There are several surprises this week, and the most awaited event is the Federal Open Market Committee meeting. In this meeting, the Fed is expected to raise the interest rate by another 75 bps, followed by three similar moves in June, July, and September.
According to fed chair Jerome Powell, there is no painless path to control higher inflation, and the Bank could come up with a 100 bps hike by the end of this year.
Forex Technical Outlook for 31 October 2022 to 04 November 2022
The week will start with a corrective momentum as there is no significant event for Monday. However, it will be the last trading day of October, which could come up with excessive price fluctuations due to the profit taking.
Let’s see the important events from this week:
- RBA Case rate Rate Statement on Tuesday
- ISM Manufacturing PMI on Tuesday
- NZD Unemployment Rate on Wednesday
- Federal Funds Rate & FOMC Statement on Wednesday
- CHF CPI m/m on Thursday
- GBP Official Bank Rate on Thursday
- ISM Services PMI on Thursday
- Non-Farm Employment Change on Friday
- CAD Employment change on Friday
Let’s proceed with the DXY outlook:
DXY daily chart shows a new swing low below the 110.04 support level, indicating corrective momentum for the coming days.
A bullish daily candle above the 111.58 level, would increase the possibility of a trend continues toward the 115.00 area while breaking below the 109.50 level could extend the loss toward the 108.00 level.
Bullish price action was solid for EUR/USD as investors saw the price break above the symmetrical triangle and hold a buying pressure above the critical horizontal level. However, the price action for the last two days differed when a bearish two-bar reversal was formed in the daily candle.
This technical analysis indicates a strong trend reversal possibility as the triangle breakout left several demand zones, which is a sign of buyers' activity in the market. However, the broader outlook is still bearish, where the recent two-bar bearish reversal raised a question regarding the sustainability of the triangle breakout.
In this situation, investors should closely monitor how the price trades at the 0.9881 static support level, from where buying pressure may come.
In the main price chart, the 20-day Moving Average is below the price, working as a dynamic support level, where the current RSI level is still above the 50% level. However, there is a divergence between the price and RSI line, which could indicate a trend reversal if the price action allows.
Based on the daily price of EUR/USD, the bullish outlook is solid as long as the price trades above the triangle support level. In that case, bullish pressure from 0.9771 to 0.9882 level could open a bullish opportunity, targeting the 1.0193 level.
On the other hand, breaking below the 0.9771 level could increase the bearish possibility, where the ultimate target for the week is to test the 0.9631 support level.
- EUR/USD support levels to look at: 0.9881, 0.9771
- EUR/USD resistance levels to look at: 0.9818 & 0.9970
After the trendline breakout, GBP/USD bulls grabbed massive buying pressure last week, as shown in the previous GBP/USD weekly outlook.
For this week, the buying pressure is challenging as the price reached a critical supply zone from where sellers may regain momentum.
This technical analysis Indicates how the buying pressure appeared in the GBP/USD price, where the gap between the dynamic 20 DMA and price was extended to 300+ pips.
The recent buying pressure from the high volume level came with several bullish rejections and exhaustion at the multi-year low. It signifies a strong sell-side liquidity grab, where the ultimate possibility is a trend change.
Last week, the extreme buying pressure found a barrier at the 1.1743 to 1.1639 critical supply zone, from where a bearish correction may appear. The long gap with the 20 EMA support also indicates a pending bearish correction within the long-term bullish possibility.
In the indicator window, a strong divergence is present with the RSI, where the current RSI is still below the overbought 70% level.
Based on the daily outlook, the bearish possibility is potent as it trades below the 1.1743 level. In that case, any bearish possibility in the lower timeframe could offer a short opportunity, targeting the 1.1200 level.
However, breaking above the 1.1750 level with a daily close could eliminate the bearish structure and increase the price toward the 1.2000 area.
- GBP/USD support levels to look at: 1.1307
- GBP/USD resistance levels to look at: 1.1743 & 1.1200.
AUD/USD showed decent bullish pressure after the channel breakout but failed to extend the momentum above the 20 DMA level. Moreover, there are multiple barriers above the current price, which could limit the gain this week.
This technical analysis shows the daily RSI level, which shows a rebound from the 50% neutral level, while the dynamic 20 DMA acts as immediate support.
This week's broader outlook would be bearish as the current price is trading below the fixed range high volume level of 0.6495. Moreover, the critical resistance level of 0.6545 is also above the price, working as an immediate static barrier.
Based on the current price action, the bearish outlook is potent for the AUD/USD price as it is trading below the 0.6545 critical level. Therefore, any short opportunity in this pair with the target of 0.6300 area would be profitable.
However, breaking above the 0.6545 level needs to be monitored to find a bullish opportunity toward the 0.6700 area.
- AUD/USD support levels to look at: 0.6274
- AUD/USD resistance levels to look at: 0.6918.
The bullish trend continuation possibility is solid for USD/JPY as sellers failed to grab the wheel last week. Moreover, there are multiple demand levels formed last week, which increases the possibility of buyers' attempts to join the market.
This technical analysis indicates how the Relative Strength Index (RSI) holds momentum at the 50% level while the daily market trend is still bullish for the GBP/USD price.
The dynamic 20-day Exponential Moving Average is below the current price, from where buying pressure appeared. Meanwhile, bulls have got strong pressure from the 145.09 to 146.36 zone, which is a critical demand zone.
For this week, the bullish trend continuation possibility is valid until bears extend the selling pressure below the 145.00 psychological number. In that case, the upside pressure is solid towards the 151.90 swings high.
However, breaking below the 145.00 level with a D1 close might extend the loss toward the 140.40 level.
- USD/JPY support areas to look at: 145.09
- USD/JPY Resistance levels to focus: 150.00, 151.90.
The current outlook for the XAU/USD price will be similar to the previous week as the price ended the week with a bearish trend continuation opportunity.
This technical analysis indicates how bears are still active in the market as the price failed to break above the fixed range high volume level.
The potential double top formation at 1615.14 indicates retail liquidity below it, which would be the primary target for this pair this week. The dynamic 20 Exponential Moving Average level is also above the price, aimed lower. On the other hand, the selling possibility is potent from the RSI reading, as the current RSI level showed a bearish rebound from the 50% neutral level.
On the other hand, the alternative trading approach is to find a bullish breakout above the 1685.10 level with volume support before aiming for the 1734.79 level.
- XAU/USD support level to look at: 1615.14
- XAU/USD resistance levels to look at: 1684.10.
The BTC/USD price got hit by the recent earnings reports from Meta, Apple, and Amazon.com. Investors' attention was grabbed surprisingly by earnings from Netflix, while other companies did not show any sign of an economic slowdown.
Bitcoin positively correlates with the stock market, where the recent hit in the earnings report influenced BTC/USD bears to extend the momentum.
On the other hand, the bullish development in the BTC price has been solid from the last month. Since the beginning, the average return of Bitcoin in Q4 is 27%, which is highest after Q2’s 21%.
This technical analysis of the BTC/USD daily chart indicates how bulls are active in the market. After passing a long consolidation, investors have seen a bullish daily candle above the 19,944.68 level.
Moreover, the upside pressure is solid as the current price is above the high volume level of 19,208.27 level. Therefore, as the current price is above the 20 DMA, it has a higher possibility of extending the buying pressure toward the 22,742.43 level.
The alternative approach is to wait for the price to break below the 19,200.00 level before aiming for the 17,000.00 level.
- BTC/USD support level to look at: 19,944,68
- BTC/USD resistance level to look at: 22,742.68.
The US Dollar bulls need more momentum from the solid fundamental background. However, other currencies are in control against the US Dollar, as per the daily chart shows.