Risk disclaimer

The content in the weekly analysis is based on years of accumulated experience and knowledge of professional fund managers. They shares their views on the weekly economic and market trend with Clients. This is aimed to enhance the Client’s awareness of the economic situation and the market conditions. Clients understand and acknowledge that the purpose of this weekly analysis is to educate and share opinions and not as an investment or trading advice. Clients must be responsible for their own investment and trading results.

Week 18 – 22 October 2021

The trader is a professional trader with institutional experience having worked in both banks and fund management companies.

His educational background is a Bachelors degree in Business Administration with a major in Finance.  His favourite subjects are banking and finance as well as psychology.  These subjects allow him to have an understanding into the behaviour of financial markets.

Treasure trader relies on fundamentals to initiate his trades whether they are trades in currencies, stock indexes or metals.  He then follows up with technical charting to identify entry and exit points where he can maximise returns taking on the appropriate risk.

The technical charting methods that the trader uses is also proprietary and he has developed this unique skill over many decades of observation of the markets.

Treasure trader’s objective is to target returns in excess of 50% per annum by taking on risk of up to 30% annually.

Chart 1A: USD INDEX WEEKLY CHART

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We had three weeks of the Dollar testing the weekly chart resistance of 94.30 without closing above it. The Dollar however looks like building up a base at these current levels before attempting to break higher. With the Fed tapering likely to commence either in November or December, probability is getting higher that we will eventually break 94.30 and attempt a test of next resistance at 97.16.

Chart 1B: USD INDEX DAILY CHART

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The Dollar does not look as bullish on the daily chart and there are several resistance levels which is holding back the Dollar from trading higher. These resistance levels are at 94.58, 94.98 and 95.87.

Chart 2A: AUDUSD WEEKLY CHART

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Despite expectations of Dollar strength, the AUD is no longer weakening against the Dollar. At this juncture we are neutral on the AUDUSD.

Chart 2B: AUDUSD DAILY CHART

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AUDUSD has been very strong and has now entered into a daily chart resistance zone. We are neutral on AUDUSD at this current level.

Chart 3A: GBPUSD WEEKLY CHART

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GBPUSD closed above the neckline of the Shoulder-Head-Shoulder pattern and last week’s key reversal pattern on the weekly chart could set up further rallies for GBPUSD.

Chart 3B: GBPUSD DAILY CHART

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With GBPUSD breaking back above 1.3700, all the short sellers below 1.3620 are now being squeezed out. This short squeeze could potentially bring GBPUSD to trade higher towards 1.3800.

Chart 4A: EURUSD WEEKLY CHART

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The break of support at 1.1602 on the weekly chart did not see a strong sell-off in EURUSD as anticipated. While EURUSD is still below 1.1602 we are mindful that currencies like AUDUSD and GBPUSD has started to show strength and while EURUSD is currently lagging, it might play catch up.

Chart 4B: EURUSD DAILY CHART

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EURUSD is currently trading below resistance levels between 1.1630 to 1.1691. As long as EURUSD does not trade above 1.1691, there is still scope for EURUSD to resume the downtrend.

Chart 5A: USDJPY WEEKLY CHART

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USDJPY has taken the lead in terms of Dollar strength. While other currencies like AUD, NZD and GBP strengthened against the Dollar in the past one week, the JPY has weakened considerably against the Dollar and the uptrend in USDJPY looks to last for some time.

Chart 5B: USDJPY DAILY CHART

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USDJPY has broken clear of its resistance zone and its momentum last Monday and subsequent consolidation last week seems poised for further strengthening of USDJPY in the coming week.

Chart 6A: AUDNZD WEEKLY CHART

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As we mentioned in our commentary last week, AUDNZD should see selling pressure close to 1.0605 based on observation that there are two key reversals at that level highlighted by the blue ellipse and rate of 1.0605 on the weekly chart. After testing that level we have seen AUDNZD demonstrating a key reversal last week.

Chart 6B: AUDNZD DAILY CHART

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After testing resistance at 1.0607 last week, we are now seeing a strong correction. Support is quite far at 1.0313 and at current levels we prefer to stay neutral.

Chart 7A: EURCAD WEEKLY CHART

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EURCAD continues to trade lower after breaking weekly chart support at 1.4487. We do need to break below the previous low which is 1.4330 if we are to continue on this trend.

Chart 7B: EURCAD DAILY CHART

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EURCAD did test support at 1.4332 after breaking the support zone between 1.4625 and 1.4662. We expect some consolidation at the current level before this cross breaks and trade lower.

Chart 8A: EURNZD WEEKLY CHART

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We have mentioned putting this currency pair on our radar screen in our past commentaries. We see EURNZD moving lower as that seems to be the path of least resistance after breaking the weekly chart support and breaking below the up-trend channel. Should it also close below the previous low of 1.6320 it would have a high probability of moving much lower to test the next support which is the monthly chart support at 1.4694.

Chart 8B: EURNZD DAILY CHART

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EURNZD has one final support which is a 4-hourly chart support at 1.6377 and when that support breaks this currency pair could see a potential move much lower.

Chart 9: BITCOIN DAILY CHART

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Bitcoin broke the resistance level at 57,970 and has formed a potential flag pattern. This flag pattern could see price action of Bitcoin heading towards 85,000. On the way up we do expect profit taking at about the 72,000 level or whenever the price meets the dotted upward sloping channel.

SUMMARY:

  • US Dollar appears to be consolidating for a move higher and this is apparent in USDJPY and EURUSD.
  • AUDUSD, NZDUSD and GBPUSD has been firmer and we stay neutral on these currency pairs.
  • AUDNZD saw profit taking again last week with rallies getting close to resistance at 1.0605.
  • EUR has not gone down much versus USD but has been weaker against the crosses especially against the commodity currencies.
  • EURCAD is now consolidating around the daily chart support level of 1.4330. A break of this support level could set the stage for a much more significant down move for this currency pair.
  • EURNZD which we have put on our radar has now finally broken the weekly chart support and looks to break the uptrend channel as well.
  • We are unclear about equity markets for now. Despite expectations of Fed tapering the path of least resistance still seems higher for equity markets.
  • Bitcoin broke through resistance level of 57,970 on the daily chart and looks poised to trade towards 85,000.