Weekly Forex Forecast (28/02/22) EurUsd / XauUsd + Forex Trading Plan! [HD]
hey traders it's john fortune here with this week's weekly forex forecast i hope you're all well we had a crazy week in the markets last week because of the ongoing situation in ukraine and heading to this week we cannot form a trading plan without taking into account three major catalysts coming up this week two interest rate decisions one out of australia one out of canada and of course the decision as to whether or not to cut russia off from the swift system which is probably the biggest driver heading into the markets next week and we're not going to be getting into the politics of the ukraine russia conflict in this video but we are going to be talking about the potential disconnection from the swift system for russia because of the implications this has primarily on the oil market and then the secondary knock-on effects following on from the big impact that will have on the oil markets so we're going to start as we always do by having a look at the economic calendar at those key economic events which are coming up we're then going to look at the scorecards before moving on to the currency pairs themselves to see which markets are looking like the best opportunities heading into next week for finishing as we always do with stocks XauUsd XagUsd and bitcoin so if we have a cursory look at the economic calendar starting with what took place last week we did have an interest rate decision out of new zealand we saw the raising of interest rates and a strength of the new zealand dollar this is something to consider going into this week as it does look like we could get some follow-through trades on that move last week if we click over to see what's coming up next week you can see first and foremost we have the interest rate decision out of australia on tuesday the australian dollar is unlikely to do anything between monday and this interest rate decision on tuesday morning and so in terms of the aussie dollar pairs i will be waiting for this interest rate decision to take place and looking for setups based on the price action after that interest rate decision takes place you can see there's not expected to be a raising of interest rates but if you decide to try and preempt that and you say go short on some of the aussie pairs and you get a surprise interest rate it's going to fly on your face so the best way to trade this in my opinion if you want to get consistent returns is not to try and guess the outcome is to wait for the move to happen and then trade those secondary or even sometimes you get third opportunities to trade in that direction the next key thing to look at in the economic calendar is the canadian interest rate decision on wednesday there is expected to be an interest rate rise in canada from 0.25 0.5 so again the cad pairs are going to be in part of my trading plan i'm going to have them and i'm going to set them up in a way that this can be traded both ways and i will also be waiting until after wednesday's interest rate decision to trade those cad pairs that we're going to look at and you can see finally we have services pmis as well but we have unemployment data and non-farm payrolls on friday usually when you have non-farm payrolls on a friday you can see the entire week basically just kind of correcting or doing nothing however because of the other catalysts that we have in the market specifically the decision as to whether or not to cut off russia from the swift system as we will be discussing in this video and its implications and also the interest rate decisions we have i think we're going to see quite a bit of volatility next week despite the fact we have non-farm payrolls on friday and finally a quick look just two weeks ahead you can see we also have an interest rate decision coming out of the eu the following thursday and so there's quite a lot going on over the next two weeks and of course in today's video i'm going to be going through my own personal trading plan of how i'm looking to navigate these market conditions over the next week or so so if we look at the scorecards we can see a clear picture emerging from last week we have had the euro and the dollar both kind of scoring positively for a while and this has caused corrections in the markets overall as the dollar has just kind of corrected sideways well last week we saw a clear flight to safety we saw an increase in the score of the dollar we saw an increase in the score of the franc the yen we also saw a slight increase in the score of the new zealand and that was because of the interest rate rise in the face of risk-off moves we still saw the new zealand scoring a point higher so the message that the markets are sending here is quite clear we have risk of sentiment coming into the markets and under normal conditions this would actually be quite welcome here because you'd be looking at this and saying finally we have that breakout of the dollar we have that divergence in the euro and the dollar which actually starts to get the markets trending once again we start to see tons of opportunities coming back into the markets and trading actually becomes a lot easier and more profitable when you see the market's trending and when you see the dollar and the euro diverging in strength so confirming the capital flight into risk-off assets we also saw money coming out of the euro out of the pound so we saw money moving specifically from those currencies into the risk-off assets but there is a slight giveaway here that the risk-off move is not fully fledged and that is that the more exposed commodity currencies here are not weak they are actually still more or less neutral and in a fully fledged risk off mode you would expect these markets to actually be the weakest down in this area you would expect to see the australian dollar as the weakest then the new zealand and cad etc so despite the clear risk off move this has not formed a complete trending risk off sentiment or market condition and the problem we have going into next week is this we saw a kind of a whip saw at the end of last week we saw the dollar and crude oil rallying over fears that russia would be cut from the swiss system and then when joe biden the president of the u.s came out and said this was not going to be the case we saw the markets whip sold back and we saw risk on coming back into the markets and of course going into next week this remains an issue because as i am recording this now reports are coming out that countries which initially vetoed or stood against the cutting of russia from the swift system are starting to change their mind and they're starting to talk about potentially supporting the idea of cutting the russian economy off from the swiss system so going into next week even in the face of the australian and canadian interest rate decisions the big key driver and it's something that is likely not to just decide next week but it's going to decide probably the next couple of months now is whether or not the decision is made to cut off the russian economy from the swiss system that is going to be the main driver the sword of damocles hanging over the markets heading into next week because that is a major major economic shock not just to russia but throughout the whole system and the implications of cutting russia off from the swift system are actually quite wide ranging and we're going to go through that again in today's video so based on what we're looking at in the scorecards my primary plan is going to be risk off because that's what we're seeing and especially as more and more countries come out in support of potentially cutting russia from swift this of course is more risk off and if they take that decision it's going to be a very risk-off situation in the markets so the primary pair i'm going to be looking at is euro dollar to the downside is going to be the first pair and my primary pair going into next week can also look at pound dollar to the downside and potentially even us dollar cad to the upside and those being the primary setups for a risk off environment and a continuation of what we're seeing in the scorecards we can also have a look at a couple of potential risk on situations and the best place in my opinion to look will be in the new zealand pairs so if we come into next week and it's reaffirmed that russia is not going to be cut off from the swift system you are likely to see a continuation of the risk on sentiment that came in and an unwinding of the risk-off moves at the end of last week and that's going to benefit the commodity currencies primarily like the new zealand dollar like aussie dollar and since we had the interest rate decision out of new zealand last week and a slight strengthening of the new zealand my primary risk on markets next week will be for example euro new zealand to the downside pound new zealand to the downside and possibly in that situation we could also look at new zealand dollar to the downside as well so i am setting up charts to potentially play this both ways next week because it's impossible to know at this point whether russia will be cut off from the swift system and i will also be looking at adding in some australian pairs and some cad pairs for the interest rate decisions themselves next week so to summarize primarily i'm going to be looking at those risk off pairs i will also be setting up with some risk on pairs in case the opposite happens and it's reaffirmed once again russia is not going to be cut from the swift system you're likely to see risk on moves and then i'm also going to have those interest rate decision setups ready to go for the interest rate decisions out of australia and canada next week okay so let's look at the markets themselves starting with the oil chart and this is probably the most important chart as it currently stands with the ongoing situation we have been discussing i have said in previous videos that crude oil is likely reaching a top and for that reason i haven't been looking to trade it to the upside for a number of weeks and there is key resistance not only is it in terms of trend the momentum likely to be reaching a top and we're likely to see it start to roll over it is also at a very significant key area of resistance so you have those two things going hand in hand and since i posted out on twitter that we're likely seeing the top in wti we basically have gone nowhere and i still believe without any exogenous shocks that crude oil is likely to roll over to the downside now what we saw last week was we saw fears over the sanctions on the oil and gas industry and the disruption of the oil and gas industry which speculators were positioning for and that's why we saw the big spike up in crude oil we're looking on the daily chart here so you can see overall this big spike and the candle closing back down pretty much where it started in the range and the reason it came back down was because joe biden came out president of the u.s and said russia will not be cut off
from the swift system and by extension and not just by extension but also explicitly there will be no sanctions on the oil and gas industry that is why we saw fears over sanctions on oil and gas causing a spike to the upside in crude oil and then those fears are baiting when sanctions were announced and they were not to be targeted at the oil and gas industry now this is really where the whole scenario around swift comes in because if russia is cut off from the swift system there is a high risk that this causes disruptions to the oil and gas industry because the swift system is essentially a messaging system but an easier way to think about it would be as if you were running a business and you were using something like paypal very easy to do all your transactions in paypal 24 7 and then if that was taken away from you you would have to you could still continue to do business but you'd have to go maybe and do bank transfers go into the branch you'd have to sign some paperwork show identification it's just a lot more laborious and it's a much more difficult way to do business you're not preventing them from doing business but what you're going to do is you're going to make it much harder to do business and you're going to provide a short-term shock as they transition from the swift system into something else but it won't actually prevent them from doing business now of course payments are made to russia on the swift system for oil and gas and therefore any disruption in the swiss system or cutting russia off from the swift system is likely to result in disruption of oil supplies and that is what is likely to cause a big rally in crude oil now the reason that this is the key chart is because it's the chicken and egg scenario if you get a rally in the price of crude oil you're going to see high levels of inflation that will be in the us in europe because crude oil is a large input to the global economy now if you have a big price rise in crude oil and you get higher levels of inflation on top of already high levels of inflation in countries like the uk europe and the us this is going to increase the need for central banks to raise rates even quicker than they're currently looking to do and so you're faced with a scenario where central banks in europe the uk and the us face with higher levels of inflation from now onwards than we already have we'll be forced to raise rates even quicker into what is currently not extremely strong economic growth so it greatly increases the risk of a policy mistake in the uk in the us in the eu if we have a big spike and a shock to the oil price and therefore a sharp increase in the levels of inflation in the global economy over and above what we're already seeing so this is why policymakers have been hesitant to unanimously approve this because it is going to cause a shock on top of already fragile situations economically now this is not a coincidence of course this would be one of the reasons why vladimir putin invaded ukraine at this current time because he knows full well were they to play sanctions on the oil and gas industry at this crucial moment when trying to keep inflation down they're going to be causing themselves an even bigger problem than they already have so this is not a coincidence this was a mechanism which has quite clearly been put into the russian invasion plans to prevent them being sanctioned on the oil and gas industry because if in the uk in europe in the us you have very very low levels of inflation there's a lot more room to sanction russian oil and gas because you can have a spike in the oil price you can take the additional inflation but when you have inflation already at seven percent the calculation has been made by the russians that that is going to prevent the eu the uk and the us from sanctioning their main exports which is oil and gas so that is the reason why going into next week the oil market is the key market here and on top of that the decision as to whether or not to cut russia out of the swift system and therefore in all likelihood disrupt the supply of crude oil is going to be the key driver because if they do that and you see the price of crude oil spiking to the upside and with it inflation you're going to see the us dollar rally and you're going to see bigger risk off moves because central bank around the world are going to have to tighten monetary policy even faster than they're already doing and of course when you do that causes a negative effect to gdp so going to speed up the economic contraction in the global economy conversely if the decision is made not to cut russia off from the swift system and not to sanction the oil and gas industry then this is likely to see a top in the near term in crude oil as long as supplies are not disrupted and at the same time there would be less need to raise rates at a faster pace which would also be bearish for the dollar and just generally this is more of a risk-on-type scenario not because they can necessarily cut interest rates but just because they don't have to increase interest rates as fast with lower levels of inflation and again the decision as to whether to cut russia from the swift system is either going to result in a spike in the oil price in all probability and also a flight to safety so you see the dollar also rallying to the upside in the event russia is cut off from the swift system and there are disruptions severe disruptions to the oil and gas industry or on the other hand if russia is not cut off from the swift system and they decide to pursue this policy of strengthening ukrainian defenses with weapons ammunition etc and at the same time sanctioning russia in all other areas apart from the oil and gas industry you are likely to see a continuation to the downside in crude oil you're likely to see the dollar start to top and roll over as well as inflation comes down and speculators view this as the fed for example having a little bit more room and not having to rush hikes if inflation is starting to come down naturally so hopefully that makes sense and that is why i believe the decision about swift and russia next week could very well have a major impact on the markets themselves so with that said i'm not going to be looking at trading crude oil all the time this decision about swift seems to be pending okay so let's start by looking at my first two and my favorite pairs based on the scoring system these are risk off moves and they are EurUsd GbpUsd to the downside these are my two favorite markets going into next week as you can see we have big momentum on the fears over the sanction of russian gas from russian oil and then we had that correction when it came out that sanctions were not going to be applied to that industry however i still believe any pullback in this area should still simply be viewed as an opportunity to look for bearish setups into the 1.1109 next is pound dollar you can see we're also forming this kind of bear flag set up really strong momentum i am looking for this to come down and make new lows as a fairly high probability trade so any pullback in GBPUSD is viewed next week as an opportunity to look for bearish setups down to the 1.3271 it does currently look like with a number of holdouts over the swift system changing their minds and looking like they're starting to support cutting russia from this system that would actually benefit both these pairs to the downside as well next is the new zealand pairs now the new zealand pairs are all based off of the increase in interest rates last week and a strengthening of the new zealand is a risk on play in risk on scenarios you would expect the new zealand to outperform the pound outperform the euro and certainly outperform the dollar so i'm primarily looking at the two risk off pairs of euro dollar pound dollar but in the scenario the west comes out and reaffirms that russian oil and gas is not going to be sanctioned and they're not going to perhaps be cut from the swiss system then i'd prefer to pivot to the new zealand pairs which will risk on and any pullback in this market will be viewed as an opportunity to look for bearish reversals down to the 1.9804 in euro new zealand you can see we are testing the lows here unlike pound new zealand where we have really nice momentum to the downside that's why although the euro is slightly more bearish i've put the pound slightly above it because you have that nice momentum whereas in the euro you're testing the lows so any pullback in euro new zealand would be viewed as an opportunity to look further declines and perhaps you get euro new zealand pulling back like this and then what happens is you get the announcement that no russian oil and gas is not going to be sanctioned you see the sell-off like this bit like an interest rate decision and then that's the opportunity to look further declines into the 1.6542 and the final new zealand pair is new zealand dollar again i'll be looking for any pullback in this market and if we get the news that russian oil and gas is not going to be sanctioned they're not going to be cut from swift i would expect to see a rally to the upside like this and then any pullback would be viewed as an opportunity to look for further advances into the 0.6807 the next two markets are cad pairs based on the canadian interest rate decision starting
with us dollar cad which is structured to the upside we took out the target last week at 1.2842 any correction into wednesday what i'm going to be looking for is any correction in this market and then on the interest rate decision we get a rally to the upside because we get a weaker cad so we get a surprise interest rate decision which causes weakness in the cad we get a rally to the upside in us dollar cad any pullback would be viewed as an opportunity to look further advances into the 1.2911 the second cad pair which is pound cad is based on the opposite so if we see an interest rate decision on wednesday out of canada and this causes the price of the canadian dollar to rally any pullback in this market will be viewed as an opportunity to look for reversal and of course if we correct into wednesday and then we get the interest rate decision and it does this look for a pullback i'm going to be looking for shorts into the 1.6953
and the final part of my plan next week is based on the australian interest rate decision starting with pound cad you can see in all the pound pairs we have this really nice momentum to the downside there's the previous low so technically i really like the look of these pound pairs because these are forming potential bear flags any pullback into the interest rate decision out of australia and then a sell-off to the downside which would be a strengthening of the aussie dollar i'm going to look for a pullback and then further sell-offs into the 1.8429 and finally the opposite of that allowing me to play a potential australian dollar weakness interest rate decision and that's aussie dollars to the downside so again i'm not going to be doing anything until the australian interest rate decision but any continued pullback into that followed by a sell-off in the australian dollar i'm going to be looking for a pullback i'm going to be looking for the declines down to first of all the previous lows over here and then on to the 0.6933 so to summarize here i have no position on crude oil because of what we discussed with the russian oil and gas industry potentially being disrupted or sanctioned my favorite two pairs next week are euro dollar and pound dollar to the downside which are risk off moves if in the event the west comes out and reaffirms no sanctions on russian oil and gas and that they're not going to be kicked out the swift system i will be looking at the risk on pairs and i'll be looking for further advances in the new zealand dollar i'll be looking to trade the canadian interest rate decision with us dollar cad on cad weakness and pound cad on cad strength and i'll be looking at trading the australian interest rate decision with pound aussie on aussie strength and australian dollar on aussie weakness with everything going on next week you don't have to trade the number one job is always to preserve your capital but that is how i'm personally going to be approaching the markets next week okay so moving on stocks gold silver and bitcoin starting with the spx last week we came and took out both targets in the spx and last week was quite an important week because it was the week that we saw a trend change technically to the downside having broken the low over here and this was a major head and shoulders break to the downside confirmed below this level and so as it currently stands i am bearish on spx and this fits in with the risk-off primary plan that i'm looking at in terms of euro dollar to the downside pandora to the downside stocks will also be affected by the decisions made against russia and the sanctions because as we said before if oil supplies are disrupted through sanctions and we get a spike in the oil price and we get an increase in inflation over and above what we already have this is going to force central banks to tighten monetary policy even faster and this is going to be even more negative for the stock markets now when you get a major break like this it does become a decision point this is very often where you get the start of a new bear market or if it fails here this can actually be the bounce for a new bull market so i know it doesn't sound extremely helpful me saying that but that's just the reality in the stock market you are right at a level which is currently bearish but could reverse to being bullish in the near future and the catalyst for that would likely be the refusal once again from the west to sanction the oil and gas industry in russia or to cut it off from the swift system if that's the case and you start to see the price of oil coming down that is going to give central bankers more room with their monetary policy and that could actually be the catalyst for a new break above the 4 4 8 5 40 and a continuation of the overall trend we've been seeing all year into the end of the cycle so how i would personally play that when you're in a situation where the market is bearish but you could get a bounce is if you want to be short i would only be short with a small amount of risk that would mean maybe taking a couple of positions if you want to get short or to be short on stocks themselves or another way of reducing your risk is to be short in the form of a long short portfolio so you have long positions and short positions so in this kind of a scenario i would either leave these markets completely and wait for a more clearer direction or i would be net short but with not huge amounts of risk just in case we get that reversal and again you may even just want to wait for further confirmation on what's going to happen with the oil and gas industry in russia in terms of sanctions and the situation around the swiss system next is the nasdaq now the nasdaq is in exactly the same position as the spx which i got both targets to the downside last week as it stands this is the start of a new bear market technically because we broke the major low here if this was a one and a shallow two and so the nasdaq is bearish i would once again be net short although i wouldn't take too much risk and if you want to be extra safe wait for the situation around sanctions to become clearer but as it currently stands i would be net short on the nasdaq looking further declines into the 1306.27 dow jones dow jones also took out the target set previously and like with the other stock markets we currently have a technical bear market now in the dow jones so any pullback would be viewed as an opportunity to be net short into the next kiev's port to the downside at the three two four one four point six five next is the russell now the russell also came down took out the target set the russell also has a very clear delineation here in the 2107.80 or 0.08 i should say this was
the break which started a potential bear market in the russell and we're still down below here so any continued pullback is viewed as an opportunity to be net short into the next gear of support at the 1892 the first indication that the train was reversing back to the upside in the russell would be a break back above the 2107.08 and what tends to happen if you get that let's say they they refuse to sanction the oil and gas industry in russia and they say they're not going to kick russia out of swift and then at the same time perhaps we start to see peace talks emerge between ukraine and russia in fairly short order well all of these are going to be bullish for the stock market and you may see a rally back above the 2107.80 if that's the case that becomes the trade to start to look for but it is not going to happen probably next week certainly the pullback as well you might just get if you have some good news coming out of this conflict as i say in the form of peace talks and no further sanctions then you may see the breakup next week and then that would kick start the following week potentially long opportunities so as it stands i'm still net short as an overall bias and finally we have the nifty the nifty did break down taking out the target set what i'd be looking for going into this week is any pullback in the nifty to close this gap would be viewed as an opportunity to look further declines once again into the 16 349.50 so finishing up with gold silver and bitcoin starting with gold gold has
been a fantastic performing market over the last couple of weeks we've had a really big rally we broke multiple key major areas and we took out both targets to the upside in gold last week now gold got a bit wild as we had that initial risk off spike followed by joe biden saying there is not going to be any sanctions on the oil and gas industry and then we saw the risk on move coming back into the market and we had this huge whip saw within one day in gold it was quite something when all is said and done i do have an overall bias of risk off and i do think we could quite easily see gold continuing to the upside and making new highs we are coming back to retest the previous major breakout points at the 187724 so any test of this area is going to be viewed as an opportunity to look for bullish breakouts into the 1973.26 just bear in mind if we get peace talks coming out of ukraine or a continued refusal to sanction the oil and gas industry or kick russia off the swift system you could see gold dumping once again so any long positions do have a little bit of risk so it's just something to pay attention to but if you've got sensible risk management that should take care of that because there's always a risk of having a losing trade whenever you place a trade anyway next is silver silver also took out the target last week in the same fashion as gold we had a rally to the upside so any continued pullback in silver is still viewed as an opportunity to look further advances into the 25.39 and finally we have bitcoin bitcoin was a really good performing market last week we came down took out the target set at the 38 960 and we turned right at the second target down here at 34 670.
so what to be looking for here in bitcoin is any break to the downside i'm viewing this correction as an opportunity to look for bearish breakouts and any break like this with momentum is going to be viewed as an opportunity to look for further declines once again into the 33.039 so that is it for me for this week guys we do have very turbulent market conditions so it's not super easy to be trading in these conditions however that is my plan going into next week and i do think the decision as to whether or not to kick russia off the swiss system could actually be quite a big decision in terms of market directions heading into next week as always i hope you enjoyed the video and 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 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 you