The US retail sales topped the estimation in April while the industrial production showed a better-than-expected result. Although the inflation did not show a recovery to a satisfactory level, other metrics for the US economy remain solid.
On the other hand, the UK inflation reached a 40 year high in April at 9%, putting additional pressure on the Bank of England (BoE) to tighten monetary policy. This situation is also applicable to Canada, where the latest CPI inflation reached the 30 year high of 6.8% year over year in April.
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Forex Technical Outlook for 23 May 2022 to 27 May 2022
The week will start with German PMIs, where the current expectation is barely changing from the previous report. Among other reports, the FOMC meeting minutes and US prelim GDP, q/q would work as key price driving events.
In the US Dollar index daily chart, the prie turned volatile above the 103.00 level, where an immediate recovery below the dynamic 20 EMA is seen. Therefore, if the bears hold the momentum, they may move lower towards the 101.00 area.
EUR/USD broader market direction remained bearish, whereas last week’s bullish correction would signify another bearish leg. Bulls failed to hold the price above the 1.0600 psychological level despite the bullish candle in the weekly chart. In that case, the higher timeframe price action needs a clear view where another swing high above the 1.0640 would be the primary sign of the trend reversal.
The above technical analysis shows the EURUSD chart, where the latest daily candle closes below the dynamic 20 EMA resistance. Moreover, the Accumulation/ distribution line (ADL) continued moving lower while the RSI was still below the neutral 50 level. Therefore, the selling pressure may extend in the coming days if the price remains steady below the dynamic resistance.
For EURUSD, the 1.0560 to 1.0640 area would be crucial from where any selling pressure would continue the current trend towards the 1.0340 support level. On the other hand, a bullish structure break with a new swing high above the 1.0640 would be the primary sign of the possible bullish trend toward the 1.0800 area.
GBP/USD showed an amazing recovery last week, where the weekly candle closed with 226 pips of profit. The test of 1.2152 support level and bullish weekly candle indicates a sign of buyers' presence in the long-term chart that needs more confirmation from the RSI, which is at the oversold 30 level.
This technical analysis shows how the daily candle consolidates at the dynamic 20 EMA area, followed by an RSI divergence. Moreover, the Accumulation/Distribution line moved higher, indicating that the recent bullish pressure has enough support from volume.
Based on the daily context, investors should closely monitor how the price trades at the dynamic 20 EMA area, where any bullish daily candle above the 1.2600 level would open a bullish opportunity towards the 1.2900 area after a considerable correction. On the other hand, the alternative approach is to wait for a solid bearish rejection from the dynamic 20 EMA before getting short in this pair.
AUD/USD bearish pressure remains intact as the weekly candle failed to close above the 0.7054 static resistance level. Moreover, the weekly RSI was below the neutral 50 level while the MACD Histogram remained bearish.
This technical analysis shows how the daily cable closes below the 0.7054 static level where the dynamic 20 EMA worked as a confluence resistance. In the indicator window, the RSI rebounded higher from the oversold 30 level but remains steady below the neutral 50 areas. Moreover, the current price trades within the bearish channel where any daily close above the 0.7060 would ensure the channel breakout.
Therefore, as the current trend remains bearish, any intraday selling pressure in this pair would resume the bearish trend towards the 0.6830 level. On the other hand, bulls should wait for the channel breakout, where a daily candle above the 0.7060 would increase the possibility of testing the 0.7263 level.
The USD/JPY price showed three consecutive lower lows in the daily chart, followed by the double top formation at the 131.27 level. Moreover, the price moved below the 129.00 necklines with an intense selling pressure where bears are still active below the dynamic 20 EMA.
The above technical analysis shows how the RSI moved below the neutral 50 level for the first time since 7 March 2022. Moreover, the Accumulation/distribution line (ADL) moves lower, indicating that the trading volume supports the selling pressure.
Based on the current context, USDJPY is more likely to extend the selling pressure towards the 124.75 support level in the coming days. However, the bearish momentum is valid as long as the price trades below the 129.00 level. A rebound and a daily candle above the 129.00 level would resume the existing bullish trend towards the 131.27 level.
Gold remained bearish below the 121.97 resistance level, but the recent exhaustion of last Monday with a bullish channel breakout shifted the market momentum from bearish to bullish. As a result, the price recovers from 1821.97 to 1779.00 weekly demand zone, indicating the continuation of the long-term bullish trade.
This technical analysis shows the daily chart of XAUUSD where the recent bullish daily candle above the 1822.00 level shows a bearish channel breakout where the RSI was supportive with a rebound from the 30 level. Moreover, the ADL remained steady with a bullish momentum indicating a buying pressure based on the supply-demand concept.
Therefore, the upcoming price direction for XAUUSD may remain bullish as long as the price trades above the 1820.00 level. In that case, the main aim is to test the 1909.54 resistance level in the coming days.
Bitcoin whales holding 1,000 to 10,000 BTC are highly correlated with the BTC price, where watching these investors’ sentiments would provide an accurate outlook of the BTC/USD price. The number of whale wallets has increased from 2,127 to 2,133 last week, which is not a significant change. However, six new wallets in this category represent an accumulation period of BTC, which is at the beginning stage.
On the other hand, the Net Unrealized Profit/Loss (NUPL) is another metric to work as a fear and greed index for Bitcoin, where the latest price drop below the $30K level changed the NUPL sentiment from Anxiety to Fear.
This technical analysis shows how the price is trading within a symmetrical triangle below the 31,466.92 resistance level, which signifies further selling pressures. Meanwhile, the RSI rebounded from the 30 oversold while the ADL remained steady down. Therefore, based on the current price behaviour, the selling pressure may extend to the 26629.04 level this week. On the other hand, an immediate rebound with a bullish daily candle above the 31,466.92 level may increase the price towards the 36,500.00 level.
Overall, last week’s corrective price action may continue the momentum after having the price direction from the US prelim GDP. However, investors should remain cautious about the uncertainty of higher inflation, and Ukraine-Russia may increase the volatility at any time.