Weekly Outlook: 6/21/21 - 6/25/21
Are you ready for another week of trading?
Let’s take a quick look at what happened last week before we start preparing for this new week.
What happened last week?
Last week saw many correctional moves. Indeed, as May gave rise to many over-extended moves for major currencies, prices clearly needed to retrace. For example, the EUR pairs that had all made impressive bullish moves during the month of May finally retraced almost all of those moves recently. The USD pairs, on the other hand, have regained strength after several weeks of weakness with investors beginning to lose hope in the currency.
As for the EUR and USD (which also retraced impressively following Wednesday’s FOMC and J. Powell’s press conference which reassured investors), we had already mentioned the high probability of a correction in our previous weekly outlooks, on Discord and on Telegram. How to explain this kind of correction? In fact, overextended movements like these (almost) always have an end. The price can’t go in one direction without ever retracing, and the further the price goes without correcting, the more likely the correction will be. At this point, the more complex part is determining when the pattern of these moves is actually broken so that you can trade the reversal and not get locked into the direction of the trend like many trapped traders.
Here is one of the analyses published in our discord server and Telegram group giving bullish probabilities for USDCAD:
Sellers were clearly showing signs of weakness and bearish impulses were becoming increasingly rare. The reintegration of the long term channel after the overextension of the bearish movement gave bullish probabilities to the top of this bearish channel, with a potential of 250 pips and a movement that perfectly respected the published analysis.
Looking ahead to next week: what moves should we be watching for?
EURGBP Technical Analysis: a last bearish move before the bullish impulse?
EURGBP could chase the liquidity below support and below the bearish channel and then make a bullish impulse. The target of this impulse could be the major resistance of 0.8715, the starting point of this bearish channel.
USDCAD Technical Analysis: A probable correction of the impulsive bullish movement?
After a bullish move of more than 400 pips in 1 week, USDCAD might feel the need to retrace. The price is reaching resistance and even though it recently broke the top of the bearish channel, a retracement is still likely so that it can breathe before the next impulse.
EURCHF Technical Analysis: Bullish continuation to come?
EURCHF has followed the analysis sent in our Telegram group and in our Discord server by making a bullish move to the top of the bearish channel. At present, the odds still appears bullish, and if EURCHF manages to break the top of the bearish channel it could well continue to the major resistance of 1.11.
Please note that these analyses are based on price action elements only and are in no way trading or investment advice.
Fundamentals to watch for this new trading week:
Tuesday, June 22nd:
USD – Fed Chair Powell Testifies. As head of the central bank, which controls short term interest rates, he has more influence over the nation’s currency value than any other person. Traders scrutinize his public engagements as they are often used to drop subtle clues regarding future monetary policy.
Wednesday, June 23rd:
EUR – German Flash Services & Manufacturing PMI. One of the major indicators of the economic health of Germany, the largest economic power in the Eurozone, acting as a driving force.
USD – Flash Services & Manufacturing PMI. One of the major indicators of economic health that could change or accentuate the current trend of the dollar.
Thursday, June 24th:
GBP – Asset Purchase Facility + MPC Asset Purchase Facility Votes + Monetary Policy Summary. This news should bring volatility to the GBP pairs so please be careful with your risk exposure on this day!
Quote of the week – Psychological Preparation
“It is impossible for a man to learn what he thinks he already knows.”
Trading is a process of continuous improvement. Even when you reach the top of your trading career, you will always have things to learn because the markets are constantly changing. Never think you know everything about everything and always be humble about the market. If you stay in this frame of mind, you will then be open to all the lessons it can give you every day and you will inevitably become stronger. However, if you think you already know everything, you won’t pay the necessary attention to the signals the market gives you and you will end up letting your ego dictate your trading. One day, the market will get so upset with you that the frustration will drive you to make dramatic mistakes, which could cost you dearly.
No one will ever beat the market. The best traders are the ones who listen to the market, and try to become a better version of themselves every week with the experience they gain.
Have a great trading week everyone!