Weekly / Long-Term Forecast
Positive (+) and negative (-) factors for DOLLAR:
(+) FED still saying about % rates rising;
(+) yearly GDP cycles suggest recovery of GDP in the middle of year closer to 3% (that on 1% above EU and GB);
(+) local dollar falling from 1.05 to 1.15 (over 10%) increasing export and rising of Manufact. PMI, that will start recovery, and also increasing CPI rising because of more expensive foreign goods, that support % rates increasing;
(-) falling of WTI prices decreasing CPI and perspectives for % rates. But now oil will be trading in range of $42 - $49, that will stabilize situation. Only falling below $42 will open road to $37, that will be negative for CPI and % rates.
Positive (+) and negative (-) factors for EURO:
(+/-) Draghi words about possible QU decreasing is just words, because they was without certain numbers and we still need have confirmation from economy indicators, that for now is not saying anything;
(-) Core CPI is still very low, over 1%, that is too far away from target level of 2%;
(-) local rising of EUR price, from 1.05 to 1.15 (over +10%) create negative conditions for export and further rising of Manufact. PMI, that was supported by long-term low eur price and strong QE. So if eurusd will start uptrend above 1.15 and same time QE will be decreasing, this will be very negative factors for further EUR rising and euro zone economic conditions.
Market became to be trading on key resistance levels 1.1450 – 1.1580, that suggest start of downtrend to main support levels 1.05 – 1.08, that is confirmed by fundamental situation.
We have a chance that on such optimistic uptrend (after Draghi speech about QE decreasing, that is looks more as market manipulation) eurusd can break up 1.1450 and then get to 1.1580, where also we have target of wave 5 from daily chart. And we can’t exclude scenario that market can try to re-test high on 1.1713, but without fundamental confirmation, that we still do not have, market will not be able to do all of this.
Confident uptrend continuation we can have only with break up of 1.1713, after that eurusd will go on 1.2230.
Confirmation of the beginning of a downtrend we will have after break down of support 1.1190, after that market will go on main support levels as 1.05 – 1.08.
Positive (+) and negative (-) factors for POUND:
(+/-) BoE head Carney words about possible % rates increasing do not combine with economic situation:
1. CPI more increased because of fallen pound exchange rates, but not because increased PMI, that do not have correlation with GDP, so GB CPI is empty;
2. Fallen pound supported PMI increasing, but was temporarily and last index fluctuation showing this. So as higher pound exch. Rate will be, as lower PMI and CPI will be too.
Market came to main resistance levels 1.3035 – 1.3280, from that suggest downtrend to main support levels 1.2370 – 1.2570.
Confident uptrend continuation we will have with break up of 1.3280, after that we will reach 1.41.
Level 1.3035 suggest correction to 1.2890 or 1.2820, but with further break up of 1.3035 we will have uptrend continuation to 1.3280.
Positive (+) and negative (-) factors for GOLD:
(-) no political risks;
(-) central banks policies became more clear;
(-) possible dollar rising in eurusd from 1.15 to 1.08.
On resistance 1279 – 1269 we already have a top of the market, where same time market created “Head and shoulders” pattern with neck line on support level 1227. I suggest downtrend from 1269 to 1151, where with break down of “neck line on 1227 impulse will be increased.
Uptrend can start only with break up of 1269 with target on 1315.
For this week (July 3 – 7)
1243 strong resistance and while market is trading below it, we can expecting target on support 1227, where we have neck line. With break down of 1227 downtrend pressure will be increased and next target market will have on 1205.
End of current downtrend and beginning of uptrend we will have with break up of resistance 1243 with target on resistance 1256.
US OIL, WTI
Positive (+) and negative (-) factors for OIL:
(+/-) on $42 US production is felt on 100K (that is not much), that is saying that this price level is not such comfortable for some part of oil producers. But the same time some of OPEC countries increased their production, because of very weak budget and possible that much more, then US decreased production;
(-) inventories stopped their falling, so summer cars season disappointed. More worst, that in the end of august he will come to the end and inventories will start uptrend cycle;
(-) price $48-49 is good level for shale sellers and for all market at all, so production will be recovered and oil price will go down again to $42.
Level $43 was strong long-term support, but same time we have the same long-tern resistance on $48-49, from that we can expecting downtrend again on $43-42. With further break down of 41.70 downtrend impulse will increase with target to support $34.5 and this scenario will be possible to start closer to September, when car season in US will be ended and inventories will start their uptrend to 550000 from current 510000.
An uptrend will start as soon as the market rises above resistance level $49, which will be followed by a move up to resistance level $54. But in this case we need to have strong falling of US production and inventories, that is not looks as realistic scenario, because price $45-48 is already comfortable for producers, where same time in autumn inventories will start only to increase.
For this week (July 3 – 7)
Now we trading on strong resistance 46.60, but have a chance to break it up, in case of that market will continue uptrend to the level 48-49.
An downtrend will start as soon, as the market drops below support level 45.40, which will be followed by a move down to support level 43.20-42.50.
by Anton Kolhanov
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