each week and in which direction, and not on the exact methods you might use to determine trade entries and exits.

So, when starting the week, it is a good idea to look at the big picture of what is developing in the market as a whole, and how such developments and affected by macro fundamentals, technical factors, and market sentiment. Read on to get my weekly analysis below.

Fundamental Analysis & Market Sentiment

I wrote in my previous piece on 21^st August that the best trades for the week were likely to be:

1. Short of the GBP/USD currency pair, which fell by 0.75%.
2. Long of Natural Gas, which rose by 1.04%.

This produced an average win of 0.90%.

The news is currently dominated by the Federal Reserve Chair Jerome Powell’s speech on Friday, which was received negatively by markets. Powell stated that inflation was still too high, too persistent, and too dangerous as a driver of long-term expectations to be met with anything other than tough monetary measures as part of a struggle to drive it down. Powell said this would necessarily cause some pain to the economy and he signaled there is no chance of a dovish pivot which some analysts had been hoping for after recent inflation data suggested that CPI has already peaked in the USA. Powell’s speech at the Jackson Hole symposium sent stock markets sharply lower, and hit risk sentiment hard, which sent money flowing into the US Dollar in the Forex market and out of riskier currencies such as the British Pound, the Euro, and the commodity currencies.

A 0.50% rate hike at the Fed’s next meeting is all but certain, while analysts now see a real chance of a 0.75% as an alternate possibility.

It is worth pointing out that although the US stock market had been rising in recent week, the US stock market has technically been in a bear market for some time, with the US yield curve being inverted for several weeks now. The US is also arguably in a recession, having seen two successive quarters of GDP contraction, although wages growth and the job market remain relatively buoyant. The case for recession was boosted by data released last week which showed that in Q2 2022, US GDP shrunk at an annualized rate of -0.6%.

To recap there were two other important economic data releases last week apart from the US Preliminary GDP data. The results were as follows:

1. US Core PCI Price Index data – the month-on-month increase was only 0.1%, lower than the 0.2% which had been expected, slightly boosting hopes that US inflation has already peaked.
2. US, UK, German, and French Flash PMI data – the results were mixed, but overall, more negative than had been expected, suggesting there may be a slowing in producer output in the EU, the UK, and the USA.

The Forex market saw a rise by the Australian and US Dollars last week. The rise was broad but especially strong against the New Zealand Dollar.

Rates of coronavirus infection globally dropped last week for the sixth consecutive week. The most significant growths in new confirmed coronavirus cases overall right now are happening in Japan, South Korea, Russia, and Taiwan.

The Week Ahead: 29^th August – 2^nd September 2022

The coming week in the markets is likely to show a slightly higher level of volatility than last week, with Friday’s higher level of market activity following Powell’s speech likely to continue. Releases due are, in order of likely importance:

1. US Non-Farm Payrolls, Average Hourly Earnings, and Unemployment data (plus the earlier forecast)
2. German Preliminary CPI data
3. US JOLTS Job Openings data
4. US CB Consumer Confidence
5. US ISM Manufacturing PMI data
6. Swiss CPI (inflation) data

Technical Analysis

U.S. Dollar Index

The weekly price chart below shows the U.S. Dollar Index printed a bullish candlestick which closed up, in line with the long-term trend, which is bullish. The weekly closing price is a 20-year high, and the week’s rise came after the price rejected the support level below just under 105.00 a few weeks ago. These are all bullish signs, and with the chair of the Fed giving a very hawkish speech a few days ago about the need for more rate hikes to fight US inflation, the bullish technical picture is supported by sentiment and monetary policy fundamentals.

It will probably be a good idea to look for long trades in the US Dollar over the coming week. This is a very powerful, long-term bullish trend in the most important currency in the Forex market, and it remains likely to continue if sentiment remains driven by the fear of ongoing interest rate hikes negatively impacting risky assets, with the US Dollar acting as a primary safe haven.

EUR/USD

Last week saw the EUR/USD currency pair print a bearish candlestick. This pair is technically interesting as it again printed the lowest weekly close seen in almost 20 years.

The Euro is beset by worry over the impact of ECB rate hikes which have begun and must continue. These hikes are going to put a severe strain on government bond markets in southern Europe, notably Italy.

The strength of the US Dollar and the technical breakdown we see here, plus fundamental headwinds against the Euro, see a short trend trade opportunity continue in this currency pair. However, it is probably helpful to use relatively wide trailing stop losses for this pair, as using ATR 3 has over the years produced better results than ATR 1.

GBP/USD

Last week saw the GBP/USD currency pair print a bearish candlestick. This pair is technically interesting as it printed the lowest weekly close seen since the coronavirus panic in March 2020.

The British Pound is troubled by fundamental woes, including new increased inflation figures above 10%, and a Bank of England forecast of a coming recession which will last for five quarters and see GDP shrink by 2.2%.

The strength of the US Dollar and the technical breakdown we see here, plus fundamental headwinds against the Pound, see a short trend trade opportunity continue in this currency pair. However, it is important to use relatively tight trailing stop losses for the British Pound, as using ATR 1 has over the years produced much better results than the more typical ATR 3.

NZD/USD

The New Zealand Dollar was the biggest loser of all major currencies last week, despite the RBNZ’s rate hike two weeks ago by 0.50% to 3.00%, the highest rate of any major currency. We finally see a technical breakdown below recent support here, with the price making its lowest weekly close since May 2020.

It is notable that the price closed right on the low of the week, which is a bearish sign.

There may be further bearish momentum in the NZD/USD currency pair over the coming week, with the NZD the weakest of all major currencies suggesting that this can be an interesting currency on the short side.

Natural Gas

Although we are seeing a bearish market with most commodities and risky assets shrinking against safe havens such as the US Dollar, we have seen Natural Gas gain very slightly over the past week to make new multi-year highs.

Volatility is very high and price movement can be extremely choppy.

Long natural gas can be an attractive trend trade as we are seeing a breakout in the price chart. However, anyone trading natural gas should be very, very mindful of the extremely high level of volatility we have seen here over recent months, and trade very small position sizes which respect the volatility.

What is even more concerning for anyone thinking of going long here is the fact that we see the current weekly candlestick form as an inverted bearish hammer, which hints that there may not be much upside left over the near term.

As commodities in general and energies are quite weak, I do not have strong faith in a long trade here, which is another reason to keep the position size very small if you are trading natural gas over the coming week.

Bottom Line

I see the best opportunities in the financial markets this week as likely to be short of the EUR/USD, GBP/USD, and NZD/USD currency pairs.

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Spot natural gas prices (CFDS ON NATURAL GAS) stabilized at a decrease in the recent trading at the intraday levels, to record slight daily losses until the moment of writing this report, by -0.01%. It settled at the price of $9.279 per million British thermal units, after its decline during yesterday’s trading by -0.03%.

September gas futures contracts in Nymex settled at $9,330 per million British thermal units, an estimated increase of 13.7 cents from Tuesday’s close, while October futures contracts rose 14.5 cents to $9,300.

NGI’s Spot Gas National Avg. Spot gas prices fell in most areas of the US, even as hot weather continued on the West Coast by 31.0 cents to $8.935.

Prices stabilized after a volatile session on Tuesday when they hit $10 per million British thermal units for the first time since 2008, before pulling back on news of a delay in the Freeport LNG plant’s return to operation, which will continue to affect demand by hurting the ability to Sending fuel abroad.

The US Energy Information Administration (EIA) is set to provide its weekly update on domestic inventories later Thursday, with the market anticipating above-average storage that may ease some concerns.

Natural Gas Technical Outlook

• The price is trying to gain positive momentum that might help it breach the pivotal resistance level 9.600.
• The resistance caused the price to rebound from its recent highs.
• It is trying to drain some of its clear overbought by the relative strength indicators, especially with the influx of negative signals from them.

All of this comes in light of the dominance of the main bullish trend over the medium and short term along with major and minor slope lines, as shown in the attached chart for a (daily) period, with the positive pressure continuing to trade above its simple moving average for the previous 50 days.

Therefore, our expectations indicate that the scenario of a rise in natural gas during its upcoming trading is likely, but on condition that it first overcome the obstacle of the resistance level 9.600, and then target the resistance level of 10.70.

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Spot natural gas prices (CFDS ON NATURAL GAS) stabilized at a decline in recent trading at intraday levels, to achieve slight daily gains until the moment of writing this report, by 0.96%. It settled at the price of $9.372 per million British thermal units, after sharply declining during trading. Yesterday, the rate was -5.24%.

Natural gas prices retreated from 14-year highs after Freeport LNG said on Tuesday it plans to restart its liquefaction facility in early to mid-November, later than previously expected, and that will lead to further delays. in US LNG exports.

Higher natural gas prices in Europe helped keep prices higher around the world, prices in Europe rose on Monday after Russia announced that natural gas giant Gazprom would again halt supplies to Europe via the Nord Stream 1 pipeline for three days. It starts on August 31.

However, natural gas storage facilities in Germany are now more than 80% full before winter, showing steady progress despite a significant drop in deliveries from Russia amid the war in Ukraine.

Natural Gas Technical Outlook

• Natural gas declined following the stability of the pivotal resistance level 9.600, as the price failed to confirm its breach with another close above.
• It reaped the profits of its recent rises, and to try to gain positive momentum that might help it recover and breach that resistance in the future.
• It is trying at the same time to drain some of its saturation of clear buying of the relative strength indicators, especially with the start of the influx of negative signals from them.

All of this comes in light of the dominance of the main bullish trend over the medium and short term along a slope line, as shown in the attached chart for a (daily) period, with the continuation of positive support for its trading above its simple moving average for the previous 50 days.

Therefore, our expectations suggest a return to the rise of natural gas during its upcoming trading, but on condition that it first breach the pivotal resistance level 9.600, then target the resistance level 10.70. In the event that this resistance continues to remain stable in front of its upcoming trading, this would lead to more negative pressure to target the support level. 8.60.

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Our expectations indicate more ascent for natural gas during its upcoming trading.

Spot natural gas prices (CFDS ON NATURAL GAS) continued to rise in recent trading at intraday levels, to achieve daily gains until the moment of writing this report, by 2.38%. It settled at the price of $ 10.028 per million British thermal units, after rising sharply during yesterday’s trading by reaching 5.04%.

Natural gas stole the spotlight on Monday as prices in the United States rose to a 14-year high, with analysts attributing the gas price move to Russia’s decision to halt flows to Europe along the Nord Stream 1 pipeline.

Gazprom announced late last week that the Nord Stream 1 pipeline will be suspended for three days of maintenance, and the real concern for the market is whether flows will resume after this period.

• In the United States, August-September has historically been the strongest season of the year for natural gas, with a combination of potential supply disruptions from hurricanes and the anticipation of the upcoming home heating season.
• Issues related to the supply of Russian natural gas to Europe have also been a factor.

The current tight supply of demand is underlined by US crude stocks in the Strategic Petroleum Reserve (SPR), which are at their lowest level in more than 35 years.

Natural Gas Technical Outlook

Technically, natural gas, with its recent rise, succeeded in breaching the pivotal resistance level 9.600, to settle above it until the moment of writing this report. It is amid complete control of the main bullish trend in the medium and short term along major and minor slope lines, as shown in the attached chart for a (daily) period. The continuation of the positive pressure with its trading above its simple moving average for the previous 50 days. The influx of positive signals on the relative strength indicators is despite reaching overbought areas.

Therefore, our expectations indicate more ascent for natural gas during its upcoming trading, especially as long as its stability is above 9.600, to target the first resistance levels at 10.70.

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Spot natural gas prices (CFDS ON NATURAL GAS) rose in the recent trading at the intraday levels, to achieve daily gains until the moment of writing this report, by 0.84%. It settled at the price of $9.411 per million British thermal units, after its rise during Friday’s trading by 1.02 %.  During the past week the price achieved gains for the second week in a row, by 5.35%.

Russia’s state-owned energy exporter Gazprom said Friday that it will shut down Nord Stream’s natural gas pipeline to Germany for three days for maintenance later this month. I am giving prices a boost after last Tuesday’s settlement topped a 14-year high.

Eastbound gas flows through the Yamal pipeline to Europe to Poland from Germany rose on Monday, operator data showed, while flows through the Nord Stream 1 pipeline from Russia remained flat.

The price increase came despite record production and ongoing outages at the Freeport LNG export plant in Texas, which has left more gas in the US for utilities to pump into storage for the coming winter.

So far this year gas futures are up 150%, as prices in Europe and Asia continue to demand US LNG exports. Global gas prices soared due to supply disruptions and sanctions linked to Russia’s invasion of Ukraine on February 24.

 Natural Gas Technical Outlook

Technically, the price is now preparing to attack the pivotal resistance level 9.600, in light of the dominance of the main bullish trend in the medium and short term along a slope line. This is shown in the attached chart for a (daily) period, with the continuation of the positive support for its trading above its simple moving average for the previous 50 days. In addition, we notice the continuation of positive signals on the RSI indicators, despite reaching overbought areas.

Therefore, our expectations indicate more ascent for the stock during its upcoming trading, provided that it first breaches the resistance level 9.600, and then targets the resistance level 10.70.

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Spot natural gas prices (CFDS ON NATURAL GAS) stabilized in the recent trading at the intraday levels, to achieve new daily gains until the moment of writing this report, by 1.49%. It settled at the price of $9.377 per million British thermal units, after it decreased during yesterday’s trading by – 1.66%.

US natural gas futures fell about 1% on Wednesday, down from a 14-year high hit in the previous session, due to expectations of cooler weather and lower demand for refrigerants over the next two weeks than previously expected.

This slight price drop came despite lower daily production, hotter-than-normal weather on the West Coast and Texas, and near-record world prices.

US gas prices have also been affected by the ongoing outage at the Freeport LNG export plant in Texas, which has left more US gas for utilities to pump into storage for the coming winter.

Wednesday’s futures traders focused squarely on the next round of weekly government inventory data in the US Estimates ahead of the Energy Information Administration (EIA)’s official weekly inventory report on Thursday were wide-ranging, but hovered around the two figures of 22 billion cubic feet and 45 billion cubic feet. cubic feet with an average forecast of 32 billion cubic feet.

So far this year, the price of gas has risen during the first month by about 145% as higher prices in Europe and Asia keep demand for US LNG exports strong. Global gas prices have risen this year after supply disruptions linked to Russia’s invasion of Ukraine on February 24.

Meanwhile, Russian gas exports through the three main lines have averaged about 2.5 billion cubic feet per day so far. Down from 2.8 billion cubic feet per day in July and 10.4 billion cubic feet per day in August 2021.

Natural Gas Technical Outlook

Technically, natural gas’s decline came yesterday as a result of the stability of the pivotal resistance level 9.600, to reap the profits of its recent rises. It is trying to gain positive momentum that might help it breach that resistance. This is in light of the dominance of the main bullish trend in the medium and short term along a slope line, as shown in the attached chart. The positive pressure of its trading continues above its simple moving average for the previous 50 days, in addition to the influx of positive signals on the relative strength indicators, despite reaching overbought areas.

• Our expectations indicate that the scenario of a rise in natural gas during its upcoming trading is likely.
• It is on condition that it first overcome the pivotal resistance 9.600 obstacle.
• After which it will target the resistance level 10.70.

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Spot natural gas prices continued to rise in recent trading at intraday levels, to achieve new daily gains until the moment of writing this report, by 0.68%. It settled at the price of $9.460 per million British thermal units, after rising sharply during yesterday’s trading. By 5.91%.

Natural gas futures ended yesterday’s session at their highest levels since 2008, buoyed by supply shortages in the US and Europe, as European gas prices remained elevated after the weekend amid maintenance activity in Norway, while flows through the Nord Stream 1 pipeline remain significantly restricted. big.

Natural Gas Prices

Prices in the US also remain high amid rising temperatures, and although the temperatures are cooling down, hurricane season is still lurking.

Analysts expect the US Energy Information Administration on Thursday to report an increase of 34 billion cubic feet in US gas inventories for the week ending August 12, according to a survey by S&P Global Commodity Insights, which indicated that a rise in that volume would be much lower. of an average five-year storage of 47 billion cubic feet.

So far this year the price of gas in the first month has risen by about 150%, as higher prices in Europe and Asia maintain strong demand for US LNG exports. Global gas prices have risen this year after supply disruptions linked to Russia’s invasion of Ukraine on February 24.

Technical Outlook for Natural Gas

Technically, natural gas is now preparing to attack the pivotal resistance level 9.600, amid the dominance of the main bullish trend in the medium and short term along a slope line. This is shown in the attached chart for a (daily) period, with the continued influx of positive signals on the relative strength indicators, despite reaching areas. The price is very saturated with buying operations, and the price is also benefiting from the continuation of the positive pressure to trade above its simple moving average for the previous 50 days.

Therefore, our expectations indicate that natural gas will continue to rise during its upcoming trading, but on the condition that it first breach the obstacle of the resistance level 9.600, and then target the resistance level of 10.70.

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Spot natural gas prices slightly increased in the recent trading at the intraday levels, to achieve slight daily gains until the moment of writing this report, by 1.04%. It settled at the price of $8.964 per million British thermal units, after it rose slightly yesterday by a rate of $8.964 per million British thermal units. 0.23%.

US natural gas futures fell about 1% on Monday, driven by increased supplies, expectations of cooler weather and lower demand for refrigerants over the next two weeks than previously expected.

The ongoing outage has also affected the Freeport terminal for exporting liquefied natural gas (LNG) in Texas, leaving more gas in the United States for utilities to pump into storage for the coming winter.

So far this year, the price of the most active natural gas futures contract is up by about 134%, as higher prices in Europe and Asia keep demand for US LNG exports strong. Global gas prices have also risen this year after supply disruptions linked to the Russian invasion of Ukraine on February 24.

The United States became the world’s largest exporter of LNG during the first half of 2022. Regardless of rising global gas prices, the United States cannot export any more LNG, because the country’s factories are already operating at full capacity.

US gas futures lag behind global prices because the US is the world’s largest producer with all the fuel it needs for domestic use, while capacity constraints and freeport outages prevent the country from exporting more LNG.

Meanwhile, Russian gas exports through the three main lines to Germany have averaged about 2.5 billion cubic feet per day so far in August, down from 2.8 billion cubic feet per day in July and 10.4 billion cubic feet per day in August. for the year 2021.

Natural Gas Technical Outlook

Technically, the main bullish trend dominates the price movement in the medium and short term and along a slope line. This is shown in the attached chart for a (daily) period, supported by its continuous trading above its simple moving average for the previous 50 days. We notice the influx of positive signals on the relative strength indicators.

Therefore, our positive expectations surrounding natural gas remain in effect, as we expect more rise for the price during its upcoming trading, as long as the support 8.054 remains intact, to target the pivotal resistance level 9.600.

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Spot natural gas prices stabilized at an increase in recent trading at intraday levels, to record daily losses until the moment of writing this report, by -1.62%. They settled at the price of $8.709 per million British thermal units, after rising slightly for the fourth day during trading on Friday, by 0.72%. Last week, natural gas rose by 9.39%.

Natural gas futures fell throughout the Friday session, despite the slight change in daily prices. September gas futures contracts in Nymex settled at $8.768 per million British thermal units, down 10.6 cents from Thursday’s close. The October contract fell 11.9 cents to $8,744.

There’s no doubt it’s been an interesting week in the gas market, as futures have risen for most of this week in the face of cold weather. Early on Friday, the outlook for continued cold seemed to be in the cards. The Nymex contract for September touched a low of $8,516 before the opening but rose after That comes to $8,919.

Meanwhile, weak Chinese economic data raised concerns about demand in the world’s largest energy importer, as government data showed that China’s economy slowed unexpectedly in July, while refinery production fell to 12.53 million barrels per day, the lowest level since March 2020.

Technical Analysis

Technically, natural gas is trying to reap the profits of its recent rises and gain some positive momentum that may help it recover and resume the rise, amid the dominance of the main bullish trend in the medium and short term along a slope line, as shown in the attached chart for a (daily) period of time, with continued pressure. It is trading above its simple moving average for the previous 50 days, and we also notice in the midst of that the influx of positive signals on the relative strength indicators, after reaching oversold areas.

Therefore, our expectations suggest that natural gas will rise during its upcoming trading, as long as the support 8.054 remains intact, to target the pivotal resistance level 9.600.

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Spot natural gas prices rose in the recent trading at the intraday levels, to achieve new daily gains until the moment of writing this report, by 1.12%. It settled at the price of $8,399 per million British thermal units, after rising sharply during yesterday’s trading by It reached 4.93%.

Freeport’s removal of force majeure in the wake of the June accident at the liquefied natural gas (LNG) facility helped lift the Nymex gas futures contract for September by 36.9 cents to $8,202/MMBtu. While the October futures contract jumped by 36.8 cents to $8.193.

Price Dips Ahead

With cold weather starting in some key US regions before milder temperatures are more prevalent later this month, there is likely to be some price dip in the middle of the week based on the latest weather models, both US and European models headed for the cooler trend .

Meanwhile, wholesale gas prices rose in the Netherlands and Britain on Thursday morning due to concerns about finding alternative supplies for Russian gas before winter, maintenance outages and reduced wind production.

Eastbound gas flows through the Yamal-Europe pipeline to Poland from Germany were steady on Thursday, data showed, as were flows through Nord Stream 1 from Russia, which cut the pipeline to 20% of capacity, citing maintenance work.

Separately looking at the weekly US Energy Information Administration (EIA) inventory report due later Thursday, it is estimated that storage was accumulating near 40 billion cubic feet for the week ending August 5.

Natural Gas Technical Outlook

Technically, natural gas succeeded in restoring stability above the resistance level 8.054, in light of the dominance of the main bullish trend in the medium and short term along a slope line. This is shown in the attached chart for a (daily) period, with the positive pressure continuing to trade above its simple moving average for a period of 50 previous days.

We notice the start of positive signals on the RSIs, after reaching oversold areas, in an exaggerated way compared to the price movement, to start forming what is known as positive divergence and adding more bullish momentum to its next movement.

Therefore, our expectations indicate more rise for natural gas during its upcoming trading, as long as it stabilizes above 8.054, to target the pivotal resistance level 9.600.

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