The US Dollar’s dominance last week was noticeable as the three major US Indices and the commodities, including the commodity currencies, were declining. The FED cut their Interest rates by 25 basis points as expected, but the Interest Rate projections were positive and promising. This gave confidence to the Greenback, and its price against the other currencies increased. Also, we noticed significant volatility in the Cryptocurrency markets as most of the most tradable cryptos were declining. The BOJ (Bank Of Japan) and the BOE (Bank Of England) kept their Interest Rates unchanged at 0.25% and 4.75% respectively. The drop in the CPI (Consumer Price Index) in Canada was the main reason for the Canadian Dollar’s obvious weakness last week.
Due to Christmas celebrations, this week's major news events are expected to be fewer than those of the previous week, as the markets on Wednesday and Thursday will be closed.
On Monday, the volatility is expected to be normal during the Asian trading session as there won't be any significant news events. Moving into the European and London trading session, in the UK, they will report their Current Account (Trade Balance). The consensus this time estimates an increase from -28.4B to -22.9 B. Last week, the Sterling was among the strong currencies, and a positive outcome on the Trade Balance can boost Sterling. At the same time, the UK will still report the GDP (Gross Domestic Product). The consensus estimates an unchanged number for both the Yearly and Quarterly. The yearly is expected to remain at 1%, and the last quarter’s is expected to remain at 0.1%. The Great British Pound's value against the other currencies is expected to increase if the actual numbers are greater than forecasted. The next significant event for the day will be the GDP (Gross Domestic Product) in Canada. The forecast estimates an increase in the GDP from 0.1% to 0.2%. If this happens and at the same time the market follows through, we expect a strength in the Canadian Dollar, at least during the New York trading session. The day will end with the Consumer Confidence report in the US. The consensus estimates an increase from 111.7 to 112.9. This indicates that consumer spending in the US is greater than in the previous report, and it is considered a positive for the value of the US dollar.
On Tuesday, the volatility is expected to be noticeable early in the morning during the Asian trading session, as in Japan, they will have their Monetary Policy Meetings Minutes. As the BoJ reported their interest rates last week, it will be important to find out how the policymakers are seeing Japan’s economy. Usually, we get an indication of how they will proceed with the Interest rates in 2025. Next, it will be Australia’s Monetary Policy Meetings Minutes. Usually, two weeks after the RBA (Reserve Bank of Australia) announces the country’s Interest Rates, the meeting minutes are held. As the RBA hasn’t proceeded with a rate cut yet, this meeting will be very informative as we will understand what they will likely do moving into the next year. Next, it will be the Core CPI (Consumer Price Index) in Japan. The forecast shows an unchanged number remaining at 1.5%. Many of the Japanese currency pairs are around key levels of resistance, as will be seen on the price charts below, and any positive events coming from Japan will add strength to the Japanese Yen. Moving into the London trading session, in German, the banks will be closed in observance of Christmas Eve. Therefore, GER30 will be closed. As there won't be any significant next events during the London trading session, the volatility is expected to be normal. Still, due to Christmas Eve, the liquidity might be less compared with another day, so day trading needs to be approached carefully as the spreads are usually affected. Moving into the New York trading session, in the US, the DGO (Durable Goods Orders) are expected to drop from 0.3% to -0.3%. This can cause fluctuation in the US Dollar, but usually, it does not cause any significant trend reversal in the markets. The day will end with the New homes Sales in the US. The consensus estimates an increase from 610K to 666K, which can be a positive event for the US Dollar.
Wednesday, December 25th, the only significant news event will be the BOJ (Bank of Japan) Governor Ueda's speech. Despite that, the liquidity in the markets will be minimal. Therefore, the spreads are expected to be higher. Due to Christmas celebrations, the banks in Australia, New Zealand, France, Italy, Germany, the UK, Canada and the US will be closed.
Thursday will be a short day regarding significant news events in the markets. In Japan, they will report their Housing Starts, and the consensus estimates an increase from -2.9% to -0.4%. If the forecast is confirmed and the market follows through, this can add strength to the Japanese Yen currency. During the European and London trading sessions, the banks in Switzerland, Germany, and Italy will be closed due to Boxing Day. Also, in the UK and Canada, banks will be closed due to Boxing Day. The day will end with the Unemployment Claims in the US. The consensus estimates a decrease from 220K to 218K. As this is not related to the NFP, it can bring some volatility to the US Dollar during the announcement. Still, it usually does not cause significant trend changes in the markets. The day will end with the Crude Oil Inventories in the US. The consensus estimates a decrease from -0.9M to -1.6 M. If the actual report confirms the forecast, it will be considered a positive event for the Greenback.
Moving into the last trading day of the Week, on Friday, in Japan, they will report their CPI (Consumer Price Index). The consensus shows an increase from 2.2% to 2.5%. This 0.3% estimated increase in the CPI is significant, and if the actual confirms the forecast and the market follows through, we expect a noticeable strength in the Japanese Yen. This can send the GBPJPY and the USDJP lower, at least during the event’s report. The next event will be the Unemployment Rate in Japan. The consensus estimates an unchanged number remaining at 2.5%. This stability in the unemployment rate is perceived as a neutral sign of the Japanese Yen’s performance. Still, in Japan, they will report on Industrial Production and Retail Sales. The Industrial Production is expected to decrease from 2.8% to -3.4%. At the same time, Retail Sales are expected to increase by 0.2%. Currency their Retail Sales are 1.3%, and the forecast shows Ian crease to 1.5%. If this happens sn at the same time the market follows through, we might see more strength in the Japanese Yen on the price charts. The last significant event for the day and the week will be the Goods Trade Balance in the US. The forecast shows a drop in the number, and from -98.3B, it is expected to decree to -101.2 B. This can cause weakness in the US Dollar, and it might give some advance to the EURUSD and the GBPUSD to gain some value against the Greenback.
EUR USD 4H
Last week, the price of the EURUSD kept moving lower, as expected. This is because, on the weekly chart, the major trend is a downtrend, and the candlestick was an Inside Bearish candlestick, which had a higher probability of pushing the price lower and resuming the existing trend. On the 4-hour chart, the price made a lower high and lower low formation. Last Wednesday, after the Fed reported the interest rates in the U.S., the price dropped by 1500 points (150 pips). The 20-period moving average is below the 50-period moving average, which is bearish. Last Friday, the price created a Double Bottom formation, and the RSI oscillator printed Positive Divergences. As the RSI remains below its middle line of 50, it has bearish implications. Currently, the price is within the FVP (Fair Value Price). Starting Monday, if the price keeps moving upward, the first area of resistance, R1, will be an Inside Resistance at 1.04532. This is considered as a key level of resistance because it coincides with the 61.8% Golden Ratio of Fibonacci measuring the swing from point (a) to point (b) and the 50-period moving average. If the price penetrates R1 and continues moving upwards, the next resistance area, R2, will be at 1.05344, which is the previous week's high. This is also a key level of resistance because it coincides with the 4-hour Bearish Engulfing Order Block created last Monday.
On the other hand, if the price is rejected and moves downwards, the first support area, S1, will be at 1.03439, which is the previous week’s low. If the price penetrates S1 and continues moving downwards, the next support area, S2, will be at 1.03319. Further downward moves will find the S3 support at 1.02000.
GBP USD 4H
Following the previous week's market outlook, the weekly chart ended as a Long-Legged Dojy candle. Last week, we noticed the Great British Pound's weakness, and the drop in the value of the GBPUSD was expected. Moving into the 4-hour chart, the price kept making lower highs and lower lows. Last Wednesday, towards the end of the New York trading session, the price created a Bearish Engulfing candlestick that resulted in a new lower-low price formation and also a new market structure, with a 4-hour Bearish Engulfing Order Block around 1.27000. Sterling's weakness continued until Friday, with the price making a new lower low and lower high, as shown on the chart. Therefore, we could draw a Downward Trendline T1. The 50-period moving average is below the 200-period moving average, which is bearish. The RSI Oscillator is below 50, and this has bearish implications. Although the MACD is below zero, the MACD Line (Blue) crosses above the Signal Line (Orange), creating a bullish crossover. These can cause the price to start a retracement phase.
Currently, the price is around 1.25679. Therefore, if the price keeps moving downwards, the first support area, S1, will be at 1.24748, which is the previous week’s low. If the price penetrates S1 and keeps moving downwards, the next support area, S2, will be at 1.24457. If the price penetrates S2 and keeps moving downwards, the next support area, S3, will be at 1.22994. Conversely, if the price moves upward, the first resistance area, R1, will be at 1.26670. This is a key level of resistance because it coincides with the Downward Trendline T1. If the price penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be at 1.27284. This is also a key level of resistance because it coincides with the Bearish Engulfing Order Block and the 200-period moving average. A further upward move will encounter the R3 resistance around 1.28116, which is also considered a strong Supply Zone for this currency pair.
AUD USD 4H
Among the two weakest currencies last week was the Australian Dollar. The price of the AUDUSD on the weekly chart ended as a Bearish Continuation candlestick, reaching October’s low of 2023. On the 4-hour chart, the price sold off with a Bearish Marubozu candlestick after the FOMC Minutes last Wednesday in the US. The price created a new lower-low formation, continuing the downtrend. On the same day, the price created a Bearish Engulfing Order Block around 0.63196. The 20-period moving average is below the 50-period moving average, and this is bearish. The RSI is also below its middle line of 50, which is also bearish. Starting Monday, if the price continues moving downwards, the first area of support, S1, will be at 0.6199, which is the previous week's low. If the price penetrates the S1 support and keeps moving downward, the next support area, S2, will be at 0.61702, which is another weekly level.
Oppositely, if the price starts a retracement phase, it means that it will start moving upwards. In this case, the first resistance area, R1, will be around 0.63274. This is considered a key level of resistance as it coinsists off the Bearish Engulfing Order Block created last Wednesday, the 50-period moving average, and the 61.8% Golden Ratio of Fibonacci if we measure the swing at point (a) until the swing at point (b). If the price penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be at 0.6382, which is the previous week's high.
USD JPY 4H
The Bullish Continuation candle we pointed out on the weekly chart in last week’s Market Outlook played out well on the chart. Last week, the obvious weakness of the Japanese Yen and the strength of the US Dollar made the USDJPY one of the favourable bullish currency pairs for traders. The weekly chart ended with another Bullish candlestick.
On the 4-hour chart, the price kept forming higher highs and higher lows. The 50-period moving average is above the 200-period moving average, which is bullish. The RSI is above its middle line of 50, signalling bullishness. The Stochastic Oscillator is in an Overbought condition, indicating bullishness.
Last Wednesday, during the London trading session, the price created a Bullish Engulfing Order Block around 153.400, and during the New York trading session, an FVP (Fair Value Price) of around 154.000. Currently, the price is trading within the FVP created last Thursday at around 156.400. Hence, if the price keeps moving upwards, the first resistance area, R1, will be around 157.929, which is the previous week’s high. If the price penetrates R1 and keeps moving upwards, the next resistance area, R2, will be around 158.856. A further upward move will find the next resistance area, R3, around 161.808. Conversely, if the price rejects and starts moving downwards, the first support area, S1, will be at 153.324. This is a key level of support, as it coexists with the Bullish Engulfing Order Block, as shown on the chart. If the price penetrates the S1 and keeps lowering, the next support area, S2, will be around 151.035.
USD CHF 4H
The price of the USDCHF on the weekly chart last week ended as a Bearish Reversal candlestick with a Long Upper Wick and a very small body size. This shows the price rejection as the USD was pressing for higher value, but by the end of the week, the price was rejected, and the candlestick left a noticeable upper wick. On the 4-hour chart, the 20-period is above the 50-period moving average, and this is bullish. The price still maintained its higher high and higher low formation but under the disagreement of the RSI, showing Negative (or Bearish) Divergences as shown on the chart. Currently, the RSI Oscillator is below its middle line of 50, and this has bearish implications.
Additionally, last Friday, the price rejected the Demand Zone at around 0.89000, as well as the 50-period moving average. Therefore, if the price moves upwards, the first key level of resistance, R1, will be around 0.90206, which is the previous week’s high. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be around 0.90504, which is an older weekly level. Conversely, if the price is rejected and moves downwards, the first support area, S1, will be around 0.88987, which is the previous week’s low. If the price surpasses the S2 and keeps moving downwards, the currency uptrend will end. If the price starts making lower highs and lower lows, it will create a new downtrend, with the next key level of support, S2, being around 0.88166. If the price penetrates the S2 and keeps lowering, the next support area, S3, will be around 0.87588.
GBP JPY 4H
Following the previous week’s market analysis, the price of the GBPJPY has kept increasing, with the weekly chart’s candlestick ending as a Bullish Continuation. The 10-period remains above the 40-period weekly moving average (not shown on the chart), which has bullish implications. On the 4-hour chart, last Thursday, after the BOJ reported the new interest rates, the price of the GBPJPY skyrocketed by 3,500 points (350 pips), as shown on the chart. The price forms a higher high and a higher low formation, which is bullish. The 20-period is above the 50-period moving average, and this also has bullish implications. The RSI Oscillator is above its middle line of 50, indicating bullishness. Currently, the price is within the FVP (Fair Value Price) of around 197.000. Therefore, if the price keeps moving upwards, the first resistance area, R1, will be at 198.958, which is the previous week’s high. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be around 199.811, which is an older weekly high. Conversely, if the price rejects and moves downwards, the first support area, S1, will be an Inside Support at 195.888. This is a key level of support as it consists of the FVP, the 20-period moving average, and the 61.8% Fibonacci Golden Ratio that is created if we measure the swing at point (a) until the swing at point (b). If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be around 193.660, which is the previous week’s low. The level coexists with a 4-h Bullish Engulfing Order Block and can become an additional supporting factor for the price. In case the price penetrates the S2 and keeps lowering, the next support area, S3, will be at 192.547.
GOLD 4H
The Long Upper Wick candlestick, very similar to the Gravestone candlestick pattern, played out exceptionally well, as we expected, and the price of gold declined last week. The 4-hour chart ended the uptrend, and the market structure changed once the price started making lower highs and lower lows. The Bearish Marubozu candlestick created during the FOMC Minutes formed the Death Cross once the 50-period crossed below the 200-period moving average. The RSI at that time became Pversold, and by the end of the week, it remained below 50, which is bearish. Additionally, the MACD is below the zero line, showing a Bullish Crossover as the MACD Line (Blue) crosses above the Signal Line (Orange). Currently, the price is around the 61.8% Fibonacci Golden Ratio, as shown on the chart. At the same level, there is an Inside Resistance R1 and the 50-period moving average. Therefore, if the price is rejected, it will start moving downwards. In this case, the first support area, S1, will be approximately $2582, which is the previous week’s low. If the price surpasses the S1 and keeps moving downwards, the next support area, S2, will be at $2562, which is an older weekly level.
On the other hand, if the price penetrates the R1 resistance and keeps moving upwards, the next resistance area, R2, will be at $2664, the previous week’s high. This is considered a key level of resistance as it coexists with the Bearish Engulfing Order Block created last Monday, which has yet to be tested. If the price penetrates R2 and keeps increasing, the next resistance area, R3, will be at $2692.
USOIL 4H
For another consecutive week, the price of USOIL kept trading sideways. On the weekly chart, the candlestick ended as a Bearish Inside, which has bearish implications. On the 4-hour chart, the price created a False Breakout of the Lower Band last Tuesday. It then moved upwards and traded all the way until the Upper Band, where it was rejected, forming a Shooting Star, as shown on the chart. Since then, the price has been trading below the middle of the Bollinger Bands, which is the 20-period moving average. Last Thursday and Friday, the price was “Walking the Band”, and this has bearish implications. The RSI is below its middle line of 50, and this is bearish. The Stochastic Oscillator is in an Oversold condition, and this is bearish. Starting Monday, if the price keeps moving downwards, the first support area, S1, will be at $68.42, which is the previous week’s low. If the price penetrates the S1 and keeps lowering, the next support area, S2, will be at $67.69. A further downward move will find the next support area, S3, at $66.95. Conversely, if the price bounces off and moves upwards, the first resistance area, R1, will be at $71.39, which is the previous week’s high. If the price surpasses the R1 and keeps increasing, the next resistance area, R2, will be at $72.85.
BTC USD 4H
The Bullish momentum on the BTCUSD sustained a higher price and a new ATH (All-Time High) only last Tuesday. The price reached $108297. On the 4-hour chart, a Bearish Engulfing Reversal pattern caused the market to create a new market structure and cause a Bearish Crossover once the 20-period moving average crossed below the 50-period moving average. The Demand Zone, which we pointed out on the chart last week, caused the price to have a False Breakout after the sudden downward move last Friday. The RSI Oscillator is below its middle line of 50, and this is bearish. The MACD is below the zero line, showing bearishness. Hence, if the price continues moving downwards, the first support area, S1, will be at $92159, which is the previous week’s low. If the price penetrates the S1 and keeps moving lower, the next support area, S2, will be at $90736, which is an older weekly level. A further downward move will find the next support area, S3, at $86621.
On the other hand, if the price bounces off and starts to move upwards, the first resistance area, R1, will be at $102750. This is considered a key level of resistance as it consists of the Bearish Engulfing Order Block and the FVP (Fair Value Price) created last Thursday. If the price penetrates the R1 and keeps moving upwards, then the next resistance area, R2, will be the ATH at $108297.
E-mini SP 500 Futures, 4H
Last week, the price of the SP500 created a new ATH (All-Time High) at $6152.75. The weekly candle didn’t close above the previous week’s high, and this is a point of weakness in the SP500 market. The primary trend is still an uptrend. On the 4-hour chart, the price Gapped Up on Monday’s opening, but the gap “filled” last Wednesday with a Long Bearish candle during the FED’s announcement of the Interest Rates and FOMC minutes in the US. That caused the 20-period to cross below the 50-period moving average, known as a Bearish Crossover. Last Friday, the price created a Lower Low formation, but simultaneously, the RSI Oscillator showed Positive (or Bullish) Divergences, and that pushed the price upwards. Last Friday, the price rejected the 50-period moving average, the Inside Resistance R1, and the 61.8% Fibonacci Golden Ratio if we measure from the swing at point (a) until the swing at point (b). Therefore, if the price keeps moving downwards, the first support area, S1, will be at $5866, which is the previous week’s low. At this price level, a bullish order block was created last Friday and hasn’t been tested yet. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be at $5724.25, which is an older weekly level. Conversely, if the price bounces off and moves upwards, the first resistance area, R1, will still be the Inside Resistance at $6034.52. If the price surpasses the R1 and keeps moving upwards, the next resistance area, R2, will be the ATH at $6152.50. Right under the R2 resistance, the price formed a Bearish Order Block, which can add more resistance to the price.
US 30, 4H
Following the previous week’s Market Outlook, the price of the US30 kept moving downwards, and the weekly chart ended with a Bearish candlestick for the third week in a row. On the 4-hour chart, the price created a Death Cross once the 50-period crossed below the 200-period moving average last Wednesday, after the FED’s FOMC Minutes. The candlestick that showed this is a Bearish Marubozu, which has bearish implications. The RSI Oscillator created a Positive (or Bullish) Divergence once the price registered a new lower low last Friday. The price then moved upwards, as the last low occurred under Low Volume. Last Friday, towards the end of the New York trading session, the price reached the swing low at point (a) and declined, as shown on the chart. Currently, the price is around $43000. Hence, if the price continues moving downwards, the first support area, S1, will be at $42132, which is the previous week’s low. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be at $41667, which is an older weekly level. If the price penetrates the S2 and keeps lowering, the next support area, S3, will be around $40653.
On the other hand, if the price starts moving upwards, the first resistance area, R1, will be an Inside Resistance at $43350. This is considered a key level of resistance as it consists of the 50-period moving average and the 4-hour Bearish Order Block, which was created last Wednesday and hasn't been tested yet. If the price penetrates the R1 and keeps moving upwards, the next resistance area, R2, will be at $43941, which is the previous week’s high.
GER 30 (DAX Futures) 4H
The Doji candle created the ATH (All-Time High) price on the weekly chart a few weeks ago, caused the price to decline last week, and created a Bearish candle on the weekly chart. As the primary trend is an uptrend, intraday downtrends need to be approached carefully. On the 4-hour chart, the price started making lower highs and lower lows. Last Wednesday, the price created a 4-hour Bearish Order Block around 20300 and an FVP (Fair Value Price) around 20150. Last Thursday, the 20-period crossed below the 50-period moving average, known as the Bearish Crossover. The RSI Oscillator is below its middle line of 50, and this has bearish implications. Starting Monday, if the price continues moving downwards, the first support area, S1, will be at 19831, which is the previous week’s low. If the price penetrates the S1 and keeps moving downwards, the next support area, S2, will be at 19600, which is an older weekly level.
On the other hand, if the price bounces off and moves upwards, the first resistance area, R1, will be an Indie resistance at 20198. This is considered a key level of resistance as it consists of the FVP, the 50-period moving average, and the Golden Ratio of Fibonacci, which is 61.8% if we measure the swing at point (a) until the swing at point (b) as shown on the chart. If the price penetrates the R1 and keeps increasing, the next resistance area, R2, will be at 20490, which is the previous week’s high.
