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I didn’t make an analysis last week, because I didn’t expect much to happen and sadly I was right. The USD chart is pretty much the same where it was one week ago. The channel I posted, is still valid and the USD bottoming got only stronger. The only interresting thing this week was to watch which pairs perform better or worse to the US dollar. UCHF was holding the best and the weekly chart is now very bullish, so that might be the best trade into next week, if the pair is able to break and stay above 9000 early in the week.

The opposite pair was GBPUSD, where USD was the weakest and pound overstreched the move by a lot, breaking 4000. A correction here is still in the cards and 3690 should be a doable target, but I still feel its going to break the uptrend channel now and target 3450-3500 eventually. Fundamentally, there is nothing positive going on in Europe, even though UK might have a little advantage into the future. Monday will be important for the pound…if London breaks 3950 and stays safely below it, the downmove for the week should be confirmed. Its the last week of the month and we know pound is doing strong one-way moves into the end of the month…and bears might take the upper hand now, after the overstreched move from the last 2 weeks.

Euro is somewhere in the middle, copying the USD chart almost exactly. We are still seing many news about a weak dollar and I can’t help but feel like the market is playing with traders at the moment. We came back towards 90 so many times now, it feels like the big boys are trying to discourage retailers, before they start the big move. Thats why I am cautious with selling the dollar at these levels and prefer to wait for a spike up. Since the USD bottoming is now taking longer than I expected, my long target will increase, too. As, the longer we bottom, the higher it will go, once the range is played out. First target remains 92.50-93.00, but now I wouldn’t be surprised with a strong move above 95, once this bottoming is over. Probably something to look into for the next few weeks.

This week worked out very nice, with the promised dollar squeeze from monday until thursday, with a retrace on friday. The most important for EU bears was the fact that not only 2100 was finally broken, but also 2050 was broken, a support level which was holding for over 2 months! Even with the big retrace on friday, bulls still didn’t manage to break above 2050 and the area needs to be watched early next week also. If bulls manage to stay safely above it, EU might give good short opportunities above 2200 again. If bears manage to stay under, my next bear target will be 1880 and finally 1770.

We will need to figure out if friday’s upmove on EU was just profit taking or a short term reversal attempt. Looking at the dollar price action on the 5m and 15 charts, it looks like profit taking to me, so early next week, dollar should climb back up and re-test its highs from this week. The question is which pairs to focus on and I decided to focus on GBPUSD. Looking at the EG chart, there might be a correction towards 8950-9000, which is not a little one. If EU will be struggling within the current range, GU will be the pair to watch for a drop. Of course, knowing GU, there still might be a spike up on monday, but eventually it should go down towards 3450-3550. There are no big events next week, so moves should be more technical than fundamental. We need to watch the USD chart and how it reacts above 9150, if it gets there, of course. But my USD target is still 9250-9300, so no need to jump on the short side just yet.

I feel that something big is coming…and it will come soon. Looking at EURUSD, it looks bullish on the H1 chart, had a tough time to stay under 2100 last week, BUT that doesn’t mean I think its safe to buy it at this moment. Since the EU chart is a little misleading and telling different stories on different time frames, maybe other pairs and the dollar itself will help to solve this puzzle. Let me start with the dollar…looking at the 15m chart, there was a heavy bottoming during London fix and since it was friday and the last day of the month at the same time, this is meaningful. It can easily happen that this bottom can last through all february and dollar can do a big short squeeze. I wouldn’t look into dollar shorts at all, until I see 93, at least and the reaction there. And it is also important to look at other USD pairs, which are all somehow correlated to EU, some more, some less, but if all go one way, EU will have a hard time to go the other way. Especially when the fundamentals are strongly against technicals at this point. The risks for EU in february are the neverending lockdowns, collapsing businesses, shortage of vaccines, which is a big issue, since it creates a bigger uncertainty as there already was and if that wasn’t enough, we now have a political crisis in Italy, with the possibility of new elections. Yet, I see many retailers buying EU and not even looking at the other side, but thats in general the problem of retailers, even so called retail “gurus”, who get so used to trade in one direction, they can never see the other. The same people who are buying now and say that even 1.18 is a crazy thought are the same people who were heavily shorting EU at 1.08 and thought people who expected 1.10 were crazy.

The important pair to watch next week is USDCHF, lurking below the strong resistance of 8920, which is there for 2 months now. Until now, it has been a good scalp short everytime UCHF went above 8900…this friday, it managed to stay safely above this level after the London fix bottoming, which is a good sign for bulls. Here is the thing about a long bottoming or topping…the longer it takes, the bigger the move afterwards. Now, after 2 months of bottoming…if bulls manage to break and stay safely above 8920…what do you think will happen? Retailers, so used to short this pair…will short the first spike up…it will retrace down a little…and then spike higher…they will short again…and the move up will become stronger as it accumulates retail shorts on the way. And that will be the dollar squeeze I am waiting for. So, if you see this move starting…I would advise not to short it, it may become a bloodbath for dollar bears.

p.s. There is a bearish divergence on EU monthly chart. 😉

Last week I talked about entries on many USD pairs and we reached good entry zones on all. On EU, we reached entry zone 2, didn’t make it all the way up to the 3rd, which is above 2220. Next week is FED week, so I hope we get better volatility than during ECB, which only gave us a pathetic 30 pips range to work with. EU can still go a bit higher before wednesday, but I wouldn’t go long below 2200, anyway. The main reason for it is the dollar chart and a similar patterns and price action as we saw at 100, actually, the bottoming around 90 seems even stronger to me than the topping that occurred around 100. Even though its hard to predict months or even years into the future, looking at the chart, we might be at a point of very good long term entries. On the daily chart, bulls are getting really angry, just from watching the PA, so if it starts going up, it might be strong, fast and without corrections!

p.s. I only added the monthly chart to piss off dollar bears a little. 😉

First of all, since next week is ECB week, take all my analysis with a grain of salt. Next week might be a typical ECB week, with a zig-zag until thursday and a big move after that. And on friday, we have important EU news, too. So, even though I am bullish on the dollar, next week will be about looking for good entries, before the big events start. And it might be misleading until then. I am ready for EU to go up until then, with the smallest short “target” being somewhere in the 2120-40 region and the highest between 2220-2250. Good thing is, most dollar related pairs had a nice topping this week, EU, GU, AU and NU, as seen on the charts below. But for all pairs, the key will be to find a good entry and not start shorting right away. Same goes for UCHF. Even though my target is 9100+, it is current at a very strong resistance of 8900-8920, which it can’t break for some time now. So I am also curious to see, if it keeps lurking under it, waiting for big volume on thursday and friday or if bulls are able to take it out before the news events. Also important to note, that as I was warning last week, retailers are very bullish on EU, they had a tough week and are even more bullish now. As you can see on the community outlook image below, now the majority is long on EU, so its better to look for trades in the other direction, anyway. But scalpers should do good either way early in the week, until mid week.

Last week dollar made a few more scares to the bulls, but eventually won the fight and broke above 90, where it stayed after strong bottoming on a 5M chart before the market close. The interresting part is how it got there. The USD upmove started on thursday already, with Asia not being able to break the previous low, London was buying dollar most of its session and NY was just ranging, not being able to break it back down. And friday, being many times the most important day of the week, when it comes to future outlooks, just continued this path. We had important US news on friday, the numbers are rarely important, what the “big boys” do with them is important. First NY hour, we had a fake bear candle, quickly reversed the next hour. And London fix confirmed a strong bottom around 89.80. Next hour, we had an important speech from FED’s Clarida, who was basically talking the dollar down with negative outlooks. BUT the London fix support did not break, anyway. That was a sign, that whatever negative news might come, there is not much interrest from “big boys” to sell the dollar anymore, in other words, its undervalued. From that support, we went up above 90.20 and even though the last few hours before market close we had a correction back towards 90, it wasn’t able to break below anymore and ended up with a strong bottoming on the 5M chart. This might be a clue into next week…if there is no opening gap down, the 90 handle might be re-visited a few times, before the dollar heads above it towards 91 and higher. On the EU chart, this reflects to the 2100-2140 area, which is a very strong support zone. If this zone gives up and bears are able to close below 2100, it might go down below 2000, towards my first big target of 1920-50. Another positive thing for EU bears is the fact, that retail seems to be 100% convinced about 1.25 and I am seing a lot of people only looking for longs into a new high. I don’t see it…not from here, anyway.

Actually, most USD related pairs are due for a correction early this year…not just EURUSD, but also GBPUSD, AUDUSD, NZDUSD and USDCHF, USDJPY. I will make the analysis on EU, but the same applies for all the pairs, as technically, they are all showing the same signs. Dollar is oversold across the board and the question is not IF it corrects, but only WHEN and HOW MUCH. Fundamentally, EU reached a level last week, which even ECB couldn’t take anymore…and it dropped nicely off 2300. Technically, all indicators tell us, EU is overbought. I am curious about today’s market open, because looking at the H4 chart, if EU opens without a gap down, it may bounce up from current support at 2210-15, before moving down later in the day. So the asian session will be interresting, as to how high they can take it until Frankfurt and mainly London starts. But I will be looking only for short opportunitites this week.

Looking at fundamentals, this is still a bad time for airlines all over the world and it might not change anytime soon, but with the vaccine rollout and the airline travel hopefully going slowly back to normal in 2021, it might be a good time to look into undervalued stocks, for a medium to long term investment. Technically, AAL seems to be the best bet, looking at the monthly chart. Medium term target would be $30 and long term target 50-60.

This month is tough for dollar bulls…especially EURUSD is having a one-way ride, which is very strange. Its normal that fundamentals are behind technicals…it can take some time for fundamentals to be shown on the chart, but this month even technicals don’t seem to work. I keep thinking why that is…but for that to understand, I will need to see the following moves. It could be that the big boys know something we don’t and try to load up at better prices. If a brexit no-deal was announced this year, then it would make all sense. But next week is Christmas week and we have only 3 regular trading days, thursday and friday will be most likely “dead”. I expect more from the week after, New Year’s week and then the first full week in january. Those should be big movers and lift the dollar up. Right now USDx is hovering around 90 and whats a better spot to build longs than now. We saw a similar fight at 100, which also took some time, but once bulls lost there, we had a 1000 pip drop. As of now, my dollar target is 93-95 “only”, lets see what happens if its reached.

I also have a different reason to believe that EURUSD will start a drop and its on the EURJPY and USDJPY chart. UJ is close to what I think will be the bottom and should go up from here. Even though it can range in this area for a while, so no crazy upmove or downmove are expected for now. And when you look at the EJ chart, its at a strong resistance zone and can easily drop 300-400 pips. Now combine those 2 together and you get EURUSD as a full bear into the coming weeks.

EU broke all resistance levels this week, first 1.20, then 1.21 and finally bulls got weak below 2180. People seem to be panicking, closing their shorts and going long, which I don’t think is a good idea. Not at these levels, that is. Since the move happened early in the month, it can easily be a trap…the monthly candle only started and has most of the month left to close. In my experience, end of month and start of month are used to build big positions by big players. So its too early to tell, if this move is a definite breakout north or just a trap, with a possible monthly close below 1800 or lower. If it turns out to be a confirmed break out north, this would be the worst place to buy, anyway. I am seing 1880-1920 as the first area, which has a bullish potential again…and the second area would be 1750-1825. So bears might have better opportunities to close their shorts at those levels. This month’s close will give us a clue, if it will be time to start looking for longs next month or if bears take over. This month, there is nothing positive for bulls anymore, fundamentally. It looks like there won’t be a brexit deal after all, not this month that is. Following the negotiations this week, no side wants to make any concessions. And in my personal opinion, EU wants to “punish” UK for leaving, so they might let UK leave without a deal…let them suffer a little early next year, only to “force” them into a deal more suitable for the EU. Either way, this month, both EU and GU should depreciate, as the uncertainty grows. And lets not forget problems with the EU budget, which Poland and Hungary want to veto. So there is no time to panic for EU/GU bears, especially when dollar found some support at 90.50 today. AUD and NZD are topping with the USD also. UJ and UCHF bottoming…so I don’t see anymore dollar weakness this month. Profit taking might start as early as next week, taking USD back towards 92.50-93.00.