Forex FOREX PRO WEEKLY, May 09 - 13, 2022

Sive Morten

Special Consultant to the FPA
Messages
15,955
Personally, I think the comfort zone for Japan is the 110-125 levels, after which they can still and will bear with their currency weakness. But at and over the 130 levels, Japan will start to feel the heat and need to intervene to bring their currency down to their comfort levels. Essentials imports like oil & gas have to be paid in US$ and with record high prices for these commodities, that draws down Japan's foreign reserves which they cannot sustain over a long period of time. Also, imported goods will become more expensive in Japan.
Hopefully, I am correct in my assessment.
Absolutely Rahman. Actually we were looking at the same issue, as Japan Trading balance and current account has dropped almost to the zero because of Commodities prices. So, the US has lost another source of external liquidity support.
 

RahmanSL

Major
Messages
2,867
Absolutely Rahman. Actually we were looking at the same issue, as Japan Trading balance and current account has dropped almost to the zero because of Commodities prices. So, the US has lost another source of external liquidity support.
Hi Sive,
Yes, the pull backs on the USD/JPY pair are probably due mainly to US 10-year Treasury yields pullback from a 20-year high and also comments from Japanese Finance Minister Shunichi Suzuki. A double top formation on H4 suggest signals a bearish reversal, hopefully, down to below the 129 levels.

Thank you very much for your input & time, and all the very best.
 

Sive Morten

Special Consultant to the FPA
Messages
15,955
Morning everybody,

So, action was a bit choppy, but not only on the EUR. You could check yields, GBP, DXY etc. - everywhere we have some pullback. But the character of this pullback, the price shape do not indicate the change in trend/sentiment. It just because all markets are overextended, especially interest rates. Thus, when markets get some relief, the trend should continue.

Speaking on EUR, take a look that in recent two sessions price was not able to out from Friday's indecision candle. Flag pattern is still valid. To start speaking about sentiment change, we need to get bullish flag breakout at least. Grabber is valid as well.
EUR_d_10_05_22.png


On 4H chart upside bounce is choppy, and here our grabber are valid as well:
EUR_4h_10_05_22.png


Overall performance stands so that we even could consider large downside butterfly, and if you have bearish view, you could think about it. For entry, you could try to use "222" Sell pattern (grey), but with very slow CD leg, I'm not sure that EUR completes it. So, downside action could start earlier.
We see nothing to do for the bulls by far - neither 1.0430 completion nor daily flag bullish breakout happens yet.
EUR_1h_10_05_22.png
 

Sive Morten

Special Consultant to the FPA
Messages
15,955
Morning guys,

Today in the video, we've taken a look at all majors across the board as EUR mostly stands flat and we can't add a lot. Speaking shortly, on GBP we're watching for 1.20 area, JPY - 133, NZD - 0.6150-0.62, AUD - 0.67

EUR now stands flat partially because of interest rates pullback. Now 10year rate drops below 3%, but it means nothing, because rates are heavily overextended and even drop to 2.5% doesn't mean the reversal. It is normal reaction. Besides, EUR keeps the same scenario:
EUR_d_11_05_22.png


On 4H chart now it becomes clear the triangle shape, grabbers are still valid. Overall sentiment and existence of 1.0430 target give advantage to bears
EUR_4h_11_05_22.png


On 1H chart, as we've suggested market was not able to complete even minor "222" Sell and turns down. Upward action looks heavy and choppy. On a background of interest rates pullback, downside action might be not as fast, but be aware of CPI today - it could lead to the explosion here.

EUR_1h_11_05_22.png
 

Sive Morten

Special Consultant to the FPA
Messages
15,955
Morning guys,

So, activity on the EUR is not too strong again. Yesterday CPI has brought volatility but not the direction. Still, it is interesting detail about CPI. Headlines treat it as "positive" and inflation has raised not as fast (!!!) as it was supposed to. But, if you take a look deeper, in the structure of the CPI report, hardly numbers make you happy. Inflation has become wider and now spreads among almost all spheres of economy, including services, medicine etc. This is bad sign.
Second - take a look at S&P index. It has collapsed and you can see precisely the process that we've described in our weekly report - Fed crushes stock market to return investors back on debt. Now take a look at the debt market - 10 year yield is already about 2.5%, so the process is running. Next step - be prepared for unemployment jump for 2-3 times.

On daily EUR market stubbornly is moving lower, showing some signs of bearish dynamic pressure, as daily MACD is still bullish.
EUR_d_12_05_22.png


On 4H chart, pennant is broken but grabbers have not reached the target yet, as well as daily grabber:
EUR_4h_12_05_22.png


While on the 1H chart EUR keeps the shape of butterfly, without any attempt to move higher. In fact, the right wind is rounding down gradually. So, the status quo remains the same - bears could keep positions, bulls wait for 1.0430 target.

EUR_1h_12_05_22.png
 

RahmanSL

Major
Messages
2,867
Hi Sive,
Yes, the pull backs on the USD/JPY pair are probably due mainly to US 10-year Treasury yields pullback from a 20-year high and also comments from Japanese Finance Minister Shunichi Suzuki. A double top formation on H4 suggest signals a bearish reversal, hopefully, down to below the 129 levels.

Thank you very much for your input & time, and all the very best.
Hi Sive....looks like I got my below 129.000 at 128.980 which triggered my TP to closed out all my short positions on USD/JPY. However, I am still trying to find out the reason for the pair to drop. Perhaps should attribute that to the God of Forex :D
 

Sive Morten

Special Consultant to the FPA
Messages
15,955
Hi Sive....looks like I got my below 129.000 at 128.980 which triggered my TP to closed out all my short positions on USD/JPY. However, I am still trying to find out the reason for the pair to drop. Perhaps should attribute that to the God of Forex :D
Well, actually Yen has shown a bit surprising action recently - it goes in opposite direction compares to all the others. I haven't checked the headlines yet, but some fundamentals changes stand behind probably - either some statistics release or Intervention maybe... I need to check this.
 

Sive Morten

Special Consultant to the FPA
Messages
15,955
Good morning,

So target is hit, today is Friday, and for daily traders is nothing to do, as we need to get the reaction that tells us - could we count on more or less solid pullback.
EUR_d_13_05_22.png


Theoretically we already have the pattern - butterfly Buy. EUR even has dropped to 1.618 extension, greater than we suggested. Now we should get the bounce to 1.0465 K-area resistance at least, and then we see what will happen.
Speaking about scalp trading on 1H chart. For the bulls - be aware of XOP target here. EUR could try to hit it before major retracement starts. For example, minor reverse H&S pattern could be formed. 1.0465 might be used as the target, supposedly. Hardly EUR breaks it up today.

For the bears - the same 1.0460 area could be considered for short entry. Downside momentum is strong, so 5/8 pullback at least, has chances to happen.

EUR_1h_13_05_22.png
 

RahmanSL

Major
Messages
2,867
Well, actually Yen has shown a bit surprising action recently - it goes in opposite direction compares to all the others. I haven't checked the headlines yet, but some fundamentals changes stand behind probably - either some statistics release or Intervention maybe... I need to check this.
I am all out from USD/JPY and is looking at silver. Of course precious metals are under pressure form the strength of the US$, and the reality of tightening monetary conditions around the world is working against precious metals which bears no inherent yield from holding the asset. It is also widely priced in the greenback across the globe making it quite sensitive to an increasingly hawkish Federal Reserve. Nonetheless, I picked silver over gold because it has more industrial uses as the metal is invaluable to solder & brazing alloys, batteries, dentistry, glass coatings, LED chips, medicine, nuclear reactors, photography, photovoltaic (or solar) energy, RFID chips (for tracking parcels or shipments worldwide), semiconductors, touch screens, water purification, wood preservatives and many, many other applications. Based on that, I do not believe the price of silver can go down by that much....like e.g US$15-18.

Thanks for your reply, time and all the very best.
 

Sive Morten

Special Consultant to the FPA
Messages
15,955
I am all out from USD/JPY and is looking at silver. Of course precious metals are under pressure form the strength of the US$, and the reality of tightening monetary conditions around the world is working against precious metals which bears no inherent yield from holding the asset. It is also widely priced in the greenback across the globe making it quite sensitive to an increasingly hawkish Federal Reserve. Nonetheless, I picked silver over gold because it has more industrial uses as the metal is invaluable to solder & brazing alloys, batteries, dentistry, glass coatings, LED chips, medicine, nuclear reactors, photography, photovoltaic (or solar) energy, RFID chips (for tracking parcels or shipments worldwide), semiconductors, touch screens, water purification, wood preservatives and many, many other applications. Based on that, I do not believe the price of silver can go down by that much....like e.g US$15-18.

Thanks for your reply, time and all the very best.
Yep, in our recent report we also told that silver is a bit undervalued to gold.
Of course precious metals are under pressure form the strength of the US$
This is temporal. Tomorrow we explain, why dollar is rising. It has nothing to fundamentals, technical reasons and its growth doesn't reflect fundamental value
 
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