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G7, N. Korea and Central Banks in focus

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Warning – an Explosive trading week ahead.

Investors should brace themselves for another potentially explosive week ahead as the calendar is full of high impact events.

At the first half of the week, the market will be focused on Trump following the G7 meeting and his meeting in Singapore with N. Korea leader – Kim Jung Un.

It wasn’t a quiet G7 weekend in Canada – Trump and the Canadian PM exchanged blows, the Europeans joined and the result was this tweet – “We’re like the piggy bank that everybody is robbing”

The market will probably react to the lack of communication between the world’s financial leaders, but the focus will quickly shift to the next event that involves Trump – His meeting with Kim Jung Un.

The market seems to care about this meeting (probably too much) and we saw that couple of weeks ago when Trump suggested that the meeting is off – The markets reacted with a sharp decline.

Personally, I don’t think that this meeting will generate actual progress when it comes to N. Korea and its Nuke power, but Trump and Un can definitely create headlines and waves in the markets so you need to pay attention when these two will meet on Tuesday.

weekly markets analysis

Credit SAUL LOEB, ED JONES / AFP


In the second half of the week, the steering wheel will be in the hands of central banks.

The Fed, the ECB and BOJ are expected to present their monetary policies decisions with potentially another rate hike in the U.S.

Will Draghi finally hint about tightening and start a rate hikes race with the U.S?

Will the European Union retaliate on Trump’s Tariffs?

This is a volatility alert for Forex Traders towards central banks meetings from Wednesday to Friday.

weekly markets analysis

Key Global Economics Events and Data this week

Trump- Un meeting

FOMC meeting

ECB meeting

BOJ meeting

Earnings Season

See this week’s economic calendar

 

SPX analysis

In my previous newsletter, I explained why I have become bullish on stocks (short term) and shared my projection that SPX will reach 2750-2760 to complete a bearish Gartley.

weekly markets analysis

SPX – Bull Flag on the way to 2750?

SPX did even more than that:

weekly markets analysis

SPX – Climbs above 2750

Despite a little shake off, SPX showed no sign of weakness and, presented a buying opportunity when it closed back up above the Fast MA line about a week ago.

SPX’s price is now deep inside the PRZ of the bearish Gartely (red).

But does SPX look weak?

Although anything can happen this week (with all the news), technically SPX is looking solid and strong right now.

What if SPX won’t stop here? Where can it reach?

The chart above shows two harmonic bullish projections that suggest that SPX might be heading to:

  1. Create a double top with previous record high (just below 2900) – Completion of a bearish Bat (Pink)
  2. Break a record and climb towards 3000 to complete a giant Butterfly (blue)

Both of these patterns may become relevant if SPX will break the 2800 barrier (the PRZ of the current pattern).

If you are bullish and you want to ride this potential bullish momentum you can seek for bargains like TEVA that recently climbed above monthly support again, and potentially forming a second bullish wave:

weekly markets analysis

TEVA – Second wave in progress

And… if you are bearish and you think that this upside move is limited – Take a look at this setup on AAPL:

weekly markets analysis

AAPL – A weekly Spinning Top ahead of earnings?

A weekly Spinning Top right at the top of a rising channel is an interesting trading scenario if you want to be a contrarian and try to sell into strength.

Just be careful and be aware that AAPL’s earnings are coming.

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DXY analysis

In the last newsletter, I mentioned that DXY was heading for a bearish pullback.

That pullback has already reached to the first target zone:

 weekly markets analysis

Dollar Index hits first target zone

As you can see, the sellers reacted to the PRZ of the bearish Bat and jumped in, sending the Dollar below its weekly MA line (18) and to the nearest structure support.

The secondary target zone of my bearish setup on DXY is near 92.

Does it mean that the Dollar will continue lower this week?

The Fed can definitely be the cause of that!

Even if they will raise rate again (as expected), the Fed’s future projections is very important.

If the Fed’s tone will be slightly Dovish, I wouldn’t be surprised if we will see the Dollar tanking towards 92.

Another trigger for another slide in DXY can be this week’s ECB meeting.

If Draghi will start talking about future rate hikes, EURUSD will probably get a boost and send the Dollar Index lower towards the second target zone.

If you are bullish, wait for DXY to climb back up above the Fast MA line first.

Let the Dollar Bulls show that they are serious first… right now, following last week’s decline from the Fast MA line (resistance), things are looking more bearish than bullish for DXY.

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Two trading channels to monitor

There are two trading channels that I am currently monitoring in seek for my next swing trades opportunities.

The first one is in AUDCAD’s weekly chart:

weekly markets analysis

AUDCAD – Testing the bottom of a broken channel

AUDCAD is trying to climb back inside a broken weekly trading channel (started back on July 2013).

You can clearly see that it isn’t going to be easy for AUDCAD to find its way back in the channel. There are some major technical elements that will try to stand in its way:

  1. Three weekly MA lines (200, 50 and 18)
  2. The bottom of the rising channel (pink)
  3. Broken monthly uptrend line (green)
  4. The 1.0 psychological level

Last week AUDCAD has formed an impressive weekly Pinbar when it failed to close inside the channel – Consider that as a warning sign (if you are bullish) or as an opportunity (if you are bearish).

If AUDCAD will stay below the 50 and 18 MA line, and close below the 200 weeks MA line, the result will probably be another sell off towards the bottom of a weekly Triangle pattern:

weekly markets analysis

AUDCAD – Triangle Formation

If you are bullish and you want to trade the potential false break scenario (we’ve seen few false breakouts to this channel), than wait for the price to climb above the MA lines and set your target near 1.0 (also the top of the Triangle pattern).

 

The second channel is in NZDUSD:

NZDUSD is advancing towards a strong weekly resistance zone that includes the top of a weekly descending channel, 0.7 (round psychological level) and the 3 weekly MA lines.

It is too early to consider shorting the Qiwi (especially when we see DXY’s situation), but you should definitely start monitoring the 0.7-0.71 Price Zone for potential future bearish trades.

 

 

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