The global financial market passed a trading week with much volatility, mostly from headlines suggesting that Russia was retreating its troops. As a result, investors moved away from high-yielding assets that pushed the US Dollar to be left aside and provided benefits to safe-haven Gold and JPY. In the coming days, if Putin continues to take what he wants by ruling Ukraine, it would increase the volatility in the forex market where the US Dollar would be the ultimate loser.
The US economy has already provided hints for the upcoming rate hike from the latest FOMC. Now policymakers are ready to raise the rate and reduce the balance sheet. However, investors were disappointed to see the speculator's anticipation of the rate hike by 75 bps to 50 bps after the event. In that case, the US dollar might struggle to gain momentum from the rate hike while the geopolitical uncertainty is present to tension investors.
The macroeconomic calendar said the same thing where the US PPI reported a 5.5% gain in January, indicating that the current rising inflation has no sign of recovery from the recent peak. On the other hand, the European economy published the Q4 GDP estimation that confirmed a 0.3% gain. At the same time, the February ZEW survey showed that the EU economy missed the expectation by coming at 48.6.
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Forex Technical Outlook for 21 February 2022 to 25 February 2022
Besides the possible volatility from the geopolitical uncertainty, it is time to see what is happening in the Asian economy. The RBNZ will meet on Wednesday, where the current expectation is no change on the official cash rate. However, investors should monitor how the bank says about the economic condition of New Zealand. On the other hand, any weaker than expected report on US prelim GDP q/q would attract investors to focus on Asian currencies.
In the US Dollar index daily chart, the price passed a corrective week where a breakout and rebound from the dynamic 20 EMA is visible. The new higher low at 95.13 and the quick rebound of the price above the dynamic 20 EMA is a sign that bulls are interested in taking the price above the 96.92 resistance level. On the other hand, a daily candle below the 95.68 event-level would alter the current market structure and attract bulls to lower the price at 94.50 area.
The EUR/USD passed a volatile week where the trading week is ended up with a spike up and downside. The volatility came from the current geopolitical uncertainty from the Russia-Ukraine conflict. However, as the broader market context is bearish and the recent price shows a bullish rejection from the 1.1482 resistance level, a bearish pressure may come in the coming days.
This technical analysis shows how the price completed the bullish correction from 1.1280 swing low to 1.1400 level after an impulsive solid bearish pressure from 1.1482 level. Moreover, the daily candle of last Friday closed below the dynamic 20 EMA, where more than 50% of the candle’s body remains below the dynamic level. Meanwhile, the MACD Histogram changed its position from bullish to bearish with a bearish crossover in the MACD line.
Based on the current price structure, the bearish pressure may extend towards the 161.8% Fibonacci extension of the recent bullish correction, which is currently at the 1.1208 level. However, the bearish pressure is potent as long as the price trades below the 1.1400 level in the daily chart.
GBP/USD passed a volatile week where the price action from 1 February failed to break from the rectangle pattern. Instead, the price tested the top and bottom of the rectangle pattern more than twice, opening a possibility of a breakout.
This technical analysis shows that the MACD Histogram remained corrective at the neutral level while the current price is above the dynamic 20 EMA with multiple bullish rejections. In that case, as the existing market trend before the rectangle pattern is bullish, any sign of buyers dominance has a higher possibility of taking the price up.
The primary trading idea of GBPUSD is to find buying opportunities from dynamic 20 EMA to 1.3485 static level with a bullish rejection. In that case, the primary target of the bullish pressure would be towards the 1.3834 level. On the other hand, a break below the rectangle pattern would need more confirmations before aiming towards the 1.3356 level.
AUD/USD showed an excellent movement from the 0.7084 swing low to 0.7228 swing high, where the 143 pips of weekly gain faced a threat last Friday. These activities are within the current symmetrical triangle that came within the broader bearish trend.
The above technical analysis showed that the price tested the triangle resistance and closed the week with a bearish daily candle. However, the dynamic 20 EMA holds the price as a support while the MACD Histogram remains bullish.
Based on the current market structure, any bullish rejection from 0.7170 to 0.7084 is more likely to extend the bullish pressure towards the 0.7370 level. Therefore, another trading approach is to wait for a bearish daily candle below the 0.7084 level and look for shorting opportunities towards the 0.6966 level.
The broader market trend of the USD/JPY is bullish, where the most recent price trades within a bullish channel. Therefore, investors may experience either an extension or a breakout from the channel this week.
The above technical analysis shows that the MACD Histogram remained turned bearish with a divergence in the MACD line. Meanwhile, the current price is below the dynamic 20 EMA, where the 114.79 support level may indicate the upcoming price direction for USJPY.
In this context, a bearish daily candle below the 114.79 support level would open rooms for testing the 113.47 level in the coming days. On the other hand, an immediate rebound and daily close above the dynamic 20 EMA might extend the current bullish channel towards the 117.32 level.
XAU/USD was the gainer of the week, where the pure safe-haven sentiment pushed the price up from 1780.23 swing low to 1903.19 swing high with more than 1200 pips without a considerable correction. However, investors should closely monitor how the price trades at the 1900.00 key level where any bearish rejection would be a selling opportunity.
The above technical analysis shows how the price formed a divergence with the MACD lines where the price is hovering at the 1900.00 area. Meanwhile, the gap between dynamic 20 EMA and price has extended, opening the bearish possibility as a mean reversion.
In this context, any bearish opportunity from 1900 to 1917 is more likely to take the price down towards the 1844.50 support level. In that case, any cool news from the geopolitical issue would increase the selling pressure in gold for the coming days.
Bitcoin showed a 40% gain from the 24 January to the 10 February rally, where the recent selling pressure towards the 40,000.00 level opened a question regarding the possible bullish pressure.
One of the key on-chain indexes, IntoTheBlock’s Global In/Out of the Money (GIOM) model, shows that the BTC near-term support at 37,000.00 is stronger than resistances where any possibility of bullish rejection from 39,0000 to 37,0000 may increase the buying pressure. On the other hand, the on-chain supply on exchanges matrics shows that HODLers are optimistic about the future price action of BTC.
The current miner's position index also shows a buying pressure in the BTC price. The metric has dipped below the neutral zone, indicating that miners hold their assets as they are optimistic about the future.
The above technical analysis shows that the price failed to breach the 45759.40 resistance level and rebounded below the dynamic 20 EMA with a bearish daily close. Meanwhile, the MACD Histogram turned its position from bullish to bearish by moving below the neutral zone.
In that case, investors may expect the price to move towards the 37,000 support level while other matrics are optimistic for bulls. Therefore, a sharp rebound with a bullish daily candle above the dynamic 20 EMA might be the effective way to go long in the BTC/USDT.
Overall, the global financial market may face volatilities from geopolitical events where investors may experience violations of near-term levels. In that case, a sound money management system is applicable besides following what is happening on the spot.