USD/JPY Weekly Forecast (17th May 2021 – 21st May 2021)

Fundamental view:

The US dollar has rallied a bit during the course of the week and reached the 109.78 high, Wednesday’s inflation report made a foster run in Treasury interest rates, though well within this year’s range, helped USD/JPY to give its best session since starting of this year. Bank of Japan Governor Haruhiko Kuroda did not help the yen as he warned of the continuing impact of the pandemic in Japan, pledging to maintain the bank’s accommodative monetary policy. Kuroda said in the last week “Economic activity will remain below pre-pandemic levels for the time being,” “Risks to the economic outlook are skewed to the downside.” 

Japan Current Account n.s.a. on 13th May and  US Import Price Index monthly report on 14th May helped in creation of bearish trend whereas US CB Employment Trends Index on 10th May and US JOLTS Job Openings on 11th May helped in created of bullish trend for the pair.

The major economic events deciding the movement of the pair in the next week are Japan GDP quarterly report at May 17, US Building Permits at May 18, Japan Industrial Production monthly report, US EIA Crude Oil Stocks Change, FOMC Minutes at May 19, US Initial Jobless Claims, Philadelphia Fed Manufacturing Index at May 20 and US Existing Home Sales at May 21.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.0.9% higher than the previous week. Maintaining high at 109.79 and low at 108.35 showed a movement of 144 pips.

In the upcoming week we expect USD/JPY to show a bearish trend. The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout below 108.53 may open a clean path towards 107.72 and may take a way down to 107.09. Should 109.97 prove to be unreliable resistance, the USDJPY may raise upwards 110.60 and 111.41 respectively.  In H4 chart, Formation of bearish butterfly pattern indicates reversal of the trend creating prospects of a bearish trend Along with a bearish harami formation braces our expectation.

Preference
Sell: 109.15 target at 107.73 and stop loss at 110.02

 

Alternate Scenario
Buy: 110.02 target at 111.40 and stop loss at 109.15

EUR/USD Weekly Forecast (17th May 2021 – 21st May 2021)

Fundamental view:

The Euro initially fell during the starting of the week but later gained some strength against greenback. The reason behind that is the news – Federal Reserve is going to have to tighten its monetary policy much sooner. And the people began to reevaluate the situation as the Federal Reserve has been plain in its language that it is going to stay loose for longer. This worked against the value of the US dollar and euro took advantage of this situation. On the other hand, comments from Robert Kaplan, the Dallas Fed President, about the need to cut back on support boosted the greenback. 

Europe Sentix Investor Confidence on 10th May and Europe Wholesale Price Index monthly report on 11th May created bullish trend for the pair whereas US CB Employment Trends Index on 10th May and US EIA Crude Oil Stocks on 12th May created bearish trend for the pair.

The major economic events deciding the movement of the pair in the next week are Europe Employment Change quarterly report, Europe GDP quarterly report at May 18, US EIA Crude Oil Stocks Change, FOMC Minutes at May 19, ECB President Lagarde Speech, US Initial Jobless Claims, Philadelphia Fed Manufacturing Index at May 20 and US Existing Home Sales at May 21.

EUR/USD Weekly outlook:

Technical View:

Last week’s high was 0.09% higher than the previous week. Maintaining high at 1.2182 and low at 1.2052 showed a movement of 130 pips.

In the upcoming week we expect EUR/USD to show a bullish trend. The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1.2195 may open a clean path towards 1.2254 and may take a way up to 1.2325. Should 1.2065 prove to be unreliable support, the EURUSD may sink downwards 1.1994 and 1.1935 respectively. Chart formation of a bullish shark in H4 chart sets prospects for a bullish trend. Three outside up formation in H4 chart escalates the expectation for a bullish trend.

Preference
Buy: 1.2135 target at 1.2253 and stop loss at 1.2060

 

Alternate Scenario
Sell: 1.2060 target at 1.1936 and stop loss at 1.2135

GBP/USD Weekly Forecast (17th May 2021 – 21st May 2021)

Fundamental view:

The British pound showed a strong trend against the greenback in the previous week. Pound benefited from the UK reopening and favorable data. On the other hand, The news that Fed be forced to tighten its policy prematurely and robust inflation figures supported the greenback. In the UK, Prime Minister Boris Johnson made an announcement that a new phase of easing coming on May 17, yet concerns about the reopening have emerged as the Indian strain of the virus is spreading rapidly. The government is considering accelerating the campaign in areas where the variant is prevalent.

US Core CPI monthly report and US EIA Crude Oil Stocks Change on 12th May and US Business Inventories on 14th May created downtrend for the pair whereas Britain Halifax HPI monthly report on 10th May and Britain RICS House Price Balance on 13th May created uptrend for the pair.

The major economic events deciding the movement of the pair in the next week are UK Claimant Count Change, US Building Permits at May 18, US EIA Crude Oil Stocks Change, FOMC Minutes at May 19, US Initial Jobless Claims, Philadelphia Fed Manufacturing Index at May 20, UK Retail Sales monthly report, and US Existing Home Sales at May 21.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 1.15% higher than the previous week. Maintaining high at 1.4167 and low at 1.3999 showed a movement of 168 pips.

In the upcoming week we expect GBP/USD to show a bullish trend.  The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout above 1.4170 may open a clean path towards 1.4252 and may take a way up to 1.4338. Should 1.4002 prove to be unreliable support, the GBPUSD may sink downwards 1.3916 and 1.3834 respectively. Chart formation of inverted ascending scallop pattern in H4 chart favors prospects of a bullish trend. Spinning top pattern formation escalates the expectation for a bullish trend.

Preference
Buy: 1.4085 target at 1.4251 and stop loss at 1.3998

 

Alternate Scenario
Sell: 1.3998 target at 1.3835 and stop loss at 1.4085

How to utilize the weekends in Trading

Trading is an art that is finely managed in the weekends alone by a few professional traders. The cryptocurrency market never sleeps. Unlike traditional financial markets, which are not open at weekends, the cryptocurrency market is open. The weekend gap trading strategy is simply the price differential between the price when the traditional forex market closes on a Friday evening, and the price when it reopens on a Sunday.

Weekends are smartly utilized to analyse the market by taking advantage of a closed market to create trading strategies for the upcoming week’s market. It gives you the opportunity to investigate any upcoming events that may impact your market. The Winstone Prime Economic Calendar, for example, allows you to identify important economic dates, like policy reform.

We detailed here several markets, strategic choices and certain benefits and risks to be considered for weekend trading. This article will help you to get out from the weekend trading fears on Gaps and Benefits of CFD trading.

Which Types of Traders Trade on the Weekend?

The cryptocurrency market is a good example of a market. It’s open around the clock, Monday through Sunday and is closed only when crypto-exchanges shut down for maintenance or an upcoming fork. Crypto-markets are well suited for traders who can only trade on weekends.

Some Forex traders will buy when fundamental or technical factors favor a gap on the next trading day. These traders will place a trade on Friday hold it for the expected news and close it on their favorable moments.

Swing traders and position traders have an advantage over scalpers and day traders since they can use weekends to analyse the market without actually placing trades.

Weekend market analysis on forex market?

What is weekend market analysis and why should it be done on weekends will be good to know for a trader. As mentioned before periodically practising this market analysis will help definitely.

The reason to do weekend analysis is to approach the next week with a perfect plan. First off, 95% of market analysis is done on the weekend and takes place on the weekly and daily chart time frame. Basically looking for key chart levels of support and resistance, swing highs and lows, event areas and daily chart price action signals . Essentially, you have to do reading the story on the chart and mapping the market from left to right. The points to be noted of what has happened, what is happening and making a final decision of what might happen next (the upcoming week).

You have to know all your key levels drawn in, your bias (bullish or bearish) written out along with the chart condition (uptrend, downtrend, large sideways range or tight / choppy consolidation) as well as taking note of any imminent trade setups that you have to look for.

Weekend gap trading on Forex Market

Weekend gap trading is a popular strategy with foreign exchange, or Forex, traders. While technically open around the clock, Forex trading closes on Friday night and doesn’t reopen until Monday morning Many news announcements and world events that affect currency prices can happen between trading sessions. Weekend gaps which can be seen as occurring within a currency pair at the beginning of the new trading week which starts with Week start opening price , following weekend closing price.

As an example, consider the case where there is a high level meeting between the President of the United States, and the Prime Minister of England, about the state of future trade between the two countries. And this particular meeting is scheduled to be held on a Saturday, when the major financial market centers are essentially closed for business. Depending on the result of such a meeting, there could be a major implication for the GBPUSD currency pair when the market opens, which could likely result in a major gap up or gap down price move.

Many times it’s extremely difficult to predict if and by what extent the market will react to such types of weekend events. And so from the perspective of trading, predicting forex market gaps does not provide for a viable trading strategy. Sure you can catch an upside or downside gap from time to time, however, there does not appear to be any real discernible edge in trading opening gaps in this particular manner.

Forex investors trade the weekend gap by expecting Week start opening price to return to Weekend closing price.

Cryptocurrency trading on Weekends

The origin of retail weekend trading is quite recent and is entirely due to the success of cryptocurrencies. Cryptocurrencies trade non-stop 24/7 across all the various exchanges and many younger traders see this as a great advantage because they can continue to deploy their trading models over the weekend as well.

In fact, weekends are seen as a crucial time for cryptocurrency traders. An article from CNBC reported various milestones posted on weekends:

  • Some of Bitcoin’s steepest price swings have happened over weekends.
  • Approximately 60% of weekends since December 2017 have seen a 5% move or higher over a weekend.
  • 82% of weekends have seen at least a 3% move by Bitcoin.

 

The popularity of weekend trading in cryptocurrencies provided by many CFD brokers. With global markets more and more interconnected, having efficient capital markets is essential and we might see more of a shift towards 24/7 trading in the coming years as “traditional asset classes” catch up to cryptocurrencies.

Back testing Your Trading Platform

Weekends are the ideal time to learn the ins and outs of a trading platform and find out how your chosen platform can assist your trading. A selection of advanced trading platforms allows traders to analyze a number of different strategies, applied to past data, for a better understanding of how these strategies would have played out. This process is called back-testing and is an excellent way of testing a strategy before employing it in live conditions.

The process of back-testing involves the selection of an earlier date and time on the chart (to a period in which you are unfamiliar with price action), ‘locking the view’ and analyzing the detailed report afterwards to gauge how well the strategy would have done.

It must be mentioned that just because a strategy performed in a particular manner in the past, doesn’t mean that it will perform in that way in the future. The goal of back-testing is to simulate how a strategy would have played out and observe the variability of expected vs actual results of the strategy.

This is perfect to do when the market isn’t actually moving, allowing traders an environment to better manage the emotions of trading.

Conclusion

Weekend trading is a novelty introduced by cryptocurrency traders, and traditional asset classes are still in catch-up mode – perhaps because habits are hard to change, and most financial markets are accustomed to the weekend break. Due to the low liquidity, higher transaction costs and lower range of instruments, weekend trading is currently hard to justify on anything except Bitcoin or other cryptocurrencies.  Only if you have an open position that is exposed to a major unscheduled geopolitical event over the weekend, should you consider hedging your position on Saturday or Sunday.

You should have more than enough trading opportunities during the week, independently from the strategy you adopt. If you are having trouble finding time to trade during normal market hours, trading on the weekend is not the right solution. The better solution is to adopt a trading style that works for you.

The most popular approach is the weekend gap technique, where the price changes are expected to take advantage of when the market closes on a Friday and reopens on a Sunday. It is also necessary to have a trustworthy trading platform, an effective strategy, and time to analyze your position.

We WinstonePrime offers trustworthy platform for trading the cryptocurrencies, can utilize the gap trading and also you can analyze the other market on weekends for better trades.