The benchmark charted a bullish engulfing on the weekly timeframe as the past week’s close rate was
higher than the previous week's open. The weekly gain exceeded +3.4%, which was never seen since the
last bullish breakthrough candlestick in June. The monthly chart has a long downside whipsaw, pointing
to strong demand from buyers on pullbacks. August closed above 2900 points, promising another bullish
run toward the all-time high value noticed this summer. The technical outlook is bullish as the 55-weeks
exponential moving average held the S&P 500 index from further decline, acting as the support curve.
What’s more, Commodity Channel Index with 21-weeks period charted a bounce-by-trend pattern, bouncing
off the oversold level. The depth of the bearish retracement was not enough for the Bollinger Bands %B
indicator to perform a breakthrough signal, and the recent performance lifted the indicator above the
average line, showing a potential bullish continuation. The bulls have only 100 points to go before
re-testing the highest value in history, and that should happen sooner rather than later.
USD/CHF: Neutral
Although the safe-haven Swiss Franc was one of the weakest currencies among majors this past week,
USD/CHF is still bearish in the long-term perspective. The past week’s growth left many questions about
its sustainability due to several technical factors. First, the upside momentum was limited by 55-weeks
exponential moving average as the weekly close rate failed to eliminate the resistance. Even a
difference of six pips matters for the technical analysis and that inability of the bulls to get back
above EMA55 might signal a weakness. Second, the Relative Strength Index with a modified period of 21
weeks failed to cross the threshold of 50% and remained bearish. Third, MACD histogram is still in the
negative territory, even though its lines are about to cross each other. The bulls must confirm their
intention to reverse the trend, and a weekly close above 0.9988 should act as the mark dividing growth
from decline. A bearish slide is more likely for the week ahead for USD/CHF which should come back to a
consolidative range of 0.9763/0.9817.
USD/JPY: Neutral
After testing three-year lows (104.45), USD/JPY bounced toward resistance range (106.68). Such a
fast-moving performance means that big money is not ready to with the recent downtrend, especially when
it comes to Japanese export-oriented corporations. The pair remained inside the descending asymmetric
triangle formation below the middle line. Daily Ichimoku Cloud trend indicator kept the bearish
sentiment as the leading span did not narrow the negative surplus, and both Base and Conversion Lines
did not change the angle. The only positive achievement was that daily rates came back into the range
between resistance lines, which could promise further buying pressure in the short-term perspective. On
the other hand, the upside risk is limited due to multiple resistance levels such as Ichimoku’s Base
Line at 106.89 and the bottom band of the Cloud at 107.40. Both resistance should be considered for
fresh short positions.
EUR/JPY: Bearish
As long as EUR/USD printed the lowest weekly close rate in 28 months, the EUR/JPY cross-rate continued
the downtrend. However, some reversal signs start appearing on the weekly timeframe. The ADX mainline is
turning back down, indicating that the bearish momentum is getting exhausted. Williams %R and Stochastic
RSI oscillators are extremely oversold. A healthy retracement is required to keep the descending
formation in play. Otherwise, a strong bearish whipsaw could lead to a long downside shadow on the
weekly chart, and thus a bullish reversal on the long-term perspective. It’s recommended to start taking
profits for those traders who still hold short for EUR/JPY.
GBP/USD: Bearish
The British Pound failed to develop the local success versus the U.S. dollar as GBP/USD was giving a
perfect entry signal on Tuesday last week. The daily chart below shows that the last green candlestick
was limited by the upper line of the Bollinger Bands indicator, which pointed to an end of the bullish
retracement. Slow RSI oscillator (21 days) had a bearish confirmation as the bullish momentum was
exhausted right below the 50% threshold. Early Wednesday’s price action was on the negative side,
allowing the bears to step in. As a result, GBP/USD plunged 130 pips, finishing the trading week
slightly above the middle BB line at 1.2163. The bottom of the range comes above 1.2020 dollars per
pound and the pair is going to test that support in the week ahead if nothing changed on the fundamental
side. So far, British politicians can’t offer something positive for global investors and currency
traders. Therefore, the Sterling should continue the long-term downtrend related to the Brexit
mess.
NZD/USD: Bearish
The New Zealand dollar was one of the weakest currencies among majors for six straight weeks. Even the
rebound in commodity prices did not help the Kiwi to recover at least part of its losses. As a result,
NZD/USD dropped another 88 pips (-1.37%), threatening to lose the ground below the round-figure
psychological support at 0.6300, which never happened since August 2013 or within six years. All of the
weekly oscillators are extremely oversold, and there is no sense to add them to the price chart. The
graphical analysis shows that if the bears broke through the horizontal support line at 0.6237, then the
bottom line of the descending channel would appear in the market’s focus. This upcoming Autumn promises
more bearish achievements for NZD/USD in the range of 0.6100 and 0.6000 in extension.
Max Vasilyev
One of 6ixmarkets's clients. It was on this resource that he was able to earn the first
$50,000.
He lives in Moscow.