A breakdown below 0.6882 would be a bearish sign.

My previous signal last Monday was not triggered as there was no bullish price action when the price first reached the support levels which I had identified that day.

Today’s AUD/USD Signals

Risk 0.75%

Trades may only be taken before 5pm Tokyo time Tuesday.

Short Trade Idea

• Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.6964 or 0.6993.
• Put the stop loss 1 pip above the local swing high.
• Adjust the stop loss to break even once the trade is 20 pips in profit.
• Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

Long Trade Ideas

• Long entry following a bullish price action reversal on the H1 time frame immediately upon the next touch of 0.6882, 0.6797, or 0.6784.
• Put the stop loss 1 pip below the local swing low.
• Adjust the stop loss to break even once the trade is 20 pips in profit.
• Take off 50% of the position as profit when the price reaches 20 pips in profit and leave the remainder of the position to run.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

AUD/USD Analysis

I wrote in my previous forecast on 15th August that if the AUD/USD currency pair could make two consecutive lower hourly closes below the support level at 0.7063, that could be a good short trade entry signal, as the price would then have a lot of room to fall before reaching another support level – the next level is not until 0.7010. I also thought it was a relatively good time to be trading this currency pair as it was in the market’s focus as a key risk barometer,

This was a good call, as following it would have got you in short at 0.7045 until the price began to bottom out, at least temporarily, at about 0.7000, so there was a nice 35 pips of profit available there.

We saw further falls over the week, as risk sentiment continued to sour and the US Dollar made a strong recovery. Friday saw an especially strong move, with the price trading as low as 0.6859. This presented a bearish technical picture as the market opened this week, however we have seen strength in the AUD today and the price was able to break up above the former resistance level at 0.6882 which may now act as support. Yet, I think that the price will probably turn bearish again later, and I doubt that the bullish retracement will make it to the next resistance level at 0.6964, but if it did, that could be a spot for a short trade entry for swing traders.

If the price quickly gets established back below 0.6882, that will be a bearish sign, and then it may become possible for shorter-term traders to sell on rallies on short-term time frames.

There is nothing of high importance due today regarding either the AUD or the USD.

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The pair will likely continue pulling back as sellers target the key support at 1.0150. 

Bearish View

• Sell the EUR/USD pair and set a take-profit at 1.0175.
• Add a stop-loss at 1.0366.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.0300 and a take-profit at 1.0400.
• Add a stop-loss at 1.0250.

The EUR/USD price pulled back to a low of 1.0254, ahead of the upcoming economic numbers from the United States and Europe. The price is about 1% below the highest level this month. The price is at the lowest level since August 10th.

US Retail Sales and EU GDP Data

The EUR/USD price rose sharply last week after the US published significantly lower consumer and producer inflation data. According to the Bureau of Labor Statistics (BLS), the headline consumer inflation dropped from 9.1% in June to 8.7% in July. That decline was slightly lower than what most analysts were expecting.

On the following day, the BLS showed that the country’s producer price index (PPI) dropped for the first time since early in the pandemic. It eased to 9.8% in July as the price of gasoline declined. The pair then started dropping as Fed officials like Mary Daly, Charles Evans, and Neel Kashkari insisted that the bank will continue hiking rates.

The EUR/USD pair will react to several important economic data this week. On Tuesday, the US will publish the latest building permits and housing starts numbers. Economists expect the data to show that building permits dropped from 1.696 million and 1.540 million, respectively.

These numbers will be followed by the latest estimate of European GDP numbers. Economists expect the data to show that the economy expanded by 0.7% on a quarter-on-quarter basis and by 4.0% on a YoY basis. With the bloc facing significant energy challenges, there is a likelihood that it will sink to a recession this year.

The pair will next react to the latest US retail sales and Fed minutes that are scheduled for Wednesday. The minutes will provide more details about what the Fed officials deliberated. The EUR/USD pair will react to the latest EU inflation data and the US existing home sales data.

EUR/USD Forecast

The EUR/USD price rose to a high of 1.0366 last week. This was a notable level since it was the lowest level in May and June of this year. It has then pulled back slightly and moved slightly below the 25-day and 50-day moving averages. The current price is slightly above the ascending trendline shown in purple.

The pair will likely continue pulling back as sellers target the key support at 1.0150. More upside will only be confirmed if the pair moves above the resistance at 1.0366.

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The strength of the US dollar, supported by the expectations of raising US interest rates throughout 2022, and the classic political collapse of the Boris Johnson government was a strong motivation for the bears to push the price of the GBP/USD pair to collapse towards the 1.1875 level. This is the lowest support level for the currency pair since the markets collapsed at the height of the Corona epidemic in March 2020. Boris Johnson’s resignation as British Prime Minister contributed to a cautious recovery of the pound sterling against the dollar towards the level of 1.2056 before closing trading around the level of 1.2016. Overall, according to experts, the UK market’s indifference to the overthrow of Prime Minister Boris Johnson may change quickly.

Johnson’s ouster has increased the odds of an early general election, according to market analysts at NatWest Markets and Citigroup Inc. and Mizuho International Plc. It opens the door to a spending spree to lure voters before they head to the polls, followed by the prospect of the opposition Labor Party coming to power and paying more cash.

It will affect everything from Bank of England policy and taxes to sterling, bonds and stock markets – and will also see past risks resurface like another Scottish independence vote and the reopening of BREXIT negotiations. Although there are still a lot of terms and conditions, the election is already permeating the minds of investors.

For their part, said NatWest analysts including Imogen Bachra: “The probability of the election itself will be unequivocally negative for the currency with the escalation of broader political risks.” Acting “strongly” in the second half of 2023 and higher long-term bond yields.

And after three turbulent years in office, Johnson’s reign appears to have come to a chaotic end after the mass resignation of members of his cabinet last week. His Conservative Party is urgently making plans for an accelerated contest to choose his successor this summer. The next election won’t be until January 2025 at the latest, and Johnson’s successor will not be obligated to return to the polls before then. However, they may be tempted to take advantage of any political honeymoon in the early months of their term in hopes of retaining another five years of power and general legitimacy. This prospect has already led the NatWest team to change the Bank of England’s forecast, anticipating faster rate increases and a slower bond sale program due to the prospect of increased government spending. They revised the 10-year Treasury yield target by the end of the year to 2.25%.

Overall the picture for sterling, which is already down about 11% this year, is more complex. While easing government fiscal constraints or lowering taxes could give the British economy a boost, it could also drive up inflation and put public finances under pressure. The new leadership will introduce other changes to market sensitive policy as well.

And for the UK stock market, domestic-focused companies are likely to get a boost if a new leader raises question marks over a planned increase in corporate tax next year. The British benchmark FTSE 250 is down 20% in 2022. Severe interest rate increases in the Bank of England and the British pound could have a negative impact on the FTSE 100, where about 75% of corporate sales take place overseas. Higher borrowing costs would also hurt consumers, and thus retail stocks such as Next Plc and Marks & Spencer Group Plc.

While a rate hike would widen profit margins for lenders such as Lloyds Banking Group Plc and NatWest, British bank stocks may remain under pressure as the country faces a recession. Investors in utilities and oil companies such as Centrica Plc and Shell Plc will keep a close eye on pressure to raise taxes on the sector to help with energy bills.

Regarding the broader trade and political risks, some analysts point to the possibility of improving the relationship with the European Union. Johnson has introduced legislation that would give Britain the ability to unilaterally adjust a post-Brexit settlement for Northern Ireland, threatening a trade war with the bloc. On the other hand, a new election could raise the existential risk of Scotland’s secession from the United Kingdom.

GBP/USD Forecast

Despite the recent correction, the GBP/USD price is still in the range of a strong bearish trend, and stability below the psychological support 1.2000 opens the way for the bears to move further down. The most important support levels for the currency pair will be 1.1825 and 1.1700, respectively. The continuation of the British political vacuum and concern about the future of economic stagnation there will negatively affect any gains for the pound against the rest of the other major currencies, and therefore I expect to sell the GBP/USD from every rising level.

On the upside, there will not be an important first break of the current downtrend without the GBP/USD moving towards the resistance level of 1.2390 as seen on the daily chart below.

The pair will likely keep falling as bears target the key resistance at 1.2000.

Bearish View

• Sell the GBP/USD pair and set a take-profit at 1.200.
• Add a stop-loss at 1.2200.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 1.2166 and a take-profit at 1.2250.
• Add a stop-loss at 1.2100.

The GBP/USD price continued in a consolidation phase as investors waited for a statement by Bank of England’s Andrew Bailey and the release of the country’s financial stability report. The pair is trading at 1.2100, which is slightly below Monday’s high of 1.2166.

Andrew Bailey Statement

The GBP/USD will be in the spotlight as Bank of England’s Andrew Bailey, the head of the BOE. He will speak as the bank launches the financial stability report that will provide more information about the economy and the banking sector.

Bailey will likely not make any new news in his speech. In an ECB event last week, he lamented that the UK economy was weakening at a rapid rate than anticipated. Indeed, the economy contracted in April and May and analysts expect that it declined in Q2.

Other leading economic data have sent warnings about the economy. For example, numbers by the Nationwide Society revealed that the house price index declined in June as mortgage rates jumped. Further data by Gfk showed that the country’s consumer confidence declined sharply as consumer inflation surged.

The GBP/USD pair will also react to the upcoming UK services and composure PMI numbers. These are important leading indicators that provide a gauge about the country’s economy. Based on the flash estimates published recently, analysts expect the data to show that the services PMI dropped to 53.4 while the composite on fell to 53.1. Still, since the PMI is above 50, it is a sign that output in the country is still strong.

The pair will also react to the reopening of Wall Street since American markets were closed on Monday for Independence Day celebrations. The next important catalyst for the GBP/USD price will be the upcoming American jobs data.

GBP/USD Forecast

The 4H chart reveals that the GBP/USD pair formed a break and retest pattern. It retested the important resistance level of 1.2166, which was the lowest point on June 23rd. The pair remained below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) remains slightly below the neutral point at 50.

Therefore, the pair will likely keep falling as bears target the key resistance at 1.2000. A move above the resistance at 1.2166 will invalidate the bearish view.

Ultimately, I’m waiting for some type of deeper flush to get involved in a longer-term “buy-and-hold” type of position.

The Ethereum market rallied nicely on Friday to show signs of life, as we have broken above the $1200 level. That being said, the market looks as if it is going to continue to see a lot of noise, but I think a bounce from here more likely than not will get sold into given enough time. After all, Ethereum is going to go down with the rest of the ship, and although we are oversold at the moment, that is just a reason to go into a bit of a relief rally.

The 50-day EMA sits at the $1700 level and is dropping quite significantly. That’s an area where we could start to see sellers again because there’s no real reason to think that risk appetite is back for the long term. While we have seen the stock market recover quite nicely, the reality is that the positive correlation between crypto and stocks makes for upward pressure in the short term. Ultimately, this is a market that has plenty of sellers above, just as the stock market will. The markets will continue to be noisy, but if you’re patient enough you should get an opportunity to start shorting again.

Eventually, I would anticipate that Ethereum dropped back below the $1000 level, but that doesn’t necessarily mean that it will happen in the next couple of days. The uptrend has a way to go because this is a situation where we have a lot of noise ahead of us, and I think if we are going to turn around and recover, we need to spend more time building a bit of a base than we have. We need to have investors comfortable going along for the long term, which is something that they may or may not be able to say at this moment. The market will continue to be noisy, but I think you will get an opportunity to get this market at sub-$1000 levels. If we were to break above the $2000 level, that would obviously change a lot, because it would double the price right now, and that would be a big turnaround. Ultimately, I’m waiting for some type of deeper flush to get involved in a longer-term “buy-and-hold” type of position.

The stock market is oversold at the moment, and I think this rally is simply a way to remedy that.

The S&P 500 did rally a bit on Tuesday, showing signs of life again, but at this point it’s likely that we will continue to cease selling pressure eventually. The 3800 level is an area that could cause some resistance, due to the fact that we had bounced from there, but if we break above there, then the market is likely to go looking to the 3900 level, possibly even the 5000 level.

The S&P 500 will have to contend with higher interest rates in the United States, as the Federal Reserve is looking to tighten everything. Ultimately, the market will continue to see plenty of reasons to fall, and I just don’t see how traders will have a longer-term bullish outlook on the market, at least not at this point. The market will continue to be very noisy and I think that anytime somebody gets an opportunity to short this market, they will do so.

The 50-day EMA currently sits near the 4100 level, as it is going to continue to draw from here. If we see the 50-day EMA continues to drop from here, it will be dynamic resistance. Ultimately, signs of exhaustion will get jumped upon, and I will most certainly not hesitate to take advantage of that. The 3650 level is an area that I will be paying close attention to as well, as it has been important previously. If the market broke down below there, then it’s likely that we could go down to the 4500 level.

The Federal Reserve will continue to be very tight with its interest rates, and the market is doing everything it can to price in massive quantitative tightening. Ultimately, this is a situation that will find plenty of reasons to drop. However, I would anticipate that if the market were to break above the 4200 level, it would be a major shift in attitude, and it could be a sign that the market is finally changing trends. However, it does look very likely to happen until something changes with the Fed itself. Yes, inflation could be slowing down a bit, but it is still extraordinarily elevated and will continue to be. The stock market is oversold at the moment, and I think this rally is simply a way to remedy that.

I’m looking for signs of exhaustion that I can sell into, perhaps off the daily chart.

The British pound initially fell on Thursday but then turned around to break above the 1.22 handle. In fact, by the end of the day, we reached the 1.24 level, exacerbated by the noise around the Bank of England interest rate decision and press conference. At this point, it looks to me like the British pound had been oversold anyway, so a relief rally was probably always coming. I do not look at this as the likelihood of the market changing direction, just that it is trying to find a little bit of balance.

I’m looking for signs of exhaustion that I can sell into, perhaps off the daily chart. Regardless, I have no interest in buying, and I do think that we will continue to see a lot of noisy behavior going forward, with a 1.26 level offering a major resistance barrier. This is backed up by the 50 Day EMA being right there as well, so it is worth paying close attention to this neighborhood. If we were to break above it, then I would have to take a serious look at a swing trade to the upside, but right now it does not look like we have the momentum building up. I think that we are going to run out by the end of the weekend, especially as people will not want to carry a lot of risk over the weekend and wait for some type of negative headline to come in and cause problems. With that being said, I think we probably see quite a bit of pressure before it’s all said and done, especially with Friday being options expiration in so many different markets, that it could cause some noise in the currency markets.

At this point, I would anticipate that a lot of bigger traders will be starting to short this market at the end of the day with smaller positions, to take advantage of the overall longer-term trade. The 1.20 level underneath has offered support, and if we can break down below there, we could go much lower, perhaps opening up the possibility of a move down to the 1.18 level. I think it’s only a matter of time before we get down there. The interest rates in America will continue to put pressure in favor of the US dollar.

I do not have a lot of faith in rallies at this point, and I do think that it is probably only a matter of time before we break down quite drastically.

The S&P 500 rallied a bit on Wednesday as the Federal Reserve’s meeting came into focus. At this point, we have seen a little bit of a giveback, which does make sense considering that the Federal Reserve looks to be very tight going forward. Ultimately, this is a market that still finds a lot of trouble, and I think it will eventually break down.

Any rally at this point looks like it’s going to find trouble, especially near the 3900 level, maybe even the 4000 level. If that were to be the case, I look at a rally as an opportunity to get short yet again. Ultimately, the market will continue to see downward pressure, but if we were to break down below the 3700 level, then it’s likely that we will go down to the 3600 level. After that, the market more likely than not will go looking to the 3500 level.

The 50-day EMA has broken down to the 4100 level and is floating lower. I think the 50-day EMA wound up in dynamic resistance, so you will have to pay close attention to it. I do not think we will get above there, but if we did it has to be one of the situations where things could get noisy and go much higher. That could be a bit of a difficult move to make, but if we were to break above there it’s likely that we would see a lot of short-covering and that could cause this market to squeeze much higher. Having said that, after the market reaction during the day on Wednesday, I do not have a lot of faith in rallies at this point, and I do think that it is probably only a matter of time before we break down quite drastically.

The next major shoe to fall is going to be revisions to earnings coming from major corporations in the United States, something that has probably not been completely priced in. In other words, there is a good shot that we will see even more trouble down the road. The market continues to be very rocky, but we could get a little bit of a bounce that opens up the possibility of taking advantage of the bigger trend.

Bearish View

• Set a sell-stop at 29,00 and a take-profit at 28,000.
• Add a stop-loss at 32,000.
• Timeline: 1 day

Bullish View

• Place a buy-stop at 30.500 and a take-profit at 32,000.
• Add a stop-loss at 29,500.

The BTC/USD declined sharply in he overnight session as its recovery hit a strong resistance at 31,426. It dropped to 29,500, its lowest level since Saturday.

Bitcoin Slow Recovery

Bitcoin has been in a narrow range in the past few weeks. In this period, the coin has remained between the important support at $28,368 and resistance point at $31,500.

Bitcoin’s declined happened as stocks and other assets erased earlier gains. On Monday, the Dow Jones and Nasdaq 100 indices rose by more than 0.50% but pared gains towards the close. Their futures show that they have dropped by more than 0.30%.

The coin is falling ahead of the coming Consensus event that will take place in Texas starting from Thursay. This is one of the most important events in the blockchain industry as it features some of the most important players in the sector.

Some of the most notable speakers in this meeting will be Sam Bankman-Fried of FTX, Abby Johnson of Fidelity, Dan Schulman of PayPal, and Changpeng Zhao of Binance. Still, it is unlikely that the event will cause major movements in Bitcoin this week.

The BTC/USD pair is also reacting to the decision by New York politicians to ban Proof-of-Work, which is the technology that allows Bitcoin mining. The bill will now be sent to Governor Hochul, who is expected to sign it into law. Meanwhile, on-chain data shows that there is more inflow among Bitcoin buyers.

BTC/USD Forecast

Bitcoin has been in a tight range in the past few weeks after it crashed to the lowest level in months. It has already dropped by more than 50% from its all-time high while the total market cap has dropped to about $600 billion.

On the four-hour chart, we see that the pair dropped sharply after it hit the important resistance at 31,426.As it dropped, it moved below the 25-day and 50-day moving averages while the MACD has dropped below the neutral point.

The BTC/USD pair is also slightly below the 23.6% Fibonacci retracement level. Therefore, there is a likelihood that the pair will continue its bearish breakout as bears target the key support at 28,500.A move above Monday’s high of 31,426 will invalidate the bearish view.

For the second day in a row, the price of gold is trying to resist the strong US dollar. The price of gold settled around the level of 1852 dollars an ounce at the time of writing the analysis. It recovered from recent selling operations that pushed it towards the support level of 1829 dollars an ounce. Despite the strong dollar and higher Treasury yields, gold prices pared losses and settled higher as weak stock markets triggered some buying in the safe haven commodity.

Recently, gold prices fell as the dollar rose and Treasury yields rose amid concerns about rising inflation and the prospects for a strong monetary tightening by the US Federal Reserve. However, the bullion price regained most of what it lost, as heavy selling in the stock markets led to some safe haven buying.

Data from the US Department of Labor showed that job opportunities in the country fell by 455,000 to 11.4 million in April. The department’s numbers are down from about 11.9 million in March, the highest level on records going back more than 20 years. At this level, there are approximately two vacancies for every unemployed person. This is a sharp reversal of a historical pattern: Before the pandemic, there were more unemployed people than there were available jobs. The number of people who left their jobs remained near record levels at 4.4 million in April, most of them unchanged from the previous month. And nearly all of those who leave work do so to take on another job, usually for a higher pay.

Federal Reserve Chairman Jerome Powell has targeted the high level of available US jobs and hopes that by raising US interest rates, the Fed can slow the demand for workers and reduce the number of job vacancies. Powell and other Fed officials said their goal is to reduce demand and thus slow wage increases to cool inflation, perhaps without forcing many layoffs.

On the other hand, a separate report from the Institute of Supply Management showed that manufacturing activity in the United States of America unexpectedly grew at a slightly faster rate in May. The ISM said its manufacturing PMI rose to a reading of 56.1 in May from a reading of 55.4 in April, and any reading of the index above the 50 level indicates growth in the sector. The rise surprised economists, who had expected the index to fall to 54.5.

According to the technical analysis of gold: the recent performance of the gold price was normal, after attempts to rebound up and stop the gains. The price of gold did not find enough momentum to continue the rise, and I still prefer to buy gold from every descending level. The support levels of 1829 and 1815 dollars are the most appropriate to do so. In general, the gold market still has factors that may push it upwards in the future, which are the continuation of the Russian-Ukrainian war and its negative consequences on the future of global economic recovery.

The resistance levels for gold prices are currently 1865 and 1880 dollars are important for the bulls to regain control of the trend. I expect movements in narrow ranges for the gold market until the US jobs numbers are announced.