In the previous AUD/USD forecast we noted that the currency pair was bearish for the week. As expected, the currency pair did not hold the region of 0.69. The middle bollinger band functioned as a support and capped the bearish momentum. Continued bearish momentum would need to overcome the middle bollinger band before heading for a test of the strong sentiment and technical region of 0.68.
The EUR/USD was also bearish for the week. As expected, the bearish pressure did manage to push through the middle bollinger band and 1.11. It was on an approach to test the strong sentiment and technical support of 1.1.
Technical Analysis
Looking at the AUD/USD weekly chart above we note that the currency pair was bearish for the week. As expected it tested the 0.68 region. Having said so, the AUD/USD had since eased back above 0.68 after failing to establish a foothold below 0.68.
Another bearish attempt to head south will likely face support at 0.68. It is critical for the momentum to breach 0.68 decisively before attempting to take on the support of 0.67.
A bullish recovery will likely see resistance at the middle bollinger band followed by 0.69 and 0.7.
Looking at the EUR/USD weekly chart above we note that the currency pair is bullish for the week. While the currency pair did test the strong sentiment and technical region of 1.1, bullish pressure over ran the currency pair and lifted the price action back above 1.1.
Next week, the EUR/USD will likely face immediate support at 1.1 and resistance at 1.11 and the middle bollinger band. Extended bearish target will likely be the lower bollinger band while towards the upside we should see the currency pair go against 1.12.
Last week our Price Action Bias Signals was spot on for the EUR/USD, producing a bias signal of bearish. While the currency pair ended bullish for the week, we observed a downside push from the start of the week that could be capitalised upon with an appropriate take profit or trailing stop loss. This serves as a reminder that nothing is 100% in forex, especially when sentiments usually influence price action in shorter time frames and can change in an instant. This means we need to always plan for unexpected price action and understand that besides a good entry, we also need to achieve a good exit for a forex trade. and without doubt, always practicing proper money management.
Congratulations to all members who captured that opportunity. The new Price Action Basis Signals for the upcoming week is now available in your dashboards.
Australian Employment Remains Weak
The Australian employment change was much weaker than expected. Estimates were for a positive gain of 16200 but the actual figure reported is a negative of -19000. The unemployment rate has increased from 5.2% to 5.3%.
Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A low unemployment rate is an indicator of a healthy functioning economy. These worse than expected figures are likely flooding the market with negative sentiment for the Australian dollar.
Eurozone Pessimism Recedes
We reported in our EUR/USD mid week update that while the German ZEW Economic Sentiment came out better than expected, it is still a negative which translates to a poor outlook. As a survey of analysts, this sentiment report holds a weight. Their sentiments may be derived from their working knowledge of the economy and hence may be an early indicator of economic health.
Subsequently we saw the German Preliminary GDP perform better than expected. Instead of a negative -0.1%, it turned out to be a positive 0.1%. This is a much welcomed change from the usual pessimism and likely compounded on the previous German ZEW Economic Sentiment’s upside surprise. Gross domestic product is a measure of the monetary market value of all the goods and services produced. It is an overall measure of economic activity and health and thus wields influence on the home currency. With Germany being a critical economic component of the Euro Zone, the euro currency likely received much positive sentiment, leading to it’s bullish close for the week..
The Week Ahead
Many important economic releases and events are due next week. It is critical to conduct defensive forex trading ( proper money management, realistic stop loss and take profits, etc ) as sentiments may change in an instant from unexpected developments, resulting in a corresponding price action shift.
AUS RBA Assist Gov Kent Speech
EUR ECB President Lagarde Speaks
Speeches may reveal new insights to economic policies or contain a question and answer segment that at times go into unscripted topics resulting in unexpected developments and volatility.
AUS Monetary Policy Meeting Minutes
USA FOMC Meeting Minutes
EUR ECB Monetary Policy Meeting Accounts
Monetary policy meeting minutes are given much attention by analysts and investors as it has an impact on the economy. The minutes will be analysed thoroughly for insights on the economic policy ahead. Significant volatility may be generated if there are unexpected revelations.
USA Building Permits
The construction of a building generates many economic activities. Jobs will be created for construction workers, the various sub contractors and services associated with new buildings such as power, water, furniture and so on.
USA Crude Oil Inventories
Movement of oil supply may bring insights to the level of general economic activities. For example, an increasing supply may suggest excessive production or diminishing demand. A reducing supply on the other hand may suggest an economic pick up.
USA Philly Fed Manufacturing Index
This survey of manufacturers is important as the sentiment of businesses is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well and with the activities of the businesses, downstream benefits will happen such as employment and investment.
EUR French Flash Services PMI
EUR French Flash Manufacturing PMI
EUR German Flash Manufacturing PMI
EUR German Flash Services PMI
EUR Flash Manufacturing PMI
EUR Flash Services PMI
USA Flash Manufacturing PMI
Purchasing Managers’ Index is a survey of purchasing managers and is important as the sentiment of purchasing managers is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well while a cautious sentiment may see less business activities due to prudence.
Following an economic calendar is vital so that your forex trading plan factors in the events. Members can log in to their dashboard for an economic calendar. The latest Major Currency Pairs, USD Index, Gold, Crude Oil and Price Action Bias Signals analysis are available too. Members can log in to their dashboards for the latest signals for the upcoming week.
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Traders should always practice proper money management and seek to understand the underlying tones for the market.
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