Price likely to remain bearish below $1.1868.

My previous GBP/USD signal on 16^th August could have produced a slightly profitable short trade from the bearish rejection of the resistance level which I had identified at $1.2100 if the trade had been closed out at the end of the day’s London session.

Today’s GBP/USD Signals

Risk 0.75%.

Trades must be taken before 5pm London time Thursday.

Long Trade Ideas

• Go long following a bullish price action reversal on the H1 timeframe immediately upon the next touch of $1.1791 or $1.1695.
• Place the stop loss 1 pip below the local swing low.
• Move the stop loss to break even once the trade is 25 pips in profit.
• Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.

Short Trade Ideas

• Go short following a bearish price action reversal on the H1 timeframe immediately upon the next touch of $1.1791, $1.1864, or $1.1878.
• Place the stop loss 1 pip above the local swing high.
• Move the stop loss to break even once the trade is 25 pips in profit.
• Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.

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.

GBP/USD Analysis

I wrote in my last forecast on 16^th August that the downwards price movement looked most likely to continue, as we saw a bearish technical situation with the price selling off within descending bearish wedge chart patterns. I thought that a bearish reversal from $1.2100 could be a good short trade opportunity.

This was partially correct – although the level at $1.2100 initially held it was broken later, but the price fell early the next day and is now trading considerably lower.

We saw the GBP/USD currency pair reach its lowest price since the coronavirus panic of March 2020 yesterday, not far above $1.1700, before the price rebounded strongly during the New York session later. However, the key resistance levels at $1.1864 and $1.1878 held, and the price was pushed back down. We also have a medium-term bearish trend line, which is shown within the price chart below, which is helping to suppress the price.

There is a long-term bearish trend, with good fundamental reasons for the strength of the US Dollar (a Fed that is talking about getting tighter with its monetary policy) and the weakness of the British Pound (inflation above 10% and the Bank of England forecasting a five-quarter recession).

I look to trade this pair short, and I see the area from $1.1878 down to the bearish trend line as a good zone in which to enter a short trade after a bearish reversal in price action. In fact, the price can now be contained within a bearish price channel which I have completed in the chart with the lower descending trend line.

If the price does not retrace to that zone but just falls, scalpers might try to be brave and capture a few long pips from a bullish bounce at $1.1791 or $1.1750 below that. The latter is not a key support level, but it does look like the price is taking note of it and reacting when it gets there.

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

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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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The pair will likely have a bullish breakout this week as investors target the next key resistance point at 26,000.

Bullish View

• Buy the BTC/USD pair and set a take-profit at 26,000.
• Add a stop-loss at 23,000.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 23,500 and a take-profit at 22,000.
• Add a stop-loss at 25,000.

The BTC/USD price moved solidly above the resistance point at 24,000 as sentiment in the market improved. It rose to a high of 24,955, which was the highest level since June 13th of this year, meaning that it has recovered by about 40% from its lowest level this year.

Market Sentiment Improving

The BTC/USD pair continued its recovery as investors focused on corporate earnings and the falling American consumer and producer inflation.

On Wednesday, data published by the American government showed that the country’s consumer inflation dropped from 9.1% in June to 8.7% in July. In the same period, the producer price index (PPI) declined sharply as the cost of fuel pulled back.

These numbers showed that the Federal Reserve will likely slow its rate hiking cycle in the coming months. Still, most Fed officials who have talked after the data came out insisted that the bank will likely continue tightening in the coming months. They noted that inflation remains substantially above the Fed’s target of 2.0%.

The BTC/USD price also rose as the US dollar index retreated from its highest point this year. The dollar index retreated from the year-to-date high of $109.30 to about $106. This performance was mostly because of the performance of US inflation.

Meanwhile, it seems like investors are getting greedy. The fear and greed index that is tracked by CNN Money closed at 55 on Friday. This price is a few points below the greed level of 50 but it is substantially above its lowest level this year. As a result, the main American indices like the Dow Jones, Nasdaq 100, and S&P 500 have moved to a bull market.,

On the other hand, Bitcoin’s fear and greed index rose to 50, which was higher than last month’s low of 15.

BTC/USD Forecast

The four-hour chart shows that the BTC/USD price has been in a slow upward trend in the past few weeks. Along the way, the pair formed an ascending triangle pattern that is shown in purple. This triangle is usually a bullish sign. It has also remained above the 25-day and 50-day moving averages while the Stochastic Oscillator has moved slightly below the overbought level.

Therefore, the pair will likely have a bullish breakout this week as investors target the next key resistance point at 26,000.

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I have often recommended selling the GBP/USD pair from every bullish level and last week’s trading moves confirmed the strength of what we mentioned. The GBP/USD pair recovered towards the 1.2293 resistance level, the highest for the currency pair in more than a month, from which the pair rebounded strongly to the vicinity of the 1.2003 support. This was after the announcement of stronger than expected numbers of US jobs, which in turn supports the path of raising US interest rates strongly throughout the coming months. The GBP/USD pair closed the week’s trading around the 1.2073 level, but the bears’ control might move it towards stronger support levels.

GBP/USD Fundamental Analysis:

The GBP/USD is trading affected by the results of the important economic data recently, as the US jobs data for the month of July came in stronger than expected with 528 new jobs recorded against the market expectations of 250K. Moreover, the country’s unemployment rate fell to 3.5% from 3.6% in June, also exceeding the consensus forecast of 3.6%. On the other hand, average hourly wages rose 5.2% year over year, topping the average estimate of 4.9%. The equivalent (monthly) also outperformed 0.3% by 0.5%.

From the UK, the Bank of England raised its policy rate by 50 basis points to 1.75%, in line with expectations. Prior to that, the British S&P Global/CIPS PMI for July fell from expectations at 52.8 with a reading of 52.1, while the services PMI came in below expectations of 53.3 with a reading of 52.6.

Sterling dollar technical analysis:

In the near term and according to the hourly chart, it appears that the GBP/USD is trading within a descending channel formation. This indicates a significant short-term bearish momentum in market sentiment. Therefore, the bears will look to extend the current declines towards 1.2022 or lower to 1.1964. On the other hand, the bulls will target short-term retracement profits around 1.2122 or higher at 1.2184.

In the long term and according to the performance on the daily chart, it appears that the GBP/USD is trading within a sharp descending channel formation. This indicates a strong long-term bearish momentum in the market sentiment. Therefore, the bears will look to maintain control of the currency pair by targeting profits at around 1.1924 or lower at 1.1766. On the other hand, the bulls will look to pounce on profits at around 1.2235 or higher at 1.2387.

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Bullish breakout from long-term bearish wedge pattern.

My previous signal on 19^th July produced an excellent, nicely profitable long trade from the bullish inside pin bar which rejected that level.

Today’s AUD/USD Signals

Risk 0.75%

Trades may only be taken prior to 5pm Tokyo time Wednesday.

• Short entry following a bearish price action reversal on the H1 time frame immediately upon the next touch of 0.6875, 0.6895, or 0.6915.
• 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 0.6797, 0.6784, or 0.6719.
• 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 14^th July that the AUD/USD currency pair was looking bearish so I was seeking a short trade from a return to the 0.6800 area before looking for a bearish reversal to signal a short trade entry.

The price did fall over that day, so I was at least partially correct to look to the short side, although it never got back to 0.6800 before making a significant low and a dramatic bullish bounce at the support level of 0.6683 during the second half of the day’s New York session.

We saw the US Dollar begin to sell off last Thursday, producing a major bottom here which now looks like a very significant bullish reversal. The price has broken out of the long-term bearish wedge pattern, as you can see from the broken upper trend line shown within the price chart below, which is a bullish sign.

The Australian Dollar has also received a boost a few hours ago as the Reserve Bank of Australia released the minutes of its latest policy meeting. This contained no real surprises but showed that taking all necessary measures against inflation remains a real and actionable top priority, and this is helping the Aussie rally now. Technically it has room to rise, as the price has got established above the 0.6800 area.

The advance may now be beginning to falter as the price reaches an area of a bearish inflection, but long trades remain attractive after pullbacks. I will be happy to go long if the price falls to 0.6800 and we quickly get a firm bullish bounce there.

There is nothing of high importance scheduled today concerning the AUD or the USD.

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Federal Reserve officials became more determined last month to keep raising US interest rates for longer to prevent rising inflation from becoming entrenched, even if it slows the US economy. Policymakers raised interest rates by 75 basis points last month and supported raising them at their next meeting in July by 50 or 75 basis points, according to the minutes of the FOMC’s June 14-15 meeting released Wednesday in Washington. They considered maintaining the central bank’s credibility to control inflation very important.

This trend contributed to the USD/JPY sticking to its gains near its highest in 24 years. This week, I tested the resistance level 136.36 and settled around the level of 135.85 at the time of writing the analysis.

The minutes of the Fed meeting also showed that “many participants saw that the big risk facing the committee now is that high inflation could take hold if the public begins to question the committee’s decision.” and “they recognized the possibility that a more restrictive stance would be appropriate if high inflation pressures persisted.” The track record has been full of references to price pressures and why it may take some time to ease them. Officials recognized that policy constancy could slow the pace of economic growth for some time, but saw inflation back to 2 percent as critical to maximizing employment on a sustainable basis. Accordingly, the two-year US Treasury yields, which are sensitive to the Fed’s policy, rose after the release of the minutes and investors continued to bet that the US central bank would raise 75 basis points later this month.

The strong push by the Federal Reserve to curb the hottest US inflation in 40 years has turbulent financial markets as investors fear that tighter monetary policy will push the US economy into recession. The word “recession” did not appear once in the minutes, compared to 90 references to inflation.

Fed officials raised their benchmark rate to the target range from 1.5 percent to 1.75 percent in June and Bank Governor Jerome Powell suggested they could do the same again in July. He told reporters at a post-meeting news conference that another 75 basis point increase, or a 50 basis point move, was likely on the table when policymakers meet July 26-27.

Officials were last month – although previously indicated they favored a 50 basis point rise – after inflation data came in hot and a leading indicator hinted that expectations for future price pressures could accelerate among US consumers.

USD/JPY Forecast

Despite the stability in narrow ranges for the USD/JPY pair, the currency pair is still in the upside range and did not experience strong profit-taking operations, as the rest of the other major currencies were exposed to against the Japanese yen, where the foundations of the strength of the US dollar are still strong and in the first place The first is the expectations of raising US interest rates strongly throughout 2022, which is supported by the distinguished economic performance of the United States of America compared to the rest of the global economies. The bulls have the opportunity to break through the resistance 137.00, the highest for the currency pair in 24 years, and to complete the general trend and break through stronger ascending levels.

On the other hand, according to the performance on the daily chart, the breach of the support levels 131.65 and 130.00 is important for the bears to control the trend.

Bitcoin will likely continue its bearish trend as sellers attempt to move below $20,000. 

Bearish View

• Sell the BTC/USD pair and set a take-profit at 19,500.
• Add a stop-loss at 21,500.
• Timeline: 1-2 days.

Bullish View

• Set a buy-stop at 21,300 and a take-profit at 23,000.
• Add a stop-loss at 20,000.

The BTC/USD pair retreated slightly as demand for Bitcoin and other cryptocurrencies waned. Bitcoin dropped from last week’s high of $21,846 to a low of $20,700. This price is about 18% above the lowest level this month.

Bitcoin and Stocks Waver

Bitcoin retreated in the overnight session as investors watched the performance of the stock and bond market.

In the United States, the Dow Jones index declined by 80 points while the Nasdaq 100 fell by more than 80 points. This was a sharp reversal considering that stocks rose sharply on Friday last week. Stocks have a close correlation to cryptocurrencies recently.

Meanwhile, Bitcoin pulled back as the bond market continued its sell-off. The yield of the 10-year government bonds rose to 3.20% while the 30-year rose to 3.145%. Bond yields have an inverse relationship with prices.

This performance is mostly because of the hawkish tone by the Federal Reserve. The bank has already hiked interest rates by 150 basis points this week and analysts expect that it will continue hiking in the coming months. It has also started implementing quantitative tightening.

The BTC/USD pair also wavered as demand from retail and institutional investors remain under pressure. The number of new account openings has dropped sharply in the past few days. Similarly, Bitcoin funds have seen significant outflows during the sell-off. The number of Bitcoin accounts has been dropping.

Further data shows that Bitcoin’s put to call ratio is hoverning near its highest level this year. A high ratio is usually a sign that more investors are placing bearish trades in the options market. In contrast, Ethereum has seen its ratio drop to the lowest level since January this year.

BTC/USD Forecast

The three-hour chart shows that the BTC/USD pair has been moving sideways in the past few days. This is a sign that bulls have struggled pushing the pair above last week’s high of 21,888. It has moved slightly below the 25-day and 50-day moving average. Bitcoin has also moved below the 23.6% Fibonacci Retracement level while the Stochastic Oscillator has moved to the oversold level.

Therefore, after facing substantial resistance, Bitcoin will likely continue its bearish trend as sellers attempt to move below $20,000. On the flip side, a move above the resistance at 21,888 will signal that bulls have prevailed and push it higher.

The best thing you can do is wait for another shorting opportunity, one that will probably come in the next couple of trading sessions.

The S&P 500 rallied a bit on Friday as we continue to see a bit of a relief rally. The market looks as if it is trying to reach the 3900 level, an area that previously had been supported. It’s possible that we may see a bit of selling pressure just above, but even if we do break above there, the 4000 level of course is an area that could come into the picture. The 50-day EMA is sitting just above there, and it is starting to reach down there as well. All things being equal, the large, round, psychological significance of 4000 is also an area that could be a bit of a problem.

The S&P 500 has been falling due to the Federal Reserve tightening monetary policy, and of course, that puts a lot of downward pressure on stocks as it builds up the “risk-free return rate”, as bonds are considered to be “risk-free.” Ultimately, this is a market that has a ways to go I think in the short term, but there is a huge amount of concern out there when it comes to the economy, inflation, and of course that monetary tightening policy. In other words, although we are getting a ripping bear market rally, the reality is that these happen from time to time, and then we continue lower.

Nothing has fundamentally changed to make the idea of the market rally for a longer-term move. Ultimately, this is a market that will continue to see a lot of headwinds, especially considering that they will have to write down earnings estimates, as the economy is changing quite rapidly with the consumer confidence deteriorating rapidly.

The Federal Reserve is hell-bent on tightening into this cycle of slowdown, so it does make a certain amount of sense that we would see the stock market price in even tougher conditions eventually. It’s a bit difficult to measure at times, but the attitude and narrative on Wall Street continue to suggest that in the short term there will be plenty of hope, but in the longer term the math does not work out. Unless you have the ability to get in and get out really quickly, the best thing you can do is wait for another shorting opportunity, one that will probably come in the next couple of trading sessions.

The recent trading sessions are characterized by the presence of a strong and sharp struggle between bears and bulls to determine the direction of gold. The price of the yellow metal is in a range between the level of $ 1857 an ounce and the level of $ 1835 an ounce. The gold market awaits strong stimuli to determine the path, and the reaction may be to the statements of US Central Bank Governor Jerome Powell, the strongest influence on the US dollar, and therefore the price of gold. The price of gold is still looking for catalysts to rise in the face of the pace of raising interest rates from global central banks.

Last week, the Federal Reserve raised the US short-term interest rate by three times the usual amount for its largest increase since 1994. It may consider another huge increase at its next meeting in July. Last week’s report on the US economy also showed that industrial production was weaker last month than expected. Markets are preparing for a world with higher interest rates, led by the actions of the Federal Reserve. Higher rates can bring down inflation, but they also risk triggering a recession by slowing the economy. It also tends to hurt the price of stocks, cryptocurrencies, and other investments.

Accordingly, testimony on monetary policy by Federal Reserve Chairman Jerome Powell before the Senate Banking Committee and the House Financial Services Committee is scheduled for later this week.

Generally speaking, two of the three largest economies in the world, namely China and Japan, do not engage in raising interest rates, unlike the US Federal Reserve and central banks in many other countries. Fears that the global economy could slide into recession if planners push forward aggressively with higher interest rates and other moves to tighten monetary policy have sent markets tumbling after stock prices surged thanks to massive support during the pandemic.

Last week, the BoJ stuck to its near zero interest rate policy despite concerns about a weak yen.

According to the technical analysis of gold: the price of gold and according to the performance on the daily chart is still in a neutral area. The tendency will be to the downside if the investors move to the support levels of 1825 and 1810 dollars, respectively. I still prefer the trading strategy for the price of gold by buying from every bearish level, especially if it moves to break the $1800 support again. The price of gold may remain under pressure until the reaction from the testimony of US Federal Reserve Governor Jerome Powell this week.

Increasing global geopolitical tensions, fears of a global economic slowdown and the suspension of the US dollar from making gains may motivate the gold price to rise towards the resistance levels of 1855 and 1878 dollars, respectively, which are levels that stimulate the bulls’ control of the yellow metal market.

The Euro also gained some momentum from the ECB Governing Council members holding an unscheduled meeting on Wednesday to discuss recent issues related to bond movements in the Eurozone.

The US Central Bank announced a stronger-than-expected interest rate hike and calmed Jerome Powell, governor of the bank. The strong demand for buying the US dollar, and the price of the currency pair EUR/USD gained momentum to rebound upwards, starting from the support level 1.0359 to the level of 1.0507 and settled around the 1.0445 level at the same time. The bears still have the strongest control over the performance of the most popular currency pair in the forex trading market.

The Euro also gained some momentum from the ECB Governing Council members holding an unscheduled meeting on Wednesday to discuss recent issues related to bond movements in the Eurozone. The market has taken this as a sign that the European Central Bank is serious about dealing with the possibility of an unregulated bond market in the Eurozone, which supports the euro exchange rates.

The developments come after bond yields in “peripheral” eurozone economies – such as Italy and Greece – rose sharply in response to recent indications by the European Central Bank that it will raise interest rates in July and again in September. Notably, peripheral bond yields rose faster than those of core eurozone countries, such as Germany and France. This widening of the eurozone yield spread worries the eurozone and markets as it revives memories of the eurozone debt crisis in early 2010.

For his part, a spokesman for the European Central Bank said: “The Board of Directors will hold a special meeting to discuss the current market conditions.” The market reaction was positive as it indicated that the ECB will not sleep and enter another crisis. The European Central Bank is expected to work quickly in developing tools to ensure that the eurozone market continues to function, thus reducing the existential risks to the euro. Commenting on this, Elias Haddad, chief currency analyst at CBA says: “EUR/USD rose towards 1.0500 and spreads around the eurozone narrowed sharply amid expectations that the European Central Bank will announce measures to deal with the increasing retail risks in the bond markets. Sovereignty in the Eurozone.

The intervention comes as the euro extends its 2022 lead against the pound, but falls further toward parity against the US dollar.

ECB Governing Council member Isabelle Schnabel said before that that the ECB had “no limits” in its commitment to defending the eurozone, citing concerns that euro zone spreads are trending upwards. Schnabel also said the European Central Bank was ready to launch a new instrument to counter any “disorderly” jump in borrowing costs for weaker eurozone economies.

The main concern for investors since the European Central Bank said at its policy meeting last week that it will raise interest rates in July is how it will intervene to tackle retail financial markets. “Our commitment is stronger than any specific tool,” Schnabel added. Our commitment to the euro is our anti-fragmentation tool. This commitment has no limits. Our track record of intervening when needed supports this commitment.”

Today’s meeting could test the ECB’s resolve. If the European Central Bank presents a compelling roadmap to contain the bond markets, the euro exchange rates may rise further, but any disappointment could be painful.

According to the technical analysis of the pair: the recent rebound, the EUR/USD price did not break out of the bearish trend, and it is still stabilizing below the 1.0500 support. This confirms the extent of the bears’ control over the trend. The recent losses moved the technical indicators towards oversold levels, but the Euro lacks strength factors so far. Investors’ balancing of the US central bank’s announcement and the ECB’s recent steps may give some hope of an upward correction. The closest support levels for the currency pair are currently 1.0390 and 1.0280, respectively.

On the daily chart, the bulls move to breach the 1.0770 resistance, which will support the rebound strength to the upside, otherwise the bears will continue to control. There are no important European economic data, and the focus will be on the US session data, where jobless claims will be announced, the Philadelphia Industrial Index and US housing data will be announced.