A moderate trading week ahead

Recommendations:

• Medium: Short the EURUSD at 1.3350, SL 1.3400, targets 1.330, 1.2800, 1.1600.

• Medium: Short the XAUUSD at 1530, SL 1570, targets 1500, 1440, 1300.

• Risky: Short the USDJPY at 102.30, SL 102.80, targets 101.50, 100.80, 100.00.

Analysis:

Last week, the SP500 fell back to 1550 and Gold accelerated to the downside to reach 1320 as we expected. For now, we maintain our recommendation to short gold on a retest of 1530 since the fundamentals continue to favor a fall. Similarly we don’t expect the EURUSD to exceed 1.33x and recommend a short there as well. The economic calendar of the coming week should provide only a basis for short term swings. We expect trading volume to decline next week, a pause is needed after the heavy events of the last several weeks.

• EURUSD: We maintain our short view on the EURUSD, and we continue looking for a short entry around 1.3350 (61.8% Fibonacci retrace from 1.37 to 1.2750). The current pattern formation looks a lot like a head and shoulder pattern which suggests we will reach levels below 1.20 (~1.15) once this pattern is activated. For now, another move up would be logical and we would use this to enter short.

• USDJPY: The gap we indicated last week was closed and the pair has again gotten close to the key psychological level of 100 (also 50% Fibonacci retrace). We believe that the market will be able to break this threshold in the near term and do not recommend any further attempts to short at 100. Once 100 is broken the market will need to consolidate this psychological level and a short entry closer to 102 makes sense.