Week Ahead Analysis – 28

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Economic Calendar

DayEvents
MondayBOE governor Bailey speaks 
Tuesday
WednesdayBOE governor Bailey speaks
NZD and CAD interest ratesBOC monetary policy report and press conferenceUS CPI 830 am EST 
ThursdayUS PPI
FridayUS Retail sales

EURUSD

EURUSD H4 Chart

The pair has been making consistent lower highs as marked by the descending trendline. The immediate support is marked in blue near the recent swing low. Considering the build up in bearish momentum, there is a high chance parity will be tested by the end of the week, but still CPI data is going to play a major role in determining the sentiment of USD.

Technical LevelsPrice Zone
R21.02790
R11.01935
S11.0072
S21.0000 parity

USDCAD

USDCAD Daily Chart

The BOC is expected to raise their rates by 50 bps on Wednesday. Technically the CAD is going to gain in strength with a rising interest rate but the question is whether this has been priced in to the markets already.

Not only that, but the Fed is also expected to continue their rate hike throughout the year so we are looking at who is raising their rates higher and faster and also market’s expectations towards the currency.

Looking at the chart, it is in a bullish channel with consecutive higher highs and higher lows. The strength of the most recent up moves have also been relatively stronger than their pullbacks/ retracements. Let’s see if the interest rate decision on Wednesday can turn the table around. For now, 1.3075 remains the key resistance and should it break, we may be looking at 1.3340 in the short term which is less than 300 pips away.

Technical LevelsPrice Zone
R21.3340
R11.3075
S11.2833
S21.2712

Gold

Gold M30 Chart

Gold spiked to a high of 1751 following better than expected NFP numbers which came out at 372k versus the expected 260k. It then quickly calmed down and is currently trading below the 50 period moving average. Looks like gold is preparing for a breakout from the consolidation zone to the downside.

Next immediate support can be found at 1723 area, but since strong impulsive moves are usual following a breakout from a tight range, the level could be broken easily and gold may proceed to test 1680 area which has been a major support over the past 2 years.

Technical LevelsPrice Zone
R21752
R11748
S11723
S21686

SP500

US500 Daily Chart

The US Stocks market has had a decent week last week, bagging minor gains of 2.06%. At least it is still in the green.

From a technical point of view, it is starting to trade in a tighter range. Upside is still limited by the bearish trendline accompanied by the 50 day SMA. All eyes are on the CPI numbers later this week and we are just sitting on our hands.

Technical LevelsPrice Zone
R24040
R13945
S13810
S23638

Crude oil

Crude Oil H4 Chart

The major attention is on China Covid’s situation right now as they discovered a new variant which led to a minor jump in cases. The impact of this new discovery is magnified with China’s Covid zero policy and investors are worried about a new wave of mass testing which could dampen fuel demand. Not only that but recessionary concerns still remain with a lot of central banks tightening their monetary policy which could lead to a global economic slowdown and fuel demand could suffer.

Oil opened at 104.8 during Asia and has been trading lower since> it is currently sitting on a minor support level which I don’t think will hold for long after the price rejected the resistance level at 104.50. If the support breaks we are looking at it testing the major swing low at $96 again.

Technical LevelsPrice Zone
R2106.2
R1102.9
S199.4
S294

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