The Federal Reserve has done with rate hikes and investors are getting more jittery about the possible recession.
The inflation is cooling down, no doubt and the labor market is becoming the main focal point for investors. However, the payroll report is a lagging indicator, and market sentiment started to believe in no rate hikes above the 5% level.
Forex Technical Outlook for 23 January 2023 to 27 January 2023
At the beginning of 2023, the Bank Of Japan was the first central bank to announce the policy decision. For this week, the Bank of Canada will grab investors' attention with several PMI readings.
Moreover, the US advance GDP estimate for Q4 and PCE inflation could indicate more about the US economy.
Before proceeding further, let’s see important releases for this week:
- French Flash Services PMI on Tuesday
- German Flash Manufacturing & Services PMIs on Tuesday
- The UK Manufacturing & Services PMIs on Tuesday
- The US Flash Services PMI on Tuesday
- AUD CPI q/q on Wednesday
- BOC Monetary Policy Report & Rate statement on Wednesday
- The US Advance GDP q/q on Thursday
- Core PCE Price Index m/m on Friday
Let’s proceed with the weekly outlook with the DXY outlook:
The US Dollar Index (DXY) keeps moving down, whereas a bullish rebound in ADX on the daily chart indicates more selling pressure in the coming days.
102.95 resistance will be the main barrier for the current downside pressure, where a stable position below this level could lower the price toward the 100.00 level.
The monthly EUR/USD candle is creating a body above December 2022 high while the weekly candle closed with an indecision bar.
As the previous weekly candle is strongly bullish the current indecision is a sign of a bullish trend continuation for the coming days.
This technical analysis shows how the buying pressure is strong in the EUR/USD price. The price created a base in the previous week on the 1.0764 level from where another bullish leg may appear.
The high volume level from October to January range is at 1.0635, which is a sign that institutional investors are bullish on this pair.
The Relative Strength Index tried to push down below the 50% area but returned to the 66% area. It is a sign of a strong buyer's interest in the market that can extend the current bullish leg in the coming days.
Trading EUR/USD would be tricky for this week as the monthly close is knocking and the previous weekly close was indecisive. However, a minor bearish correction after the weekly opening could be a bullish opportunity throughout the week.
The buying possibility needs a valid confirmation from lower timeframe charts, where the primary price target level would be 1.0936 level. However, breaking below 1.0764 needs to be observed, which can initiate a bearish correction toward the 1.0640 level.
Like the EUR/USD price, GBP/USD closed with an indecision weekly candle backed by a strong bullish candlestick. As a result, the tiny inside bar could offer a decent long opportunity in this pair until the previous weekly low is broken.
This technical analysis shows how institutional investors are interested in this pair as the current high volume level from Oct-January is below the current price.
The indicator window showed a double bottom pattern in the ADX, below the 20 levels. It is a sign that the current trend is in an accumulation phase and a strong bullish impulsive momentum may appear if the ADX moves out of the 20 level.
Based on the current daily outlook, the bullish trend might extend in the current trading days in this pair. Investors should closely monitor the lower timeframe price action to find the best place to join the bullish rally.
However, the upside possibility might be invalid if beers take out the 1.2253 support level. It may initiate a bearish correction to the 1.2100 level from where the buying momentum may extend again.
In the weekly timeframe, a strong bullish candle appeared before forming an indecision outside bar. It is a sign of volatility in the market, where the bullish momentum is still valid.
This technical analysis indicates the daily price of AUDUSD where the dynamic 20-day Exponential Moving Average is working as immediate support. Moreover, a bullish 2-bar reversal has appeared from the 0.6860 support level, which is working as confluence support to the dynamic 20 EMA.
Based on the high volume indicator from October to January's bullish swing, the strongest trading volume is found at the 0.6715 area. It is a sign that more buying pressure has appeared, even if the price is under the premium zone. In the indicator window, the current ADX level is above the 20.0 area which is signaling a possible bullish trend.
Based on the weekly price outlook for AUD/USD, A strong bullish trend continuation opportunity awaits for the coming trading days. Investors should closely monitor the lower timeframe swing levels to find a suitable bullish rejection candlestick before joining the broader trend. In this price structure, the 0.680 level would be very significant as breaking below this level could lower the price to the 0.6691 area.
A strong bearish opportunity is available in the USD/JPY price as the latest weekly candle closed as an inside bar of the previous bearish candle. It is a sign that the bullish correction is over, and the price has a higher possibility of moving toward the major trend.
This technical analysis shows how the selling pressure is emerging within a descending channel, where the 20 dynamic Exponential Moving Average is acting as a strong resistance. As last week's price action was extremely corrective below the 20 DMA, we can expect the selling pressure to extend toward the 126.38 support level.
The indicator window shows a corrective momentum as the ADX is moving down to the 20.0 level. However, a rebound from the 20.0 level with a bearish daily candle below the 127.67 swing low would be a perfect combination of joining the bearish rally.
On the upside, massive bullish pressure is needed with a formation of a new high volume level to consider the bearish trend as invalid. In that case, a stable price above the 132.00 level is the primary requirement before aiming for the 140.00 level.
In the weekly chart of XAU/USD, four bullish candlesticks in a row are present, which is signaling a decent start of 2023 for bulls. Based on the fundamental and higher timeframe candlestick structure, it is better to consider the current trend as bullish as The demand for physical gold is solid.
This technical analysis of XAU/USD showed a strong bullish pressure where the current price is stable above the 1900.00 key psychological level. At first sight, the ideal trading approach is to look for bullish opportunities as long as it trades above the 1900.00 level.
Although the current trend is bullish, a minor bearish correction is possible as there is a strong gap between the weekly closing price and the dynamic 20-day Exponential Moving Average.
Moreover, the gap between the price and the high volume level from the current bullish swing has expanded. As per the current reading, the highest trading volume from November to January peak is present at the 1649.94 level.
Based on the current price outlook, the bullish trend is very strong and any minor bearish correction could offer a long trading opportunity. On the other hand, strong volatility and accumulation above the 1900.00 level are needed before considering the bullish trend as invalid.
If you look at the history of bitcoin in 2018 and 2019, the current price action is almost similar. After a massive 83% crash in December 2018, and 2019, Bitcoin rebounded strongly above the 11,387.00 level.
If the same price action happens in 2022, we may expect the price to move roughly about the 42,000 level.
This technical analysis of BTC/USD shows a strong bullish reversal in the weekly candle that has eliminated the bearish price section from seven November 2022.
However, it is not the right time to say that the bullish trend has initiated investors should wait for the price to close above the 21509.32 resistance level before aiming for a long-term bullish opportunity.
The current price is facing strong resistance at the 21519.9 area, but the speed of the existing buying pressure from the 17000.50 level is strongly bullish. As the current price action shows a bullish pre-breakout to structure, a daily close above the 22000.00 level could open rooms for reaching the 25220.38 resistance level.
The indicator window shows strong momentum as the current ADX is above the 40.0 level. Moreover, the dynamic 20 EMA is below the price and aiming higher which is providing a confidence support to bulls.
The US Dollar weakness is clearly visible on major pairs and the US Dollar Index. Investors should closely monitor the lower timeframe price action to match the broader outlook.