Forex FOREX PRO WEEKLY, July 25 - 29, 2022

[Sive Morten]

Morning guys,

So, as we've suggested Google and Microsoft have shown worse EPS numbers that it was expected by market. The difference is not big, but still... now all eyes on Fed.

EUR was not able to start upside bounce. And now situation shows more signs of uncertainty rather than clear trading setup. Despite the recent drop, we can't say that EUR has lost all chances to reach 1.0370 area. For example, it might be AB=CD and the push could come as from Fed comments as from GDP numbers on Thursday...

On 4H chart price is still inside the flag and coiling around major intraday support area:

Butterfly has not been formed yesterday, but we've got "222" buy instead. The destiny of 2nd retracement leg should be solved recently fast - around two major support levels, 1.0076-1.0115. For this scenario it is vital EUR to stay above them. Later other scenarios could be formed, such as double bottom, but, this is quite another story.

But for now - EUR has to stay above major 5/8 support to keep bullish chances. It is forming small reverse H&S after OP has been touched, by the way. Downside breakout will be irrational for bullish setup, because after reaching of just minor COP target - EUR has erased AB-CD pattern and drop under major support.

If you still consider any bullish trades here - keep an eye on these levels and the pattern that EUR is forming. The degree of uncertainty this week is high, because of multiple fundamental events.

 

[Sive Morten]

Morning everybody,

Situation calls as "I'll be back". So EUR starts the upside action on a background of dovish Fed decision and comments. According to interest rates - investors do not believe in strong hiking, suggesting one, maximum two rate hikes more before pause will be taken, or even easing of the policy starts. It plays in favor of the EUR.
Now let's watch for IIQ GDP that we believe has to be negative. This could let EUR to complete nearest target on daily chart around 1.04 area:

On 4H chart price was able to stay inside the flag and now is trying to break it up:

On 1H chart price action starts right from our 50% Fib support and Agreement area. Now its lows we could use as invalidation point. IF you have taken position yesterday - congratulations, now you could move stops to b/e and watch the movie.
For others, who have decided to wait with long entry - today you could use most recent upside swing and its Fib levels for long entry, with the stop below the lows. If EUR turns down and breaks it, hardly we get any upside continuation.

We suspect that is not occasionally as J. Yellen as J. Powell were focused on recession term, trying to treat it differently. They do know about GDP and if it would be positive - they do not talk about it. We'll see.

 

[Sive Morten]

Morning everybody,

Yesterday was very important, but not because negative GDP. It because of comments that have been made recently by J. Yellen and J. Biden. Last month it was unclear what strategy Fed will go but now we almost have no doubts what they have chosen. And this is really scaring... Just listen recent J. Yellen press conference and what she said about wide negative statistics, including recent GDP report. In particular she said that since IQ GDP was "-1.4" and IIQ is "-0.9" - it means that economy is turning to stable growing. I've not never heard more stupidity. Have a nice watch, guys

In short-term, with the Fed choice, we should get the visuality of prosperity and success on the stock market and BTC, dollar should start falling. That's why, EUR has good chances to climb here. Initially we could stay focused on the same resistance cluster around 1.0450 area - combination of overbought and few Fib levels:

In particular, we could follow this AB-CD pattern:

For today session and few next ones, we have smaller 1H AB-CD. Market hits OP now, but since we have strong action, it has good chances to proceed to XOP. Thus, if we get here downside pullback to some Fib support level, or even B&B "Buy" setup - it could be used for position taking:

The same we could say on our GBP H&S setup on 1H chart. It has completed the OP target, but with these new inputs, cable could keep going higher, and target of daily 3-Drive pattern has good chances to be completed next week:

Bears now have no choice but wait, when market sets the new balance, based on Fed's defeat and retreat.

 

[FreddyFX]

I want parity, I want parity

 

[FreddyFX]

I want parity, I want parity

Sometimes getting too enthusiastic, lol.

 

[Sive Morten]

Sometimes getting too enthusiastic, lol.

Don't worry my friend. It goes slower now, but 0.9 is possible. Take a look at new FX Report, where we explain why.