Investors have experienced a central banks week where the Fed, BoE, and ECB met to set the upcoming bond purchase program and interest rate decisions. The Fed decided to maintain a market-friendly environment by increasing the tapering and three rate hikes in 2022. On the other hand, the Bank of England surprised the market by hiking 15 bps with no change in rates in November. Meanwhile, the ECB decided to taper, but there is no rate hike in 2022.
These decisions are likely to work as a key price driver for the coming days. Therefore, based on the central banks’ perspective, the Fed has a higher possibility of maintaining the US Dollar’s dominance in the market. In that case, investors should closely monitor how the inflation reports are coming in the coming days.
The Holiday session has arrived where investors may experience fewer institutions activity in the market. Therefore a good trade management system is needed to avoid unexpected market noise.
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Forex Technical Outlook for 20 December 2021 to 24 December 2021
As the holiday season has arrived, there is a possibility of less trading activity in the global forex market. However, this week has some crucial price drivers, especially for the AUD. The week will start with the AUD Monetary Policy Meeting Minutes on Tuesday, where no significant change is expected. Besides, CAD retail sales and GDP will grab investors’ attention. The Crude Oil bulls are currently under pressure as the price faced a dynamic resistance at 70.00 area, and the sentiment affected the CAD. Therefore, investors should closely monitor how the CAD GDP is coming. Based on the current development, the monthly GDP may come at 0.8% from the previous report of 0.1%.
The US Dollar index remained corrective below the 96.92 key resistance level, but the price failed to move below the dynamic 20 EMA support zone. Moreover, on Friday, bulls formed a strong bullish candle that closed near the resistance zone. Now, as the broader market trend is bullish, a daily close above the 96.92 level is more likely to take the price up towards the 98.20 resistance area.
EUR/USD passed a volatile week where the US Dollar was the ultimate winner at the end of the week. The price tried to move up but failed to hold a bullish sentiment above the dynamic 20 EMA. Moreover, last Friday’s candle showed a massive selling pressure that eliminated all intraday demand zones.
The above image shows how the price ended the week with a strong bearish sentiment. Although the MACD Histogram was bullish, it failed to show an increase in buying pressure. Therefore, the price is likely to break below 1.1200, where the primary bearish target would be 1.100 area. The bearish sentiment is valid as long as the price trades below the dynamic 20 EMA resistance level.
GBP/USD falling wedge breakout was solid in the previous week, pushing the price above the dynamic 20 EMA. However, bulls failed to hold the daily candle above the dynamic level and moved lower below the 1.3267 support level.
The above image shows that the MACD Histogram is bullish, where the MACD line moves up. In the price chart, wedge breakout showed a clear bullish break of structure, indicating that bulls are active from 1.3160 to 1.3200 area. Therefore, any bullish rejection from the 1.3160 to 1.3200 area would be a buying opportunity in this pair where the ultimate target should be at the 1.3600 area. On the other hand, if the price breaks below the 1.3160 level with a bearish daily candle, it may come lower towards the 1.3100 area to grab the liquidity.
AUD/USD showed an amazing bullish recovery from the 0.7000 key support level and found a ceiling at 0.7175 event level. The price formed a bullish wicked candle and closed the week with a bearish daily close. Therefore, as long as the price trades below the 0.7175 level, the selling pressure will likely extend in the coming days.
The above image shows how the price showed a strong rejection at the dynamic 20 EMA area. Moreover, the MACD Histogram remained bullish where the momentum was getting weaker. Therefore, based on the daily price structure, AUD/USD is more likely to move down towards the 0.7000 area in the coming days. On the other hand, a break above the 0.7175 level with a strong bullish daily candle will open rooms for the 0.7418 area.
USD/JPY was corrective after showing a massive bearish breakout from the 115.50 area. The most recent price showed a robust bearish rejection from the dynamic 20 EMA area, where the price formed a bearish two-bar candlestick. However, the bearish sentiment was changed the next day as the price failed to hold the new swing low. Considering the current price action and holiday sessions’ influence, USDJPY will likely extend its corrective momentum in the coming days.
The above image shows how the MACD Histogram moves to the zero level indicating a possible bullish correction in the price. In that case, the primary target of the likely bullish pressure will be the 114.47 resistance level from where a bearish pressure may come. On the other hand, a break below the 113.50 level with a bearish daily candle may resume the current selling pressure towards the 112.00 area.
XAU/USD showed massive exhaustion during the FOMC, where the price moved down to 1752 level before showing a 600 pips gain. Therefore, the buying pressure from the 1760 to 1750 area was pretty intense so it needs to take profits from this week. In that case, a bearish correction is pending in the XAU/USD in the coming days.
The above image shows how the MACD Histogram turned bullish where the MACD line aims higher. Moreover, the price moved above the dynamic 20 EMA resistance with a massive bullish daily candle. Based on the current price structure, a bearish correction may happen in the coming days where the 1770 to 1760 area would be a possible buying opportunity for bulls.
The BTC/USD price showed strong exhaustion below the 53522.51 resistance level. Since then, the price became corrective and aimed lower. In that case, any bearish pressure is a buying opportunity for long-term investors and Holder's.
The above image shows how the MACD Histogram squeezes to the zero level where the price is corrective. Moreover, the dynamic resistance is above the price, where the gap between the price and dynamic 20 EMA has expanded. Therefore, any bullish rejection from 45,000.00 to 40,632.62 level has a higher possibility of initiating a bullish pressure in the coming days. In that case, the primary target would be the 60,000.00 key resistance level. However, a break below the 40,632.62 level with a bearish daily candle needs a HOLDing approach for further gains.
Overall, investors may experience a corrective week due to less trading activity. Therefore, no significant break of structure and breakout is expected to happen. However, traders should maintain a sound risk management system to avoid unexpected false breaking from low liquidity.