Weekly Forex Forecast For July 31 – August 4, 2023 (DXY, EURUSD, GBPUSD, USDCAD, XAUUSD)

Trading Analysis for the Week Ending August 4th, 2023

In today’s video, the trading analysis focuses on the DXY (US Dollar Index), Euro, Pound, Dollar versus the Canadian Dollar, and Gold for the week ending August 4th, 2023. The analysis provides insights into the current trends, key levels, and potential trading opportunities for each market.

DXY (US Dollar Index)

The DXY is currently trading below a trend line that originated from the 2021 low. However, it has reclaimed the significant level of 100.8, which was the previous year’s low. This breakout and reclamation suggest a bullish outlook for the DXY. The analysis anticipates a potential pullback before another push towards 102 and possibly 102.8. The confluence of resistance and Fibonacci levels at 102.8 makes it a target for the DXY.

Euro

The Euro has experienced a fake-out above a trend line, triggering a move lower. The analysis suggests a potential consolidation between the current support level at 1.095 and resistance at 1.11. A sustained break below 1.095 could lead to further downside towards 1.08 and 1.073. Conversely, a reclaim of the 1.11 level could result in a move towards resistance at 1.117 to 1.118.

Pound

The Pound has also experienced a fake-out above a key level, indicating a potential move lower. The analysis highlights the importance of reclaiming the resistance level at 1.285 to maintain a bullish outlook. Failure to do so could lead to a move towards support levels at 1.263 and potentially lower.

Dollar versus the Canadian Dollar

The Dollar versus the Canadian Dollar (USD/CAD) is trading within a descending channel, but it has shown signs of potential bottoming. The analysis suggests a potential breakout above the resistance level at 1.323, which could lead to a move towards the recent high at 1.337. The height of the potential ascending triangle pattern supports this target.

Gold

Gold (XAU/USD) is currently trading within a range between support at 1940 and resistance at 1980. The analysis advises trading within this range until a sustained break above or below occurs. A breakout above 1980 could lead to an inverse head and shoulders pattern, with a target around the recent high at 1.337. However, this would require a confirmation from the DXY, which should break below 100.8.

Frequently Asked Questions

Q: What is the DXY?

The DXY, or US Dollar Index, is a measure of the value of the US dollar relative to a basket of six major currencies: Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona, and Swiss Franc. It provides insights into the overall strength or weakness of the US dollar.

Q: What is a fake-out in trading?

A fake-out, also known as a false breakout, occurs when the price of an asset briefly moves above or below a key level but fails to sustain the breakout. It often leads to a reversal in the opposite direction, triggering a move in the opposite direction of the initial breakout.

Q: What is an ascending triangle pattern?

An ascending triangle pattern is a bullish continuation pattern characterized by a horizontal resistance level and an upward-sloping trendline as support. It indicates that buyers are becoming more aggressive, and a breakout above the resistance level is expected to lead to further upside.

Q: How can I trade within a range?

When trading within a range, it is advisable to buy near the support level and sell near the resistance level. Traders can look for price reversals or bounces at these key levels to enter trades. It is important to set appropriate stop-loss levels to manage risk and be prepared for potential breakouts from the range.

Q: How can I confirm a breakout?

To confirm a breakout, traders look for a sustained move above or below a key level, accompanied by increased volume and strong price momentum. It is important to wait for confirmation before entering a trade to avoid false breakouts.