Get the Forex forecast using the fundamental, sentiment and technical position analysis for the major pairs for the week of July 19, 2021 here.
The difference between success and failure in Forex trading will likely depend primarily on which currency pairs you choose to trade each week and in which direction, and not on the exact trading methods you might use to determine entries and exits. trading.
At the start of the trading week, it is a good idea to get an overview of what is developing in the market as a whole and how these developments are affected by macroeconomic fundamentals and market sentiment. market.
EUR / USD and GBP / USD could be about to start further bearish trends. The USD / CAD could start a new uptrend based on a long term support level from 2017. And the S&P 500 continues to climb!
Overview, July 18, 2021
The US dollar index created a double bottom formation on the chart in January and May 2021, which aligned with a support zone seen in early 2018. The index then surged in value over the week. June 14, which sounds like the first push of a new uptrend. Last week, the US dollar index posted another bullish week.
Last week, the biggest day for the Forex majors and the DXY was Tuesday, July 13, when the US CPI figures were released. Inflation has been a recurring theme in market commentaries for the past few months. The public is educating themselves on esoteric things like rising lumber prices and lumber futures (something I didn’t know existed until recently!). Federal Reserve spokespersons speak of the high inflation numbers as transient and resulting from the resumption of COVID-19 with its pent-up demand. Fund managers, including giants like Warren Buffet and Michael Burry, disagree with this assessment and instead say this current spike in inflation is just the start of higher inflation and inflation actual is much higher than the reported CPI figures.
Vaccines have been with us for months now, and some countries, like Israel and Canada, have impressive immunization statistics. Yay! But the number of unvaccinated people in many countries remains high. As world leaders relax social distancing rules to help their economies, another spike in COVID-19 cases has emerged particularly among unvaccinated people, fueled in part by more transmissible variants, particularly the Delta variant. We are seeing stories of hospitals doubling or quadrupling their COVID-19 admissions, and oxygen is scarce again, reminiscent of the early days of the COVID-19 epidemic. Death is not the only measure to measure the effects of Covid-19 – long-term symptoms are also revealed. Indonesia has emerged as a new epicenter of COVID-19.
The world has seen extreme weather events – record high temperatures in western North America, flooding at unprecedented levels in western Europe that claimed hundreds of lives and destroyed communities. This is almost certainly due to climate change. What is striking is that these weather events occurred in first world countries that many believed to be safer ports against climate change.
Billionaires have started their own space race! Richard Branson, of Virgin Galactic, flew to the edge of space last week. Jeff Bezos will follow soon. We miss the good old days of the United States against the USSR fighting for domination over the Earth!
“Buy the stock market and hold it” was the very first investment advice I was given. When I look at recent S&P 500 stocks, nothing seems more true. The index got rid, with remarkable speed, of all the worries that could be brought to it. We could look at the reasons why, from purchases of US Federal Reserve corporate bonds to an influx of capital allowing for even larger share buybacks and so on. Even recent inflation concerns, supported by CPI data showing startling inflation numbers, only gave the market about a day’s break before continuing its bullish march.
At the risk of being called Captain Obvious, the S&P 500 is showing a clear, non-volatile uptrend. Pure and simple. Buy on the dips and follow your stops.
Last week the market had a week of decline with a close in the lower half of the range. This has only happened six times this year (out of 27 weeks of trading), and only twice this year has the market experienced two straight weeks of decline.
Thus, the market could experience a temporary decline. If the market continues to move lower, a strategic entry area on the chart is around the 4245.5 level as this previous resistance could serve as a support level.
What would make me reconsider the uptrend and look for a potential market top? If the market broke the support levels at 4138 made on June 21, and 4035 made on May 13. The last significant support dates back to September 2020 at 3210.
EUR / USD
EUR / USD potentially starts a new downtrend. A reversal zone performed in Q1 2018 was tested in January 2021 and May 2021, creating a double top formation on the chart.
On the daily chart, the market is below 1.19573, a key level of interchangeable support / resistance. The next price supports must break to continue falling: 1.17041 and 1.16121.
GBP / USD
GBPUSD shows a potential downtrend, similar to EUR / USD. A reversal zone performed in Q1 2018 was tested in February 2021 and June 2021, creating a double top formation on the chart.
On the daily chart, the market is below 1,4005, a key level of interchangeable support / resistance. The next support price must break to continue falling is 1.36686.
USD / CAD
The USDCAD in late May / early June 2021 rebounded from a long term support level at 1.20613 reached in September 2017. Last week it posted an impressive week bullish. This is a potentially long-term game, but USDCAD could see a long bull run until 2021.
The best opportunities I see in the markets are the long S&P 500 – I would look at the 4 hour chart to buy support. I see short opportunities in EUR / USD and GBP / USD – similarly, I would look at the 4 hour chart to break resistance. I see a potentially long term uptrend unfolding in USD / CAD.