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Last week worked out very nicely, with EU bouncing off 1760, as planned. On friday we hit 1908, where bulls got tired and couldn’t take it any higher anymore. But the important thing was the NY session and the London fix, the last one in july, with heavy bottoming above 1850, from where we got a bounce towards 1875 before the day ended. So this are will be important next week, too. Last week, we had a strong support at 1760 and this week we might have created a new support at 1850. The key area next week will be 1908. Bulls need to break it to go towards new targets, which for me are 1960-2000. The biggest events are on thursday and friday, first a meeting of Bank of England and on friday big US news. So if bulls take over early in the week, I am curious how high they can take it before the news days. The best trade of the week seems to be EG again, with heavy bottoming above 8500, 8640 is a safe target with a good profit to risk ratio. USDCHF is another pair to watch, as it is close to 9000 again, which might be a good buy area, if bulls manage to protect the area for the first days of the week. In the past few weeks, EUR and CHF were out of sync…normally they are equally strong or weak, but while CHF was very strong most of july, EURO was stuck in a tight range and only broke out of it after FED this week. So it will be interresting to watch both currencies and how they perform. If for example EU spikes up towards my target of 1960-2000 and UCHF manages to protect 9000 at the same time, it will be a good indicator to start buying. And even if 9000 breaks, the 8800-8900 is still a good spot to buy for medium to long term targets. Other than that, market will be more clear by thursday, so by then good entries should be easy for both BOE and NFP on friday.

All I hear lately is how bearish EU is between 1750-1800…all analysts talk about 1500 or 1600 and most traders I check are short…I think the opposite and with everyone being bearish, it makes it even easier for me to be bullish at these levels. While 1800 might seem like a big resistance, this area between 1750-1800 looks like a big bottoming zone to me. Eventually, when enough people are convinced to short…price will spike up like there is no tomorrow. Next week we have FED on wednesday, which could fuel the move. What do you think everyone will expect? That FED will create another EU dump like last time…well, by that time, EU was topping, the dump was technical also…this time it might be the exact opposite. This week we had an ECB meeting on thursday, it was a very dovish meeting and yet, EU again failed to break 1750…the 1750-60 area is a strong support and demand zone. Even if it breaks before or during FED next week, I think it will be just a SL hunt and not a real longlasting move. So either way…I am staying bullish on EU, even though I feel like its me against everyone else. But I prefer it that way. 😉

p.s. We have a 2nd bullish cypher this week.

Apart from EU, all other pairs worked out very well this week. UJ and UCHF dropped hard…GU printed a strong bullish candle, too, only euro was not as strong compared to other currencies against the dollar. But that can easily change next week…and EU can make up for this week with a re-test of 1970-80 next week. Easiest trade of the week might be EG, as it is back below 8550, which is a strong demand zone. EU bottomed nicely during London on friday and then created a new support zone above 1850 during NY. This zone should be re-tested next week and if bulls can stay above it, then a break of 1880 upwards is inevitable. As for GU, its NY support zone was 3825-35, created during London fix, which makes it significant. So, if both pairs would re-test their newly created support zones, EG would go up towards 8580-8600, at least. So early next week I expect EU and GU to be bearish, to re-test their support areas, where they should turn back to bullish. But EG still remains the easiest trade into next week, as GU’s bull move on friday was fairly overstreched, so the correction should help EG to attack the 8600 area again. Medium to long term, I am bullish on EG into 8700 and possibly more, so buying the dips is not a bad idea either way.

From a fundamental standpoint, USD might be in trouble due to a debt ceiling deadline. Long story short, the US is out of money to spend…with a weekly spending around 50 billion and 400 billions left to spend…its only a matter of weeks until the money runs out, if the debt ceiling isn’t increased. And this happening during summer holidays doesn’t make it easier to solve. As we know, politicians are hard working individuals, who need to work many minutes every week, so they need to take a break over the summer, to gain new strength, because nobody suffers as much as them. Of course they will make a deal in the end, otherwise government would need to shut down again for a while, like it did in the past already. And once more money can be borrowed, more money will need to be printed again…which will increase the inflation and devaluates the dollar for a while. I would like to see the USDx to re-test the 90 area again…to see if it manages to stay above, despite all the printing…and if it does, then start buying it again. But its too early to buy now, above 92.

This week, we had another re-test of 1850 on EU, even below and market still made it above before the close. This area is very important for 2 weeks now…and like I said then, I still think the USD will become weaker. This week, EU was the weakest pair…because all other majors, such as GU, AU, NU were dropping, but not as hard as EU did…and it was the most obvious on friday, before NFP, when EU just kept dropping from London start. I was very suspicious about this move, when I saw other pairs holding it well and Gold even being bullish by that time already. I thought EU has to join the gang after NFP, which it did. We had a quick fake drop below 1820 and it was obvious some big money is buying it there, which was probably the reason why it stayed down there for so long. All the other pairs found their buyers already and euro did during NFP, too. I am staying bullish on EU into next week, even though this trade is not as easy as was selling it above 2200 few weeks back, but that trade was way too easy, anyway. When it comes to EU, bulls have a few hurdles to overcome and july being a non-event month, might help there. First big hurdle is 1900, so bulls need to stay safely above…then we can re-test 1975 and if bulls manage to stay there or higher into next week’s close…then finally my bull targets will come into play. The first big one is 2060, second would be 2120 and after that…lets see what happens. Looking on the daily chart on EU, GU, AU, NU, UJ and UCHF…all currencies are looking for new gains against the dollar. And Gold might have started a new uptrend, too, with the first hurdle of 1800 on the way…

Even though last week worked out exactly as planned, the way it happened, was not exactly technically correct. If you look at daily and weekly charts of EU or GU, it seems very bearish, BUT the price action starting on wednesday, makes me think, euro and pound bulls are not done yet. Since the move was a bit surprising on thursday and friday, without any proper corrections, I had to analyze it on the tick chart, which was time consuming, but I hope it will be worth it in the coming weeks. I will start with Gold, as mainly euro is highly correlated with it. The way gold reacted to the fed meeting was extensive. It simply overreacted! So on thursday I was watching the tick chart before and after London fix and noticed a “big long entry” at 1768…this is not exact science, so I might be wrong, but there are things I have seen in the past and they keep repeating themself. So, I saw some big boys entering longs there…and really, gold started climbing up, without breaking this barrier later in the day. Then on friday, EU and GU continued with the bearish action and mainly the US session was one-sided and took them both down…so gold went down, too…but again managed to protect the 1768 area, no matter how much dollar was gaining. The only thing that kind of messed up this number was the last hour of trading, well 62 minutes before market close or so…when gold broke that barrier and quickly went down to 1760, to slowly bounce up towards 1764 by the end of the day. The break was not big, so I do not think much of it, but still, it would have been nicer, if 1768 stayed protected. Anyway, looking at the weekly chart, gold is still bullish long term and this whole move this week only looks like a correction, rather than a trend change. And when gold goes up, it will help both EU and GU to go up, too, because friday’s US session was so one-sided, it almost didn’t make any sense. Technically, moves like this make me always suspicious…and looking at the weekly chart, it would make sense, if next week was bullish on both EU and GU…and the week after that on wednesday, is the month’s end. I expect both pairs to go up until the end of the month.

This week, USDx finally took off from 90, closing the week at 90.50. But since all of the move happened on friday, I expect bears to fight back a little, early next week. Last week I was talking about the 2150-60 area on EU as a strong support zone and it was acting like that all week. Now that we broke below, it might act as resistance. Next week we have FED on wednesday, so very likely another ranging week for the first few days…and this 2150-60 area is very important for the euro, it seems, so I wouldn’t be surprised if it was re-visited. I will look for short opportunities before or during FED, if we indeed keep ranging early in the week. My EU short targets didn’t change, just need to look for good entries next week. Monday will give a clue, as how high EU bulls are able to take it…closing price was 2107, so 2130+ should be doable for Asian session and London will give more clues after that. But wednesday-friday will be the most important days of the week, anyway, so taking a break until then isn’t a bad idea either. 😉

Not much happened this week, USDx still stuck in the same range, which favors dollar bulls, as the longer we stay in this range, the higher it will spike, once it breaks out. USDx bulls moved a little bit higher again this week, created a higher high and higher low and looking at weekly, after 3 strong bottoming candles, its ready for the big move. BUT next week is an ECB week, so anything is possible ahead of thursday…euro can start falling on monday or can be ranging until thursday or try to break higher, above 2200 again. But if it breaks higher, it should be only a good short opportunity, it shouldn’t be very comfortable there, as it wasn’t comfortable above 2200 this week. Euro bulls are clearly exhausted, so whatever happens before ECB, my medium term targets are still 2060, 1980 and finally 1830. But as for monday, 2150-60 will be important for bears to break. It is very near the closing price, but strong bottoming was happening there during London fix and after, until market close. Once that fight is done and bears have won, it should re-visit the 2100-2110 area again…and if 2100 breaks, it should be over for euro bulls, for now.

Not much has changed this week, dollar bulls keep fighting over 90 and again won the fight and defended the strong support. Two fridays in a row, London fix was in favor of dollar bulls into next week, but I am still waiting for a the strong upmove, without much of correction on the way. FED keeps talking about tapering, everyone is talking about insane inflation, so to me its just a waiting game, even though its frustrating. But everytime before a reversal, there is a lot of tight range play, frustrating for swing traders. If we look at all the main USD related pairs, in every one of them a strong reversal or correction is just waiting to happen. Even USDJPY, which is sitting below 110 and looks like a good short, would be a very dangerous short, looking at the weekly chart setup. 110 is a big psychological barrier…but it still feels like its going to break next week…and the area between 111-112.50 might be tested. That area might be a good short, but only if it holds…if not and it breaks, there is a lot of room to the upside. Even USDCAD looks like a perfect long setup, even though I don’t trade CAD, as its too risky. But its painting a picture towards other pairs, so it might be useful. When it comes to EURUSD, 2200 is the equivalent of 90 on USDx…and it is a strong barrier, where many fights happened this week. Once the fight is over, we will see who wins…

This week, we had a tough fight at 90 again, howering below until friday, when dovish ECB finally made it spike above and London fix did hold it above, too. It might seem minor, but its actually a big fight at this level and when the fight is over, dollar should appreciate towards 93+. FED kept talking about tapering, well, mainly Kaplan again…and ECB started talking about not tapering anytime soon, so all this should transform into the chart soon. Technically, EU is now turning bearish and USDx bullish, fundementally its been like that for quite some time. But thats normal, fundamentals always need some time to be “displayed” on the chart. So, unless something surprising happens next week, USDx should turn bullish. I am expecting retail to start building longs on EU next week, as it drops, which should help accelerate the down move.

Last week we had nice bullish action on USDx with a drop on friday, after a miss in retail sales. But in reality the sales weren’t as bad…they just didn’t grow compared to last month, where the growth was over 10%, so the figure isn’t as bad, which the market realized, too. From the moment the sales number was released, EU bulls only managed to go up by 20 pips…and couldn’t go higher all day, which leads me to believe they are “tired” below 2150. There is a nice hanging man candle on EU and also USDx, which suggests the end of EU uptrend is near. Inflation in the US might play a part in this…the figures last week were the worst since 2008! Inflation is through the roof mainly due to the economy opening up in high speed and thus demand being way bigger than the supply, which creates pressure on prices. Unlike EU, which goes from one lockdown to another, US seems be to on the right track, but FED will need to step up to push inflation closer to 2%, which is their longterm goal. I am not expecting any surprise rate hike, but they will definitely start talking about it and mostly about tapering, which should also put pressure on stocks and help dollar to gain some value. Considering the massive stimulus and money printing in the past few months, its surprising how resilient dollar was to all this new money. To me this means that a big upmove is around the corner…I am a dollar bull for the weeks, possibly months to come. Next week will be important for EU and the 2150-80 area needs to be watched. This week I saw some big short entries at 2180…the question is if they were satisfied with the drop towards 2050-60 or not. From my experience, when big money joins the game, they are in for 300 pips or more. I might be wrong on this…but my gut tells me 1830 is still on the table. As unrealistic as it sounds to many people at the moment. 😉