Goodday traders and welcome to the last week of Q3 where trend reversals tend to happen,
Last week was an important week for the last trading quarter of the year. The FED announced they will taper in November or December depending on the data and will finish their tapering program by mid-2022. Roughly the market expects a gradual tapering of Quantitative Easing by $20 billion a month. More specifics are expected to be announced by the next FOMC meeting. This will affect the financial markets, from precious metals, commodities to the forex market. A little breakdown of what is expected the coming 3 months.
DXY
Buy the rumour, sell the news. After a solid bullish rally in Q3 on bets that the FED would taper its asset purchasing program, investors and traders are taking profits on their trades. I expect the dollar to show weakness in the rest of the year.
Technically it made a 'lower high major trend reversal' on the daily chart with a H&S and an engulfing bearish daily candle on Thursday to confirm the bearish trend reversal.
Forex
This will weigh heavily on the forex market and I expect to see a resumption of the bullish trend in the forex market. This means EUR, NZD, GBP and other currencies will gain strength in Q4. From all currencies, I expect GBP to be the strongest due to the hawkish BoE implying a possible rate hike in November 2021.
Gold
While we saw currencies fly high on Thursday after the FED announcement, gold got hammered further and dropped $60 nearly hitting my 1735 target. Gold clearly didn't like what Powell said and remains under strong bearish pressure. The daily even has some more room to go down to 1720, with no bullish presence to be found. But this all could change in the coming weeks.
Bears managed to close the Thursday candle below 'the big 1750', but bulls did some damage control by closing the week just above it with an inverted hammer candlestick (the opposite of a hanging man). This is a high probability reversal candle. Combined with my expectation of a weak dollar and a bearish exhaustion pattern on the H4 chart, I am seeing a bullish reversal building up from the 1720-1740 support zone with the first target being 1800 and 1870 as the final target.
Technically I am missing one more lower high to 1850-1870 on the weekly chart to complete an ABDCE-pattern before the breakdown of 1680. Currently I am not interested to sell gold at this price anymore, so I will be looking for a buy opportunity. However, we need a clear engulfing daily candle combined with a bullish divergence to confirm the start of the bull rally. Fundamentally, the next NFP might be the trigger to ignite the bull rally. All to be seen in the coming weeks.
Enjoy your weekend,
Cesaro
Last week was an important week for the last trading quarter of the year. The FED announced they will taper in November or December depending on the data and will finish their tapering program by mid-2022. Roughly the market expects a gradual tapering of Quantitative Easing by $20 billion a month. More specifics are expected to be announced by the next FOMC meeting. This will affect the financial markets, from precious metals, commodities to the forex market. A little breakdown of what is expected the coming 3 months.
DXY
Buy the rumour, sell the news. After a solid bullish rally in Q3 on bets that the FED would taper its asset purchasing program, investors and traders are taking profits on their trades. I expect the dollar to show weakness in the rest of the year.
Technically it made a 'lower high major trend reversal' on the daily chart with a H&S and an engulfing bearish daily candle on Thursday to confirm the bearish trend reversal.
Forex
This will weigh heavily on the forex market and I expect to see a resumption of the bullish trend in the forex market. This means EUR, NZD, GBP and other currencies will gain strength in Q4. From all currencies, I expect GBP to be the strongest due to the hawkish BoE implying a possible rate hike in November 2021.
Gold
While we saw currencies fly high on Thursday after the FED announcement, gold got hammered further and dropped $60 nearly hitting my 1735 target. Gold clearly didn't like what Powell said and remains under strong bearish pressure. The daily even has some more room to go down to 1720, with no bullish presence to be found. But this all could change in the coming weeks.
Bears managed to close the Thursday candle below 'the big 1750', but bulls did some damage control by closing the week just above it with an inverted hammer candlestick (the opposite of a hanging man). This is a high probability reversal candle. Combined with my expectation of a weak dollar and a bearish exhaustion pattern on the H4 chart, I am seeing a bullish reversal building up from the 1720-1740 support zone with the first target being 1800 and 1870 as the final target.
Technically I am missing one more lower high to 1850-1870 on the weekly chart to complete an ABDCE-pattern before the breakdown of 1680. Currently I am not interested to sell gold at this price anymore, so I will be looking for a buy opportunity. However, we need a clear engulfing daily candle combined with a bullish divergence to confirm the start of the bull rally. Fundamentally, the next NFP might be the trigger to ignite the bull rally. All to be seen in the coming weeks.
Enjoy your weekend,
Cesaro
