The Forex Market Wrap is here!
Watch the video to learn what key levels have been hit this week!
Forex Market Wrap
This week we saw inflation data out of the US fall, this caused the USD to weaken initially. There was a lot of anticipation for the CPI numbers to beat estimates, however, due to the decline in the CPI numbers the Fed could use this to hike by the expected 50bps in the next meeting. The CPI data was followed by PPI which also fell turning negative for the first time since July 2020. GBP GDP data came in lower but higher than forecasts, this didn’t prevent the GBP from weakening.
On the charts we have the weekly and daily volume profiles on 4hr and 30 minute charts. The volume profiles help us identify key levels in the market. The GBPUSD reacted to many of the levels both weekly and daily, the price initially opened outside of the weekly value area low and found resistance. However, following the US CPI data price broke back within the weekly value and traded to the value area high and high volume node finding resistance. On the Daily profile you can see that a gap formed when the price rallied on the news, when this happens it is likely the price will trade back through and fill the gap on the profile.
The USDJPY had a similar path this week, we opened well above the value area high, but the price failed to move higher and instead rejected the high volume node at 135.20. Again, the news drove prices much lower, forming a gap in the daily profile. The price held at the value area low and price is now climbing back into the unfilled area for an opportunity to trade to the other side.
AUDJPY was one to watch for us this week, as the price was consolidating at the previous weekly value area low. This was a sign that we could see the price break higher. The strength meter added some confluence to this trade as we saw the JPY was at the reversal zone. The price broke out of the consolidation higher and traded to the weekly untested point of control.
The price of Gold reached a key resistance zone this week around the $1800.00 level. Since then the price has been trading between key volume profile levels with today being one of the days that is textbook. When the price opens up in the previous day’s value area we can often see the market trade up to the daily VAH, find resistance, then trade back to the value area low. This is typical price movements when the price opens up in value.
Did you see our GBPUSD analysis? You can see it here.
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