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Andreas Zanin
Analysis, Education | June 25, 2021

The Week Ahead 📈 28th June – 2nd July 2021

Hello and welcome to the Key To Markets preview of the Week Ahead. 

If you have any questions about this information, please contact your KTM Account Manager who will be happy to assist.

Contents

  • Currency Pair Performance
  • 10 Big Stories Last Week
  • Chart of the Week
  • Economic Calendar Highlights
  • 5 Things to Watch this Week
  • Technical Analysis: EUR/USD | GBP/USD | USD/JPY | AUD/USD | Gold | Oil | S&P 500 | DAX
  • Trading Signals

Currency Pair Performance

5-day performance as of June 24, 2021. 20:00 GMT

Source: finviz.com


10 Big Stories Last Week

In case you missed it
.

Delta variant. The new strain of COVID-19 from India is threatening the European re-opening with the UK listing it as the reason to extend its lockdown for another 4 weeks.

Dollar retreat. Major forex pairs rallied as the US dollar gave back some of its post-Fed gains. Numerous Fed speakers walked back the ‘hawkish’ FOMC meeting that caused the dollar rally.

70s inflation “very very unlikely.” Fed Chair Jerome Powell told the US Congress that the current jump in prices is due to temporary supply bottlenecks.

Bitcoin under $30k. The biggest cryptocurrency by market cap hit a $28k handle before quickly reversing higher. Many have called the 30k level a ‘line in the sand’ for the bull market.

Nasdaq hits new record. Tech stocks rallied and the Dow Jones had best day since March as investors bought the dip following the worst weekly drop since October

Brent crude hits $75 per barrel. Oil traders have been bullish following declines in US inventories as travel resumes in the lead up to the OPEC+ meeting this week. 

Amazon Prime Day sales hit a new record, rising 6% over 2020 levels as consumers continue to shift their buying online, despite brick & mortar shops re-opening following lockdown.

Retail Investors participating. Retail traders now make up 20% of US stock market daily turnover, that’s more than double from a decade ago.

Cathie Wood bought BTC. The Famed tech investor took advantage of the 50%+ decline and doubled down on her bullish Bitcoin bet with an extra 1 million shares of the Grayscale Bitcoin Trust.

John McAfee dead in Spanish jail. The legendary software engineer and crypto-enthusiast was found dead in his jail cell, hours after his extradition to the United States was approved in Spain.


Chart of the Week

Source: LPL Research

Comparing the current stock market rally with previous ‘strong starts’ to a bull market in 1982 and after the financial crisis in 2009, shows a larger correction in the S&P 500 is well overdue. Picking the top of the stock market is a fool’s errand but understanding the bigger picture that these types of gains have historically been unsustainable should play a part in your trading and investing game plan.


Economic Calendar Highlights

Source: FX Street


5 Things to Watch This Week

  • Non-farm Payrolls

The Federal Reserve just told us that they will adjust their policy to fit the data – so let’s do what they do – and watch the biggest datapoint of the month. Growth, jobs and inflation numbers have all been hotter than the Fed expected, so they duly brought forward their expected timing to taper QE and for the first rate-hike. If the data continues to improve, we would be right to assume the Fed’s timing could be even shorter.

  • OPEC+ Meeting

Reports out of Reuters suggest Moscow is pushing for the further easing of production cuts starting in August. Russia have been trying to back out of production quotas for months, but Saudi Arabia has been more conservative, preferring a slower output expansion because of the uncertainty around the pandemic and the economic re-opening. With Brent crude hitting 2-year highs at $75 per barrel, the weight of evidence is with the Russians.

  • Start of Q3

Time goes by fast – even in lockdown! Thursday will be the first of July and the first day of the third quarter of 2021. The timing of the Fed meeting and resulting fallout suggests end-of-quarter repositioning and portfolio window-dressing might have already happened. Window dressing is when fund managers buy high-performing stocks just before they have to report their holdings to investors to make their stock picking look better than it really was.

  • European inflation

There has been a lot of emphasis on the sky-high inflation data out of the United States. But what about across the pond? Germany as well as the Eurozone release CPI data this week. Should the numbers come out ahead of expectations, pressure will start to mount on the ECB. Christine Lagarde and company have so-far dismissed ‘tapering talk’ because of the more muted European inflation. That only works if the data is muted. 

  • Delta Plus??

That’s right, scientists have already uncovered a ‘variant of the variant’ that – you guessed it – could be even more transmissible and deadly. Sadly, it could mean a third wave running through India in the coming weeks. While in the RoW, we are still watching the Delta variant for the rise in covid cases and hospitalisations and what that means for government policy. Local governments in Portugal, including Lisbon have already tightened restrictions in response – that’s a step-up from the UK that just delayed loosening them.


Technical Analysis

Here you can find analysis of the major asset classes including the major forex pairs, gold, oil, the S&P 500 and Germany’s DAX index.

EUR/USD (H4 Candlestick Chart)

EUR/USD is retracing some of its losses from June 16/17, and the retracement could be close to finishing. The sharp break below 1.21 support has flipped the trend bearish.

GBP/USD (H4 Candlestick Chart)

GBP/USD is dropping back from the 1.40 level as well as the 61.8% Fibonacci retracement of its June 16/17 heavy decline. The broader downtrend remains in play while the price is under 1.41.

USD/JPY (H4 Candlestick Chart)

USD/JPY remains in a choppy uptrend but has failed on two attempts to break above 111, which marks the March 31 high. A breakout above 111 would open up a new longer-term uptrend.

AUD/USD (H4 Candlestick Chart)

AUD/USD is testing the 0.76 level as resistance to the bounce in the price since bottoming below 0.75. The broader trend is still bearish while below 0.765.

USD/CAD (H4 Candlestick Chart)

USD/CAD has retraced from the high above 1.248 and for now has stopped at 1.225 with a move back over 1.23. The uptrend remains in play while above 1.22 

Gold (H4 Candlestick Chart)

The drop below 1855 has taken gold into a downtrend. The price is consolidating near the lows at $1760. A break above the highs at 1795 could carry it up towards the supply area near 1820.

Brent Oil (H4 Candlestick Chart)

Brent crude has touched the big round number of $75 but so far, no major selling at the level has taken place. Having broken and held the 74.35 resistance, more upside appears likely.

US 500 (H4 Candlestick Chart)

The US500 has recovered its entire June 16/17 decline and sits at record highs. If it holds, the breakout means the double top pattern has been cancelled. 


Trade Alerts

You can set price alerts in the MT4 platform at the potential support and resistance areas shown in the charts above to let you know when there could be a potential trading opportunity. 

See the table below for possible alerts to use this week.

From the MT4 platform you can enable push notifications to receive these alerts on your mobile phone.

Thank you very much for reading – and have a great week trading!

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