The relative calm of August trading is likely to fully disappear in the coming days, as traders react to more nervous sentiment and the USD/ZAR could prove very choppy.

The USD/ZAR is trading near the 17.00000 level as of this writing, as bullish speculation gets plenty of consideration.

The USD/ZAR is trading within sight of the 17.00000 with active price action abundant.  On cue in the midst of the storm created by Federal Reserve Chairman Jerome Powell on Friday, the USD/ZAR currency pair went from a low of nearly 16.71000 to 16.90000 without much hesitation. Via early transactions this morning the USD/ZAR has continued to move incrementally higher and is touching key psychological ratios near 17.00000.

17.00000 Could prove to be Lynchpin for Dynamic Movement in USD/ZAR this week

It may seem quite simple to say the 17.00000 is important psychologically, but having broken this ratio higher already in July and only last week, the USD/ZAR may start to create a group of ‘backers’ who believe the forex pair should be above this level fundamentally for the time being . Global market conditions remain nervous and last week’s Jackson Hole central bankers’ conference has done little to soothe the minds of financial houses.

Technically the 17.00000 has been punctured enough in recent memory to have created a framework of belief this level can prove vulnerable again.  If the 17.00000 level is toppled and the 17.05000 mark begins to be flirted with it could set the stage for another round of dynamic speculative buying. Only one week ago the USD/ZAR touched the 17.13600 mark. And in July the USD/ZAR traded above 17.20000.

Traders need to be prepared for the Potential of a rather Turbulent Week in the USD/ZAR

• The relative calm of August trading is likely to fully disappear in the coming days, as traders react to more nervous sentiment and the USD/ZAR could prove very choppy.
• Global conditions in Forex remain intense as a strong USD causes problems with a handful of emerging market currencies; the USD/ZAR is reflecting this whirlwind of results as it tests highs.

Speculators should not be overly ambitious in the short term.  Quick hitting trades which look for realistic targets may prove to produce the best results in the near term. If sustained trading takes place above the 17.00000 level this will spark intrigue for the USD/ZAR and could allure more bullish sentiment.

However, the USD/ZAR will need to sustain value above the 17.14000 ratio in order to build a strong surge higher which then tests July’s highs. If the USD/ZAR were to stumble to the 16.93000 to 16.87000 ratios it may be tempting as a place to ignite buying positions based on the notion more upside price movement will occur.

USD/ZAR Short Term Outlook:

Current Resistance: 17.04900

Current Support: 16.93200

High Target: 17.15800

Low Target: 16.81000

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Last week, I made no weekly forecast, as there were no unusually strong counter-trend price movements in the Forex market over the previous week. This week, I again make no forecast.

This week I will begin with my monthly and weekly Forex forecast of the currency pairs worth watching. The first part of my forecast is based upon my research of the past 20 years of Forex prices, which show that the following methodologies have all produced profitable results:

Let us look at the relevant data of currency price changes and interest rates to date, which we compiled using a trade-weighted index of the major global currencies:

Monthly Forecast August 2022

For the month of August, I forecasted that the EUR/USD currency pair would decline in value. The result so far is shown below:

Weekly Forecast 28^th August 2022

Last week, I made no weekly forecast, as there were no unusually strong counter-trend price movements in the Forex market over the previous week. This week, I again make no forecast.

The Forex market saw a strong decrease in directional volatility last week, with only one of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to be higher over this coming week as there are a few major releases due, and the impact of Powel’s speech last Friday is likely to continue to drive markets as this week opens.

Last week was dominated by relative strength in the Australian and US Dollars, and relative weakness in the New Zealand Dollar.

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Key Support/Resistance Levels for Popular Pairs

I teach that trades should be entered and exited at or very close to key support and resistance levels. There are certain key support and resistance levels that can be watched on the more popular currency pairs this week.

Let us see how trading two of these key pairs last week off key support and resistance levels could have worked out:

EUR/USD

We had expected the level at $1.0070 might act as resistance in the EUR/USD currency pair last week, as it had acted previously as both support and resistance. Note how these “role reversal” levels can work well. The H1 price chart below shows how the price rejected this level following Jerome Powell’s hawkish speech near the start of last Friday’s New York session with a large bearish outside candlestick, marked by the down arrow signaling the timing of the bullish bounce. This is typically a great time of day to be entering trades in major Forex currency pairs. This trade has been profitable, but has achieved a maximum positive reward to risk ratio of less than 1 to 1 so far based upon the size of the entry candlestick.

GBP/USD

We had expected the level at $1.1878 might act as resistance in the GBP/USD currency pair last week, as it had acted previously as both support and resistance. Note how these “role reversal” levels can work well. The H1 price chart below shows how the price rejected this level following Jerome Powell’s hawkish speech near the start of last Friday’s New York session with a large bearish outside candlestick, marked by the down arrow signaling the timing of the bullish bounce. This is typically a great time of day to be entering trades in major Forex currency pairs. This trade has been profitable but has achieved a maximum positive reward to risk ratio of less than 1 to 1 so far based upon the size of the entry candlestick.

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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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The USD/CAD is trading near its higher levels last demonstrated in the middle of July as uncertainty has created nervous behavioral sentiment in Forex.

The USD/CAD is trading near the 1.30000 level as of this writing, the last time these values saw sustained trading was on the 18^th of July. On the 14^th of July the USD/CAD currency pair did trade briefly above the 1.32000 mark. The spike higher seen in the middle of July reflected broad Forex conditions as the USD gained against most other major currencies, and the USD is gaining again in the short term.

Late Last Week’s Climb in the USD/CAD Likely Triggered by Uncertainty in Financial Houses

While technical traders may be able to explain away the sudden lurch higher in the USD/CAD as a natural reaction due to support levels proving they were strong, there is plenty of reason to suspect fundamental conditions have caused the outbreak of buying being displayed in the near term. Uncertainty regarding the length of time the U.S Fed will maintain its hawkish interest rate policy is causing mayhem in Forex. The USD/CAD began its move upwards after the publication of the U.S Federal Reserve’s Meeting Minutes which had no clear answers for traders.

• Financial houses may be nervous the U.S Fed will not only raise interest rates in September, but follow this hike with more hawkish actions in the months afterwards.
• Resistance levels should be monitored carefully within the USD/CAD, the 1.30000 mark will serve as a strong indication for behavioral sentiment.

Current Price Levels Should be Monitored Closely by USD/CAD Speculators

The 1.30000 juncture in the USD/CAD saw trading above this ratio in early May, mid-June and the first two weeks of July. As questions again become inflamed regarding U.S central bank policy and the price of energy remains within the lower rungs of its value range taking the last seven months into view, the USD/CAD may continue to challenge the 1.30000 mark. The USD/CAD has seen volatility the past week of trading and speculators should use their risk management carefully.

While it may be tempting to believe the USD/CAD is overbought and a natural reversal lower will occur, the results from the last couple of days of trading are a sign behavioral sentiment is nervous. If sustained trading were to be demonstrated above the 1.30000 level, some traders may be tempted to target slightly higher price levels for quick hitting results. Marks of 1.30100 to 1.30200 may become legitimate wagers for speculators who believe additional buying is going to develop short term.

Canadian Dollar Short Term Outlook:

Current Resistance: 1.30085

Current Support: 1.29800

High Target: 1.30550

Low Target: 1.29400

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This week I will begin with my monthly and weekly Forex forecast of the currency pairs worth watching. The first part of my forecast is based upon my research of the past 20 years of Forex prices, which show that the following methodologies have all produced profitable results:

Let us look at the relevant data of currency price changes and interest rates to date, which we compiled using a trade-weighted index of the major global currencies:

Monthly Forecast August 2022

For the month of August, I forecasted that the EUR/USD currency pair would decline in value. The result so far is shown below:

 

Monthly Forex Forecast Performance

Weekly Forecast 14^th August 2022

Last week, I forecasted that the NZD/USD currency pair would fall in value over the week, as it made a strong counter-trend price movement over the previous week.

This was a great call, as the NZD/USD fell by 4.26% over the week.

The Forex market saw a slight decrease in directional volatility last week, with 52% of all the important currency pairs or crosses moving by more than 1% in value. Directional volatility is likely to be lower over this coming week as although there are a few key news releases scheduled, we are unlikely to see any with a very strong impact on the market, possibly excepting a surprise in the forthcoming US preliminary GDP data release.

Last week was dominated by relative strength in the US Dollar, and relative weakness in the New Zealand Dollar.

 

You can trade my forecasts in a real or demo Forex brokerage account.

Key Support/Resistance Levels for Popular Pairs

I teach that trades should be entered and exited at or very close to key support and resistance levels. There are certain key support and resistance levels that can be watched on the more popular currency pairs this week.

Key Support and Resistance Levels

Let us see how trading two of these key pairs last week off key support and resistance levels could have worked out:

USD/JPY

We had expected the level at 132.65 might act as support in the USD/JPY currency pair last week, as it had acted previously as both support and resistance. Note how these “role reversal” levels can work well. The H1 chart below shows how the price rejected this level right at the start of last Monday’s New York session with a doji candlestick, marked by the up arrow signaling the timing of the bullish bounce. This is typically a great time of day to be entering trades in major Forex currency pairs. This trade has been extremely profitable, achieving a maximum positive reward to risk ratio of more than 13 to 1 so far based upon the size of the entry candlestick structure.

USD/JPY Hourly Price Chart

EUR/JPY

We had expected the level at 134.97 might act as support in the EUR/JPY currency cross last week, as it had acted previously as both support and resistance. Note how these “role reversal” levels can work well. The H1 chart below shows how the price rejected this level right at the start of last Tuesday’s Tokyo session with a bullish hammer candlestick, marked by the up arrow signaling the timing of the bullish bounce. This is typically a great time of day to be entering trades in Forex currency crosses involving the Japanese Yen. This trade has been nicely profitable, achieving a maximum positive reward to risk ratio of more than 5 to 1 so far based upon the size of the entry candlestick.

 

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If we get a daily close above that $2100 region above, this market could take off.

The Ethereum markets initially tried to recover during trading on Wednesday but have sold off yet again. As the $2000 level continues to offer significant resistance, it’s obvious that it’s going to be a bit of a battle to get above there. The $1800 level is an area where we had seen a significant amount of support previously, so I think a little bit of “market memory” is about to enter the picture here.

The shape of the candlestick is a shooting star, so it does suggest that maybe we have a little bit more selling pressure ahead of us. I suppose if you are stuck on the principle of Fibonacci, we are at roughly 50% of the move from previous selling as well.

Two Major Factors in Ethereum Market

The first one has been the bond yields in America dropping, as institutional traders believe that the Federal Reserve will not be able to tighten monetary policy as much as once feared. However, we are starting to see interest rates turn around to the upside again, and that has had a little bit of a negative influence on crypto in general, including Ethereum. After all, Ethereum, and crypto by extension, is pretty far out on the risk appetite spectrum, and therefore it’s not overly surprising to see it suffer.

The second important influence has been the idea of “The Merge” happening quicker than originally thought, and it looks like a theory of is actually going to pull all of this off. That obviously is good for the longer-term outlook when it comes to the network, so it does make a certain amount of sense that people bought coins based upon that.

• We are still in a very tenuous economic situation, and it must be noted that Ethereum is no longer an outlier when it comes to the financial markets, especially as the institutions have gotten involved.
• Ethereum now has a negative correlation to interest rates, much like a lot of other “risk on” assets.
• You will have to keep an eye on the 10 year yield as well.

Furthermore, the Federal Reserve looks hell-bent on trying to spook the markets into driving back down, so I think we may have peaked. However, if we get a daily close above that $2100 region above, this market could take off.

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I think we have a situation where you may be able to find a little bit of value on a dip.

• Ethereum markets pulled back just a bit on Monday as we continue to see the $2000 level offer a significant amount of resistance.
• The $2000 level obviously has a lot of psychology attached to it, and  it’ important to pay close attention to this big round number.

Pullback Ahead

The fact that we are forming a bit of a shooting star again suggests that we are probably due for a pullback. When you look at the total market capitalization of cryptocurrency, it is forming a very similar chart pattern, with the $1.18 trillion level being like a brick wall. I think at this point we are ready to see crypto in general pull back, which makes quite a bit of sense considering that it has seen such a massive turnaround in the negativity as of late. That being said, we have a long way to go until we get rid of all of that negativity, especially considering that the run-up to this level has been relatively quick.

To think that the negativity in markets is suddenly going to disappear is a bit of a stretch, due to the fact that there are a lot of moving pieces out there that suggest trouble ahead. That being said, I don’t necessarily think that Ethereum is suddenly going to sell off drastically, mainly due to the excitement around the massive upgrades that are coming this year. It looks like they are on track to happen sometime this winter, perhaps even during the fall. This is something that has disappointed Ethereum holders for quite some time, so it is a good sign that the market has been getting good news steadily.

If we break above the $2100 level, I think that would rip out all of the massive selling pressure, and could open up the possibility of a move to the $3000 level. I don’t necessarily think that the move would be easy to do, but it is something that you need to keep your mind on. The 50-day EMA sitting underneath and rising could be the target for any type of significant pullback, so I think we have a situation where you may be able to find a little bit of value on a dip. Longer-term holders will almost certainly appreciate this.

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Right now I think we have more of a back-and-forth situation ahead of us.

• The BTC/USD currency pair initially rallied on Monday but turned around to give back those gains and show signs of weakness.
• Ultimately, the Bitcoin market is continuing to struggle with the $25,000 level, so it looks like we are going to continue to see a lot of trouble above.
• At this point, the market is very likely to continue pulling back in the short term, but I do see various signs of support underneath as well.

Market Confident But Lacks Volume

The fact that we are forming a shooting star suggests that we are going to continue to see selling pressure, but I also see that the $22,500 level is a minor support level, followed by the 50-day EMA. This has been a nice grind to the upside, and quite frankly that’s exactly what you want to see in Bitcoin because there have been so many negative traders out there that the market just squeezing higher slowly shows that we are building up a bit of confidence. However, there is a severe lack of volume and that is probably the one thing that concerns me.

I think we are essentially in a major “crypto winter”, but that doesn’t mean the end of the world. In fact, we have seen this before so it does make a certain amount of sense that traders will look at this through the prism of possibly being able to build up a bit of a bigger position for the good times. I think that it is probably only a matter of time before we see some type of attempt to grind much higher, but we need some type of catalyst.

Without a doubt, the biggest catalyst is going to be if and when the Federal Reserve decides it is going to loosen monetary policy. There is a lot of expectation at the moment that the Fed is going to be forced to be less aggressive with monetary policy, but with inflation as high as it is, I am a bit hesitant to get that excited quite yet. In other words, I think we have some work to do as we go back and forth and try to establish some type of foothold. A move below the 50-day EMA could have Bitcoin reaching down to the $20,000 level. However, right now I think we have more of a back-and-forth situation ahead of us.

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I will be paying attention to the 10 year yield, as it has been a good indicator as to where we can go next and not only gold, but other markets as well.

• Gold markets fell almost immediately in the futures market on Monday as we continue to hear a lot of noise around the US dollar and the interest rate complex.
• Keep in mind that higher interest rates will work against the value of gold, and it should probably be noted that gold has had a nice rally for a while.
• Because of this, I think it is probably only a matter of time before we see a significant turnaround, and perhaps an attempt to clear out a lot of the “weak hands.”

Technical Analysis

It’s worth noting that we are sitting at the 50-day EMA, which is an area that a lot of people will pay attention to from a technical analysis standpoint, but quite frankly also can be sliced through quite easily. If we were to break down below the bottom of the candle for the trading session on Monday, then it’s possible that we would drop down to the $1750 level. I think at this point we are more likely than not going to see volatility over everything else, so I do think that it makes sense that we drop a bit.

Pay attention to the US dollar, because it does have a negative correlation to the gold market, which has been relatively strong as of late. If we were to turn around and take out the $1815 level in the spot market, I think that kicks off a lot of short-term short covering and allows the market to go reaching the 200–day EMA. The 200-day EMA is currently at the $1845 level, so it makes for a quick easy $30.

On a break down below the $1750 level, it’s possible that gold goes looking to the $1720 level. The interest rates in the US continue to be a major driver of where you go, with the inverse correlation being so strong. The $1720 level is massive support, and if we were to give that up, things could get rather ugly in short order. In that scenario, we could see a massive flush lower as the US dollar would continue to punish almost everything else in the financial markets. With that in mind, I will be paying attention to the 10 year yield, as it has been a good indicator as to where we can go next and not only gold, but other markets as well.

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The USD/ZAR is trading politely within a rather intriguing five day range and resistance up above could prove a useful strategy for wagers.

The USD/ZAR moved higher yesterday and has seen its value consolidate over the past handful of hours. As of this writing the USD/ZAR currency pair is near the 16.42000 ratio with the typical amount of give and take within its traded value. Intriguingly the USD/ZAR hit the 16.46350 ratio earlier this morning and this resistance level held and pushed the Forex pair a bit lower.  This mark was tested a bit yesterday, but before that the last time the value was hit was on the 10^th of August.

Technical Range of USD/ZAR could prove Enticing for Short Term Speculators

On the 10^th of August the USD/ZAR did manage to hit the 16.63000 mark before reversing lower. Later on the 10^th of August the USD/ZAR suddenly found itself trading near the 16.11000 mark, which it went on to test essentially on the 11^th and 12^th again. The climb higher yesterday was incremental, but the fact that a strong retest of the lows from last week has not happened is interesting.  Short term speculators may find technical charts attractive if they believe the USD/ZAR is traversing too high.

Quick Hitting Targeted Trading for those who use Risk Taking Tactics Astutely in the USD/ZAR

Resistance above near the 16.50000 region may prove to be an interesting target.  Depending on the trading strategy, this level could be used as a potential stop loss for those who think the USD/ZAR will start to trade lower. Or it could prove a rather distant take profit goal for those who believe the USD/ZAR is capable of trading higher, but will then run out of steam.

• Range trading should be expected in the near term. Resistance levels of 16.51000 to 16.60000 may prove to be worthwhile targets to be used for traders wanting to wager.
• If a new round of selling breaks out in the USD/ZAR it would not be a surprise to see the 16.37000 mark become vulnerable and a potential move lower to the 16.28000 ratio.

Short term traders may have a rather comfortable window to trade near term.  While economic data could certainly shake the global market with a lightning strike regarding news, it also may stay relatively quiet for the USD/ZAR this week. This trading range may be able to be taken advantage of by selling near perceived resistance, for quick hitting short term wagers which use take profit orders effectively.

USD/ZAR Short-Term Outlook

Current Resistance: 16.44900

Current Support: 16.38600

High Target: 16.52100

Low Target: 16.27700

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