Weekly Forex Forecast (29/08/22) EurUsd / XauUsd + Forex Trading Plan! [HD]
hey traders it's john fortune here with this week's weekly forex forecast i hope you're having a fantastic weekend last week was dominated by jackson hole and the speech that the fed chair jerome powell gave on friday you can see in the dxy we did nothing until the speech and then we put in this engulfing candle in the dxy and that's the same also for stocks we are going to look at stocks because what happened last week in the stock market is going to play a large role in where i think the opportunities lie heading into next week okay so quick look at the economic calendar and this was the speech on friday that the markets braced for they just corrected into didn't really do anything until this took place and then we saw the rally in the dxy and we saw a sell-off in the stock market now usually when power gives a speech at jackson hole it's 15 minutes 20 minutes long this was an eight minute speech and the reason for this was to drive home the message and not provide any additional material which the stock market or traders would look at and say oh this is clearly a pivot or this is the sign of a pivot therefore we're going to pile back into risk assets and buy stocks because recently he's been trying to talk down financial assets and he's been trying to nudge up unemployment by being hawkish and the markets have just kind of ignored and discounted it and said oh he's going to pivot so he wanted to make this message on point concise and drive home the point that look we've been here before in the 70s in the 70s we had very high inflation and the fed chair at the time arthur burns pivoted too early he was afraid of causing a really deep recession so he pivoted too early and all that did was lead to stagflation which is low growth and high inflation in the 70s and in the end volker had to come in in the 80s and crush inflation with a severe recession anyway so powell's point is why not cut out the middleman of many many years of stagflation before a recession anyway you may as well just get a recession if it's going to come anyway get it over with early get it over quickly cut out the years of stagflation in between and then we can pivot and then we can manage that decline and start to stimulate growth once again with the loosening of monetary policy so you have to understand the framework with which powell's working with which is that you've been here before in the us and the last time the fed pivoted too early and it just led to stagflation before a major recession happened anyway and i think for the first time in a long time the market finally took pal seriously on friday and this is why we saw the selloff in stocks and this is why we saw the rally in the dxy if we just jump ahead to next week you can see that there isn't really anything there is data coming out which is important we've got manufacturing pmis out to china we also have pmis out of the us and we have non-farm payrolls on friday but because we had a pretty low volatile week last week i do think we're going to see moves before non-farm payrolls on friday i think certainly the dollar is going to be the best opportunity heading into next week and those are going to be my primary pairs that i'm going to be focused on next week okay so let's have a look at the scorecards for the coming week and in last week's video we identified the swiss franc and the us dollar as the best potential longs and don't forget this is a one to four week forward looking scorecard and the euro and the pound had the worst one to four week probability scores going forwards and again last week not much really happened the dxy just corrected the swiss franc pairs really went nowhere and so i am still looking for pretty much the same markets we were looking at last week however the us dollar changes and becomes the best potential long play heading into next week so there are some nuances here i am still interested in us dollar long's vis-a-vis the pound the euro and also the new zealand which has weakened and i am going to be also looking at the swiss franc pairs once again pound euro new zealand frank to the downside didn't move much last week but i am looking for potential follow-through this week and we can also look at potential aussie plays vis-a-vis the pound the euro and the new zealand now the first thing is that as it currently stands the scorecards are suggesting in the forex markets stagflation as opposed to a severe risk-off move why do i say that because the japanese yen is the most risk-off currency and in a blind panic where the stock market starts to crash you would expect to see the probability score of the japanese yen being over on the left-hand side here would be positive and with the commodity currencies like the australian dollar the canadian dollar you would expect to see them weakening in the scorecards and potentially being very weak especially the aussie in a severe risk off or deflationary environment now maybe that changes and of course the scorecards are always developing and they're one to four weeks on a rolling basis so they can change over the next couple of weeks but right now the market is not in a blind panic however based on what we saw at the end of last week i am slightly wary of taking risk on moves which would be uh pound aussie to the downside is a risk on move euro aussie to the downside is risk on new zealand aussie to the downside even is somewhat risk on or rather i should say aussie new zealand to the upside because that's how it's paired and the second thing to note here is even though the swiss franc is the second highest scoring currency it is down by minus two in the scorecards and especially when a market comes off overbought for the first time very often it continues to move down the scorecard so i am also wary about swiss franc long so we have two reasons here why the top or the second and third high scoring currencies are not in my opinion super favorable next week because of what we saw in the stock market and the risk of these scorecards changing if we get a stronger sell-off next week and we get more data coming out with non-farm payrolls so to cut a long story short because of what's happening in the stock market and because for the first time in many weeks i am now getting signals from the stock scorecards to look for shorts or to be short and i am not actually short already in eu stocks uk stocks and also some individual u.s stocks and if that's going to continue into next week i want to prioritize risk off plays which would be us dollar long swiss franc long but because the swiss franc is coming off of overbought levels by -2 it really just leaves the dollar as the main focus and priority for me going into next weekend the dollar pairs are going to be where i'm going to be primarily looking to make money next week in the forex markets okay so let's have a look at the individual currencies and we're going to see this week the swiss franc is really confirming what we've looked at in the scorecards and that's why we look at the individual currencies to give us an additional filter or picture of what's going on in the scorecard so by looking at the dxy technically again pretty much went nowhere last week consolidated then we had a bullish catalyst at the end of the week i am looking further advances and i've been saying all the way through this is just a correction and i'm looking for the market to move into new highs and i do think we're coming to the 109.76 next week as i said this is the only market and i've been saying for a while which is in a full-blown bull market so it is the highest scoring currency in the scorecards next week and this is where i think the best chance to make money in forex stands next week in long dollar plays next is the euro we came and took out the targets at 0.996 and we consolidated i am now looking further advances next week down to 0.9780 and i do think euro shorts are going to be a good place to look to make money next week alongside those dollar long positions next is the pound the pound took out the target last week and this pattern you're seeing technically here can you see this where you have a consolidation after a strong momentum move like this and you're seeing the same in the euro when you go and have a look at it we just looked at it if you go back and have a look at it it's the same you have this kind of tight consolidation and in the dollar you have the same you have the momentum and you have a tight consolidation these often precede technically speaking quite sharp moves now these patterns can fail but when you combine that with the catalyst we had at the end of last week i do think we're going to see the pound selling off euros selling off and i do think the dollar is going to strengthen and we could get some really decent moves in those markets next week so the pound is my favorite short heading into next week it is oversold at -4 in the scorecards but the best signal in terms of overbought and oversold is when the markets come off of oversold or overbought in the scorecards for the first time like we saw with the swiss franc where it came off of over bought at plus four last week for the first time that is the sign that there is weakness in the swiss franc it's not necessarily when it's overbought it's when it comes off of overbought for the first time and the pound has not yet come off of the oversold levels and if you remember back to the really sharp sell-off we had in the japanese yen it remained oversold at -4 for quite a while and we were shorting the yen that whole time and it was really when the yen came off of oversold for the first time that we got the bigger correction so i do really like pound shorts next week i think they're one of the best opportunities next is the swiss rank now the swiss franc has started to break lower and look at this weakness here now relative to the other currencies it didn't really go anywhere last week going into next week the swiss franc may strengthen once again if we start to see some panic coming into the stock market but as it currently stands we're not seeing this reflected in the currencies and so the fact that the swiss franc is now technically bearish and also it's coming off overbought for the first time this is why we can look at this but it's not going to be my top plays next week i'm a bit wary of this and i would much rather if i only trade dollar pairs next week and these dollar pairs start to work i will probably not trade anything else in the forex complex i will just leave them so we will look at the swiss franc pairs next week but just bear in mind these are not in my opinion fantastic opportunities anymore with what we're seeing in the scorecards and also what we're now seeing technically but relative to the other currencies it's actually still one of the better currencies next is the yen i left the yen recently because it was kind of neutral and it still kind of is neutral so i'm going to be off the yen again next week i question whether we come down here take out the target and double bottom and that would actually potentially fit with the continued sell-off in the stock market as money starts to come into the end on a flight safety again look we're not seeing this yet the yen actually sold off on friday so although we had a sell-off in stocks and it does look like the bear market in stocks is going to continue we are not yet seeing a panic flight safety in the japanese yen the money's really just going into the dollar even the swiss franc didn't really benefit so patience required on the yen in my opinion next is the cad kind of similar to the yen we are technically bearish but relative to some of the other currencies is actually fairly strong as other currencies like the pound and the euro have been selling off with momentum and continuing you can see this has just kind of gone sideways and the scorecards actually warned us about this pretty much in advance of this taking place it said that the cad was kind of neutral and we've avoided some choppy markets here so relative to the other currencies it's not too bad but it's not great heading into this week in my opinion i think there's better markets next is the aussie also relatively quite strong as we saw in the scorecards because don't forget the scorecards are relative because you're looking at trading forex in pairs but technically speaking this is actually head and shoulders and again perhaps we do start to see some panic coming into the market next week perhaps we do break down here in the australian dollar and we do start to see the aussie moving from positive to negative in the probability scores as more data comes in so when you look at the swiss franc and you look at the aussie here you can see why the dollar pairs are the only pairs highlighted in gold as my top plays next week and although we'll look at these on a relative basis the swiss franc pairs and the aussie pairs i don't think they're as good as an opportunity next week as the dollar pairs and last but not least we have the new zealand it's weak in the scorecards and it's also breaking a head and shoulders reversal to the downside i do think new zealand shorts are going to also be a good place to look to make money next week in forex alongside the pound and the euro to the downside okay so let's have a look at the markets themselves starting as we always do with crude oil and many of you know back on june 30 if i tweeted out that oil had likely peaked and we did fall nearly 20 since then it was over in this area and for the first time last week the commodity scorecard started showing oil kind of accelerating in the data and it suggests at the very least that crude oil is not yet a buy but the short that it was back from june 30th has kind of run out of steam i wouldn't be surprised to see crude oil kind of correcting so i am still bearish on crude oil overall but it is currently sort of neutral so i wouldn't be surprised he continued correction and on balance any correction would be viewed as an opportunity to look for shorts but i would like to see this start to decelerate or accelerate to the downside once again in the commodity scorecards and when that takes place i will let you know so crude oil as it currently stands i am bearish but it's kind of bearish to neutral i think there are better opportunities next week the first forex market we're going to look at is pound dollar now this is my favorite market heading into next week it's the strongest versus the weakest in the one month forward probability scores we had a huge engulfing candle off of the speech by fed chair and this is after quite a tight consolidation and i do think this is going to continue down i am looking for this take out the target set from last week at the 1.1715 we may even consolidate here slightly at the beginning of the week but i am looking for further declines below here and the next care of support is down at the 1.1411 this is my favorite market next week i think this is the market that offers the best
chance to make money next week and remember you only need one good market each week you don't have to trade every single market it's about finding the best market which is going to move and profiting from that next is euro dollar we came down and took out the target set at 0.9927 and this was the target achieved after we tested the major breakout level of the 1.0343 which i mentioned when we had this correction this just looks like a correction to re-test and then we had the sell-off coming into this week i am looking for further declines if you want a more conservative target you could look for the 0.980 but i am looking for the declines perhaps we bounce from this psychological level first and then eventually on two may take a couple of weeks but on to the zero point nine five ninety again i think this is one of the best opportunities to make money in forex next week and this is one of my top three main pairs that i'm going to be looking at next week next is new zealand dollar we've also broken out of this tight consolidation in new zealand dollar going into next week any correction and we've already started to get some momentum maybe we come down a little bit further first but any correction pull back in this area will be viewed as the opportunity to start to look for bearish reversals i'm going to be looking down towards 0.6015 okay so moving on to the swiss franc pairs
these were markets we looked at last week and they didn't fail they just went nowhere they just very much like the dxy pairs they corrected into the speech on friday and then they started to move and very often you'll see this markets can actually take a week or two to actually move or even three weeks and essentially what we saw last week is just rolling over to this week so they are not highlighted in gold because of what we've already discussed but i do on a relative basis after the dollar pairs think the swiss franc pairs are the second best play and any continued sell-off and then pull back in this market is going to be viewed as an opportunity because you usually always get a pullback during the week is going to be an opportunity to start to look for shorts into you can look conservatively for the 1.1200 but ultimately i'm looking down towards the next care of support at the 1.1119 next is eurofrank we did come and take out the target at 0.9577 this is a market we've been shorting all the way down it's been in the weekly forecast as a great short really pretty much since the start of this move down maybe slightly after but this is still a market i am looking further declines to the downside any continued pullback is simply viewed as an opportunity next week to look for bearish reversals i'm going to be looking down towards the next care of support 0.9445 and the final frank pair is new zealand frank this was also a market we were looking at last week and this was actually a really nice move to the downside and again even though the swiss franc itself sold off and was weak we still saw this moving to the downside why because on a relative basis we had already worked out the probabilities and that this was likely to happen and it happened even in the face of swiss franc weakness so any continued pullback in this market now we've got momentum is simply viewed as an opportunity to look for shorts into the 0.5904 which we were looking at in last week's video and if we can break through here i'm going to be looking down towards 0.58
and the final forex pairs we're going to look at here are the aussie pairs now these are in purple for a reason because my base case for next week is that we get a continued sell-off in stocks and we're going to look at the stock market in this video at the end of the video and if we do get the continued sell-off in stocks that is likely to see risk off coming into the markets that would cause the dollar to outperform but it would also likely cause the swiss franc pairs to re-accelerate in the scorecards and the aussie in the face of risk-off sentiment would actually suffer so they're in purple because these are more of a backup plan next week yes my primary plan is for dollar strength and then secondarily i'm going to be looking for swiss franc strength vis-a-vis these currencies but if that doesn't work even though i believe it is most likely going to then there's nothing wrong with having a backup plan especially if it's already pre-prepared in the scorecards which is aussie strength so if for whatever reason we fail to get dollar strength and swiss franc strength then you can pivot and you at least have a plan b in the aussie pairs so any pullback in this market is views an opportunity to look for shorts perhaps we come back and test the 1.69180 first taking out this target and then correct either way any correction is views an opportunity to look for shorts into the 1.6918 and then on to the 1.6685 again if we get continued selloff in stocks i won't be trading the aussie pairs at all because i'll be looking at the risk-off moves of the dollar and the swiss franc pairs all of these aussie pairs are risk on setups so very important i'm not interested in trading these next week unless we start to see the dollar strength and swiss franc strength fall apart it just gives you a backup plan next is your aussie we did take out the previous target to the 1.43 to 90. we've already started correct so any continued correction is viewed as an opportunity to look for bearish reversals i'd like to see this breaking out with momentum that would be the opportunity to start to look for further declines and short opportunities into the 1.3987
and that's what you would likely see if for whatever reason the dollar let's say you had i don't know is highly unlikely you would get a fed official coming out and reversing the dollar based on what we've just heard but just hypothetically let's say something happened to reverse the dollar and you saw a steep sell-off that's when you would likely see the aussie accelerating and you would see this momentum to the downside like this so you would look at the dollar and say okay well this isn't good and now we've got these setups in the aussie pairs instead that we can pivot to and finally we've got aussie new zealand any continued pullback as a plan b would be viewed as an opportunity to look for bullish reversals and again perhaps you see a flight out of the dollar and the swiss franc for whatever reason as unlikely as i believe that is then you would see the aussie accelerating like this and that would be your opportunity to pivot and look for the 1.1290 so i hope that's clear based on what we're seeing in stocks i am looking for risk off next week my primary way of reflecting that will be in the dollar pairs second will be in the swiss franc pairs and if those fail to work and for whatever reason we get unexpected risk on which i think is highly unlikely but if we do at least you have the aussie pairs to pivot to in that scenario okay so wrapping up with gold silver bitcoin and also a look at the us stock market the gold silver ratio is breaking out of a consolidation to the upside and in last week's video i highlighted silver and bitcoin as two of my top plays both of these have started itself to the downside and i did also highlight the fact that silver was my preferred play over gold so silver shorts over gold shorts and we did actually see silver outperform to the downside last week compared to gold and it does look like this is going to continue next week so again i prefer silver shorts over gold shorts but as you will see i am bearish on gold silver and bitcoin next week next is gold very much like the other dollar pairs it just contracted into friday or corrected and then it started to break down i did highlight the fact that it traded into its previous major low of the 1787.3 and that we will likely now head down to the 1676.87 i do believe it's making its way down to this level so any pullback next week in this market is viewed as an opportunity to look for shorts down to next year of support at a 1676.87 but once again i do prefer silver shorts over gold shorts next
is silver this was highlighted as a top market to look for to the downside last week we corrected into jackson hole and then we sold off right at the end of the week so i am actually looking for these pretty much to go at the beginning of the week because we've already had this consolidation pretty much all week last week so any minor pullback likely on monday is going to be viewed as an opportunity to look for shorts once again for anybody not involved from last week i'm going to be looking down towards the next q support to downside the target set the 17.63 and the final market before we look at stocks is bitcoin i am actually short bitcoin i did tweet out last week at the end of the week that bitcoin looks set for the next leg down and we have started to make our way down with momentum any continued pullback in this market is simply viewed as an opportunity once again to look for bearish reversals i'm going to be looking down towards the next key of support to the downside the target is set at the 16 492 okay so finishing up the video by looking at your stock market and this is important because it affects the markets we've looked at already so i do favor as my base case risk off plays next week and the risk on setups down here will only be a plan b if risk off for whatever reason doesn't work but my base case is for risk off that is where i'm looking to make money next week and it's in the dollar pairs the swiss franc pairs and not only are they the best scoring currencies in the scorecards but you can see in previous videos i highlighted the 417-751 i said to you once the market starts to cross back down below this level and we looked at in previous videos how closely these markets resembled those of 2008 it's pretty amazing to see it doesn't mean it's going to continue playing out like 2008 although i did note in a previous twitter thread on sentiment that sentiment also mirrored 2008 and i said to you in previous videos that it's the 417-751 in spx if we start to fail below here this is where the next leg down is likely to start we closed above here on a daily basis on thursday and then what happened powell came out hawkish and all of these traders who have been buying in believing this is a generational buying opportunity in stocks and they don't want to miss out they started to capitulate and panic sell and this actually caused a steep sell-off this was panic selling this was capitulation we didn't see the flight safety in the yen or the swiss franc as i said earlier but we did see a panic selling and i believe this is likely to continue into next week and this is actually the start of the next leg down in stocks if this is going to be the case we're likely to see risk off come into the markets more and more and that would support the dollar pairs and the swiss franc pairs we discussed and it also would that's one of the reasons why i'm not massively keen to get involved in the aussie pairs as of next week so i'm looking further declines i think we could very easily be coming down to the previous lows here in terms of a crash well markets don't tend to actually crash from the top of bear market rallies what tends to happen is you get a bear market value like this and then it starts to sell off and usually markets actually crash near the bottom so i'm not saying the markets are going to crash next week but i wouldn't be surprised to see a gap down and any corrections in stocks especially below the four one seven seven fifty one in my opinion they should just be viewed as opportunities to be short or look for short opportunities in stocks okay so the final thing to note here really is the vix i've been discussing in previous videos that my base case is for the vix to come down to 1850 before we see the next round of volatility coming into the markets and of course at the same time as you see volatility spiking that's when you're going to get sell-off in stocks we came very close but we didn't take it out and it left me with a slight dilemma last week because i was starting to get my process for the first time signal to get short as opposed to being bearish which i've been for a while there's a difference between being bearish and being short and the difference is timing and last week as i said to you i did get short eu stocks uk stocks and also i am shorts of u.s stocks and this is not advice to you this is just what i'm doing personally but i favored getting short but leaving myself enough room that were the vix to drop to 1850 i'm not going to be whipsawed out of my position so you have to remember just because i personally would prefer the vixx to come down to 1850 before i got very very comfortable with the shorts it doesn't mean it's going to happen and with a catalyst like we had on friday we could very well see the next round of volatility coming in before the vix gets to 1850. so again this is not financial advice it's just how i'm viewing it and that's that uncomfortable getting short on stocks as i did last week in case this is the start of the next round of volatility in the stock market but i'm giving myself enough room to allow for a move to vixx 1850 if that does for whatever reason materialize so that is it from me for this week guys as always i hope you enjoyed this video if you did please let me know by liking sharing and subscribing a big thank to everybody who does that on a regular basis and a big thank you to everybody who has subscribed to the channel so far i want to wish you a fantastic weekend and i want to wish you all the best in your trading next week the only thing left to say is take care and don't forget to trade safely
2022-08-28 23:18