Traders often seek indicators to help them determine when they should enter the market. A crucial piece of information for traders is an estimate of how far the market is likely to move before it reaches an area of congestion.

The problem is that many traders spend their time waiting for the market to give them clear direction and hoping that the price will continue. But because there are many opportunities for this “temporary” movement, you will get the best results if you know when the price will stop for a moment—which means you have time to react.

One tool that traders can use to forecast a market’s level of fullness and determine when to sell their positions and buy new ones is called the Oscillator. Oscillators indicate when the market is oversaturated and ready for a reversal. The oscillator shows overbought or oversold levels.

When the oscillator is in the overbought area, it signals that the market is experiencing a surge in demand, and traders should be ready to exit their positions and wait for better moments. When the oscillator is in the oversold area, sellers have become weak, and the downtrend is likely to be oversaturated. This suggests that a bullish reversal might be possible.

However, an oscillator does not always accurately reflect price movement. Traders must be aware that the oscillator reading may be misleading and that a position may have changed even if the oscillator is moving similarly.

In MetaTrader, numerous indicator oscillators are already available for use. The two oscillators that traders frequently use are: 

• Relative Strength Index 
• Stochastic Oscillator

The Relative Strength Index (RSI) is one of the traders’ most common technical indicators. In 1978, J. Welles Wilder developed the RSI to measure how fast and how much prices change. This indicator also helps traders know when the market is overbought or oversold, so they can buy at low prices and sell at high prices.

RSI: How to Use It

To add RSI to the chart, click Insert>Indicators>Oscillators>Relative Strength Index.

By default, MetaTrader provides you with 14 periods. You can change this setting however you want. Most traders with short-term objectives use the 9-period RSI, while traders with long-term goals prefer the 25-period RSI. The smaller the period, the more fluctuations the indicator will show.

What does the Relative Strength Index mean?

The Relative Strength Index fluctuates between 0 and 100. A middle line at 50 indicates that there is no trend. If the RSI is above 50, momentum is growing, so you should buy. If the RSI is below 50, bearish momentum will increase, so sell your assets before they decrease in value.

The market is either oversold or overbought. Like any other oscillator, the RSI helps traders know when an asset has been overbought or oversold. 

When the RSI goes above 70, it indicates that a market is overbought and could go down. When the RSI goes below 30, on the other hand, it shows that a market is oversold and could go back up.

However, this method is not recommended for trading when the Relative Strength Index (RSI) shows a trend toward overbought or oversold conditions. If the market trend is strong and appears to be continuing, it is best to sell even though the RSI is oversold during a downtrend or continue buying when the RSI is overbought.

When the indicator leaves a critical level, the quality of RSI signals usually improves, making them more effective when used in the direction of the trend.

For example, you could buy when the RSI is increasing above 30, and the price is in an uptrend.

Market reversal

When the RSI and the price don’t match up, it can signify that the market is about to change. When the price makes a new high, but the RSI fails to make a corresponding high, this is called a bearish divergence, typically considered a sign of weakness. On the other hand, a bullish divergence forms when the price makes a lower low, but the RSI does not.

Stochastic Oscillator

George C. Lane developed the Stochastic indicator in the late 1950s, and traders use it nowadays. This indicator compares the closing price to past values to measure market momentum. The price will close near the high in a bullish market, and in a bearish market, the low. 

The stochastic oscillator can show overbought or oversold market conditions and indicates a trend change as market momentum slows. Indicators can provide trading signals and suggestions.

Stochastic: How to use it.

MetaTrader has a built-in stochastic indicator. 

Click Insert>Indicators>Oscillators>Stochastic Oscillator to add it to the chart.

A Stochastic Oscillator can be used on any timeframe and can be customized to suit your individual trading system. Standard values are 5, 3, 3, while other popular parameter variations include 14, 3, 3 and 21, 5, 5. 

The 5-day EMA is often referred to as “Fast Stochastic”, as it reacts more quickly with price changes in the market than the slower 14-day EMA (“Slow Stochastic”). Full Stochastic is a hybrid of both EMAs and reacts to changes in both prices and time periods. You can pick the parameters for your own trading system based on your goal.

How does Stochastic Oscillator work?

The stochastic indicator ranges from 0 to 100 in percentage units (%). Two lines represent the indicator:

• the fast line, also known as %K (solid green line)
• the slow line, also known as %D. (dotted red line). 

The moving average of %K is the line %D. When the speed changes, these lines meet. When a fast-moving average crosses a slower one from below, it’s a sign to buy. Sell when it crosses a slower one from below.

Like other technical indicators, the Stochastic oscillator does not always provide accurate signals. If you want to improve the accuracy of its signals, there are two options.

Firstly, use the signals made when the crossover happens at the edges (above 80 for a sell signal and below 20 for a buy signal).

One way to trade using an indicator is to look at the longer-term trend on a chart and then trade based on that. For instance, if you are using stochastic on the TF H1 chart and looking at the longer-term trend on the H4 chart. If the uptrend looks strong and you do not want to listen to a sell signal because the price may stay in the overbought area for a long time, pay attention to buy signals that Stochastic gives you, and you may make money from trend trading.

Secondly, pay attention when the oscillator moves away from the price chart. When the price moves up but Stochastic makes a lower high, this is a sell signal (bearish divergence). Conversely, a buy signal shows up when the oscillator doesn’t confirm a new low price.

U.S. equities rose for the third consecutive session. The Dow Jones Industrial Average rose 1.07% to close at 31836.74. The S&P 500 rose 1.63% to close at 3859.11. The tech-heavy Nasdaq Composite soared 2.25% to close at 11199.12. Equities were buoyed by the falling U.S Greenback and the retreating U.S. short-term treasury yield. The benchmark U.S. 10-year treasury yield has retreated from recent highs of above 4.2% to below 4.1%. The yield was last seen trading at 4.086%. The policy-sensitive 2-year treasury yield sits at 4.449%.

Earnings season continues to provide much-needed breathing room for equities. Coca-Cola and General Motors both reported earnings that were better than analyst estimates. Coca-Cola reported $0.69 EPS, beating the $0.64 EPS estimate. Revenue to the beverage giant came in at 11.1 billion Dollars for Q3. General Motors recorded $2.25 EPS, a 19.63% surprise from the analyst estimated $1.88 EPS. More importantly, GM did not adjust guidance for the year, providing a confidence boost to GM investors.

On the earnings calendar, Apple, Exxon Mobile, Ford Motor, and Credit Suisse are scheduled to release earnings this week.

U.S. GDP(QoQ) for Q3, 2022 will be announced on Thursday, Oct 27, given the persistently challenging environment, with historically high energy costs and rapidly rising interest rates, also the very high inflation, especially in food and household costs, we have less optimistic about GDP forecast.

Main Pairs Movement

The Dollar index dropped 0.99% throughout yesterday’s trading. The U.S. Greenback faced strong selling pressure amid the retreating 10-year treasury yield and better risk sentiment. Recent rumours regarding a more dovish Fed heading into the next FOMC interest rate decision have also triggered some selling amid the recent highs of the Dollar index.

EURUSD gained 0.9% throughout yesterday’s trading. The shared currency advanced against a weaker Dollar; however, strong economic headwinds still loom over the European economy and market participants’ optimism for a dovish Fed could be all but fictional.

GBPUSD gained 1.69% throughout yesterday’s trading. The British Pound surged as Britain welcomed its latest Prime Minister, Rishi Sunak. Personnel changes in the British government seem to have stabled the volatile Gilt market and thus the Pound.

Gold rose 0.21% throughout yesterday’s trading. The non-yielding metal took advance against the Dollar as treasury yields retreated.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair surged higher on Tuesday, gathering bullish momentum and refreshing its daily high above the 0.9970 mark in the US trading session amid dismal economic data in the US. The pair is now trading at 0.9958, posting a 0.86% gain daily. EUR/USD stays in the positive territory amid a weaker US dollar across the board, as the weaker-than-expected US housing prices and manufacturing data on Tuesday added to the concerns about the negative impact on the economy of the Federal Reserve’s radical tightening pace. Therefore, investors’ expectations of the Fed slowing the pace of tightening has exerted bearish pressure on the US dollar and lifted the EUR/USD pair higher. For the Euro, the better-than-anticipated economic data has acted as a tailwind for the shared currency, as the German IFO Business Climate Index eases to 84.3 in October and showed that the Business Climate remained stable. The European Central Bank will announce its latest monetary policy decision on Thursday.

For the technical aspect, the RSI indicator is 70 as of writing, suggesting that the pair is facing heavy buying pressure as the RSI reached the overbought zone. As for the Bollinger Bands, the price moved out of the upper band, therefore a strong continuation of the uptrend can be expected. In conclusion, we think the market will be bullish as the pair is heading to test the 0.9986 resistance line. The four-hour chart also reflects heavy buying interest as the technical indicators now sit at the overbought zone.

Resistance:  0.9986, 1.0038

Support: 0.9836, 0.9757, 0.9667

GBPUSD (4-Hour Chart)

The GBP/USD has surged from levels right above 1.1300 on Tuesday’s early US market session, rallying to 1.1500 where it seems to have found some resistance. In the domestic, the victory of Rishi Sunak in the Tory race and his pledge to restore economic stability are bringing back confidence to the markets, terrified with his predecessor’s economic plan. The re-appointment of Jeremy Hunt as chancellor of the exchequer has increased hopes that the next cabinet will be more market-friendly, which is acting as a tailwind for the British pound. On the other end, the weaker-than-expected US housing prices and consumer confidence data on Tuesday, as well as the downbeat S&P PMIs released on Monday are increasing concerns about the negative impact on the economy of the Federal Reserve’s radical tightening pace. Against this backdrop, the US dollar is losing ground against its main peers, with US Treasury Bonds dropping sharply. The benchmark 10-year yield tumbled from 4.25% earlier on Tuesday to 4.06%.

From the technical perspective, the RSI indicator is 67 on the four-hour scale as of writing, suggesting that the pounds amid strong upside tractions. As for the Bollinger Bands, the GBPUSD was breaking through the upper band, and the gap between upper and lower bands became larger, signalling that the bullish trend would continue in the near term.

Resistance: 1.1500, 1.1750, 1.1900

Support: 1.1120, 1.0953, 1.0632, 1.0392

XAUUSD (4-Hour Chart)

XAUUSD price advances early in the New York session, up by 0.33% courtesy of falling US Treasury yields, while bonds climb amidst the ongoing narrative in the markets that the US Federal Reserve might slow the pace of its rate hikes. All that said, the weakened US Dollar is a tailwind for the yellow metal. Gold was priced at $1657 as of writing. The sentiment is upbeat, as shown by global equities trading in the green. As previously mentioned, market players are positioning for a possible pivot, while economic data in the US continues to show further deterioration in the country, coupled with high inflation and lower bond yields, boosted gold prices. Data side, US economic data flashed that the housing market on Tuesday, as shown by housing prices cooling down due t higher mortgages, which climbed to almost 7%, as the Fed embarked on a tightening cycle trying to tame inflation. Further data revealed by Conference Board (CB), reported that Consumer Confidence dropped from 107.8 to 102.5, less than estimates of 105.9, decreasing for the second consecutive month.

From the technical perspective, the four-hour scale, and the RSI indicator 57 as of writing, suggest that the gold was in an upbeat mood and the bullish momentum would persist until RSI hit above 70, the overbought zone. As for Bollinger Bands, the gold price was hovering between the upper band and the 20-period moving average, indicating the yellow metal remains upside trend in the near term.

Resistance: 1682, 1715, 1730

Support: 1640, 1615, 1600

Economic Data

In a field where many praise continuous movement, many forget that pushing back is also a strategy. As a trader, your capital is your most valued asset and once it’s gone, it’s never coming back. Thankfully, there are ways to cut your losses and protect your profits. With the right strategy, a Stop Loss can even save your capital for your next investment.

As the name suggests, a stop loss is an order that limits your potential losses from trade and protects the pips from returning to the market. However, while a stop loss is designed to help keep pips in check, many traders do not know how to set a proper one, leading to an ungraceful early exit.

So how does one exactly set a proper stop loss?

While there are other strategies employed in setting stop losses, let’s discuss three fool-proof approaches to setting a proper stop loss: fixed-based, trend-based and volatility-based.

Fixed-based stop loss

The simplest way to set a stop loss is to do a fixed-based stop loss. It’s a stop loss order with set previous we start entering the position based on our money management calculation. For example, when we do some analysis, we know based on the Price Action strategy that we have a level that we want to set as the stop loss level, then we enter based on that level to create a better Risk and Reward trade. So we set the Stop Loss already in that level, then we just let the trade goes, on some certain level we may close our trade manually when we got the profit, or the trade hit the Target Profit level, or after certain movement, we can move the Stop Loss to the Entry Price.

Trend-based stop loss

In a trend-based stop loss, the order is placed at a level that invalidates the current trading set-up. For instance, in an uptrend market, you can identify three points: the lowest, the middle, and the highest downtrend. Using a trend-based approach, a stop loss order may be set on the lowest downtrend for optimal loss cutback, as the price is relatively low compared to that of the highest point. In this approach, identifying where the set-up may fail can help you exit before a bigger loss appears.

Volatility-based stop loss

A volatility-based stop loss, on the other hand, uses a technical analysis indicator called the Average True Range (ATR). Using this approach, the stop loss order is set at an ATR beyond the area of value, which involves two variables: the current ATR value and the swing low value (lowest price point). The current ATR value is simply deducted from the swing low value, resulting in the stop loss level at which you can set your stop loss order.

Pro tip: ATRs can be adjusted in multiples based on your trading set-up. Setting a narrow stop loss widens your position size but puts you at risk of a premature stop-up, whereas setting a wider stop loss may narrow your position size but gives you relatively more stability in controlling your movements.

Stop Losses and Stop Hunting

During a particular time when there is low volatility in the market, many traders use stop hunting as a strategy to open trading opportunities. Stop hunting is a strategy that forces traders to exit by purposely triggering stop loss orders, creating a high-volatility market, and presenting unique short-term trading opportunities which may be profitable for some traders.

For traders holding long-term positions, stop hunting causes continuous losses. In this case, setting the stop loss order at a definite level below support and above resistance can help avoid the occurrence of stop hunting.

Stop Losses in the long run

At the end of the day, a loss is still a loss. However, a small loss is a hundred times better than a burned capital. While it’s true that you can be stopped up from time to time, stop-loss orders not only can protect your capital and your profits, but can also give you time to reevaluate your trading setup to minimize even more losses than that afforded by a stop-loss order.

U.S. equities traded higher over the course of yesterday’s trading. The Dow Jones Industrial Average gained 1.34% to close at 31499.62. The S&P500 gained 1.19% to close at 3797.34. The tech-heavy Nasdaq Composite gained 0.86% to close at 10952.61. The Dow came back from its best 3-week stretch since Nov 2022 and closed at the highest level in 6 weeks, relieving the selling pressure of this year.

The benchmark U.S. 10-year treasury yield has dropped 0.04% from the highest and is currently trading at 4.228%, however, overall it’s recovering from the earlier decline on Friday when WSJ’s report strikes investors’ concern.

The U.S. CB Consumer Confidence comes out on Wednesday will reflex the DXY, with 108.00 in Sep and 103.6 in Aug, a higher expected reading should be taken as positive/bullish for the USD, while a lower-than-expected reading should be taken as negative/bearish for the USD.

Due to the Chinese leader Xi Jinping going for his third term as leader and unveiling a new leadership team, the Chinese technology companies suffered a huge impact on Monday, Tech giants Alibaba and Tencent closed down more than 11% in Asia, and Baidu was 12% lower while food delivery firm Meituan tanked more than 14%. Also, the came out of these two policies “zero-Covid” and “tightened regulation on the tech sector “, investors assume could be a negative for private firms.

Main Pairs Movement

The Dollar Index lost 0.02% over the course of yesterday’s trading. The release of the downbeat US S&P PMI data that landed at 49.9 with an estimation of 51.2, terminated DXY’s attempts of shifting into positive and restricted the upward trend in the DXY.

EURUSD gained 0.07% over the course of yesterday’s trading, and it even hits 0.99, this could be a sign that some investors are putting bets on the meeting on Thursday from European Central Bank.

GBPUSD gained 0.25% over the course of yesterday’s trading. The UK S&P Global PMIs for October didn’t show a good sign for the 4th quarter, however, the ends of the US Treasury yields on Monday show a positive side of the economy.

Gold gained 0.08% over the course of yesterday’s trading. The tepid growth-related gold markets corresponded with the DXY market and the market will continue being lacklustre before the US GDP data comes out.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair edged higher on Monday, advances steadily towards the 0.990 area and paired some of its earlier losses following the release of weaker US PMI data. The pair is now trading at 0.9870, posting a 0.14% gain on a daily basis. EUR/USD stays in the positive territory amid renewed US dollar weakness, as the disappointing PMI surveys dragged the greenback lower to the 112.0 area and provided some support to the EUR/USD pair. The US S&P Manufacturing PMI drops to 49.9 in early October, which fell short of market expectations of 51.2 and showed that business activity in the US manufacturing sector has contracted slightly. Moreover, the Services PMI and the Composite PMI both fell short of analysts’ projections. For the Euro, the downbeat PMI data in the Eurozone also further indicated that the Euro area economy is headed toward a recession. The ECB event on Thursday will be the focus this week as investors are anticipating a 75 bps rate hike by the central bank.

For the technical aspect, RSI indicator 61 figures as of writing, suggesting that the pair has limited upward potential as the RSI failed to push higher and consolidated around 60. As for the Bollinger Bands, the price failed to climb higher and started to decline, therefore some downside momentum can be expected. In conclusion, we think the market will be bearish as long as the 0.9874 resistance line holds. The technical indicators also remain directionless above their midlines.

Resistance: 0.9874, 0.9986, 1.0035

Support: 0.9757, 0.9667, 0.9551

GBPUSD (4-Hour Chart)

The GBP/USD pair was little changed on Monday, remained under slightly bearish pressure and steady hovered around the 1.1300 level amid the disappointing PMI data from the UK and the souring market mood. At the time of writing, the cable stays in negative territory with a 0.07% loss for the day. The lower-than-expected US PMI data makes it difficult for the US dollar to gather strength, but the GBP/USD pair failed to preserve its upside traction as investors remain cautious on the first day of the week. For the British pound, Rishi Sunak will become the new UK Primer Minister after winning a leadership contest and the transition from Liz Truss to Sunak could take place on Tuesday. As for now, investors are trying to figure out how PM Rishi Sunak will approach the fiscal plan. Meanwhile, the disappointing release of the flash UK PMI prints also fueled worries about a bleak outlook for the UK economy and weighed on the cable.

For the technical aspect, RSI indicator 51 figures as of writing, suggesting that the bullish bias stays intact in the near term as the RSI stays above the mid-line. As for the Bollinger Bands, the price remained under pressure and dropped towards the moving average, therefore the downside traction should persist. In conclusion, we think the market will be bearish as the pair is heading to test the 1.1228 support. Bears can have better chances if the pair extends its slide below that support.

Resistance: 1.1390, 1.1476, 1.1566
Support: 1.1131, 1.0968, 1.0392

XAUUSD (4-Hour Chart)

XAUUSD witnessed a fresh supply near the $1670 region, over a one-week high set earlier this Monday and extends its intraday descent through the first half of the European session. The gold fell back around the $1650 level and erodes a part of Friday’s goodish rebound from the vicinity of the YTD low. On the data side, the US Manufacturing PMI figured 49.9, which is lower than the expected 51.0, seen as bullish traction for XAUUSD and attracted some buying in the earlier US trading session. Furthermore, the US dollar index made a comeback and rebounded from over a two-week low. Then lost upside momentum and slid to the 120.00 level as of writing, with reports that some Fed officials are signalling greater unease with an oversized rate hike. Apart from that, the European Central Bank and Bank of England are also expected to deliver a jumbo rate hike at the upcoming policy meetings. This turns out to be another headwind driving flows away from the non-yielding yellow metal. Also, a recovery in the risk sentiment – as depicted by a positive tone around the equity markets, was seen weighing on the safe-haven gold.

From the technical perspective, the RSI indicator 54 figured as of writing, suggesting that the gold price was mildly growing in the four-hour chart scale. As for Bollinger Bands, the yellow metal was priced above the 20-period moving average and the gap between the upper and lower bands was little changed, signalling the price have no clear tractions until breakthrough the resistance of $1662, also around the upper band.

Resistance: 1662, 1674, 1725
Support: 1643, 1620, 1600

Economic Data

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This week, the Bank of Canada, the European Central Bank, and the Bank of Japan will announce their interest rate decisions, with expectations of possible rate hikes.

Meanwhile, the US is scheduled to release its Flash Services PMI, Advance GDP, and Core PCE Price Index. The UK and Eurozone will also be releasing their PMIs.

Australia will also release its Consumer Price Index, while Canada is expected to publish its Gross Domestic Product.

Flash Services and Manufacturing PMI – Eurozone, UK and US (24 October)

The Flash Services Purchasing Managers Index (PMI) for France may decline slightly to 51.9 from 52.9 in September, while analysts forecast that Germany will see a decrease in the Flash Services PMI from 45 to 44.8.

The UK’s Flash Services PMI is expected to remain at 50, while the US is forecast to rise from 49.3 to 50.

Germany’s manufacturing PMI for October is forecast to fall to 47 from 47.8 in September. The UK may see a rise to 48.4 from 47.5.

CB Consumer Confidence – US (25 October)

US consumer confidence in September 2022 rose to 108 from 103.6 the previous month. Data also showed that US consumers were optimistic about their finances and the economy in general. 

Analysts expect consumer confidence to slow down slightly over the next few months, but they predict it will remain above 100, indicating that US consumers are still feeling good about the economy.

Consumer Price Index – Australia (26 October)

The Consumer Price Index in Australia rose 1.8% in the 2nd quarter of 2022 over the previous quarter. Analysts forecast a slight dip in CPI for the 3rd quarter, between 1.1% and 1.5%.

Bank of Canada Rate Statement – Canada (26 October)

In September 2022, the Bank of Canada raised its target for its overnight rate by 75bps to 3.25%, saying that rates would need to rise further, given the inflation outlook. In its October meeting, policymakers forecasted that the Bank’s overnight rate would increase by another 50bps to 3.75%.

ECB Press Conference and Interest Rate Decision – Eurozone (27 October)

The European Central Bank raised its main interest rate by 75bps at its September meeting, signalling further hikes in the coming months. The market is already pricing a further 75bps increase in October to 2%.

Advance GDP – US (27 October)

The US economy shrank 0.6% in the second quarter of 2022, matching the second estimate. This confirms that a recession is underway. Economists expect an increase of 2% in the third quarter of 2022.

Bank of Japan Outlook Report – Japan (27 October – tentative)

The Bank of Japan maintained its key short-term interest rate at -0.1% in October and signalled that it would continue to raise rates in future meetings.

Although inflation in Japan is 2.5 to 3%, and the Yen is hitting its weakest level in more than 20 years, we still expect that the interest rate will remain unchanged at -0.1%.

Gross Domestic Product – Canada (28 October)

The gross domestic product (GDP) increased by 0.1% in July, matching the pace of growth in June. The GDP may be slower at 0% in August.

Core PCE Price Index m/m – US (28 October)

The Core PCE prices in the US, excluding food and energy, increased 0.6% in August from its previous month’s revised rate of 0.0%. The consensus estimate is for a 0.4% rise in September.

U.S. equities traded higher over the course of yesterday’s trading. The Dow Jones Industrial Average gained 2.47% to close at 31082.56. The S&P500 gained 2.37% to close at 3752.75 The tech-heavy Nasdaq Composite gained 2.31% to close at 10859.72. Equities hit the best week since June despite the 10-year Treasury yield surging to its highest level since 2008, the next move of the central back on curbing inflation will be crucial for the market.

The benchmark U.S. 10-year treasury yield has dropped 0.16% from the highest and is currently trading at 4.219%, the drop is considered a reflection of the possibility of the Federal Reserve could begin to slow the pace of hikes.

The upcoming PMI monthly Composite Reports released by Markit Economics shows the percentage of respondents reporting an improvement, deterioration or no change since the previous month, which captures business conditions in the manufacturing sector of the EU and UK.

About the ECB meeting, it seems a 75 basis points interest rate hike is a done deal, and the deposit rate reaching 3% by March next year to beat inflation, besides, there might be a prospect of another jumbo hike in December according to the 75bp increase. Also, Governing Council is considering to start reducing the bond portfolio, which will remove liquidity from the market and additional monetary tightening.

U.S. GDP(QoQ) of Q3, 2022 will be announced on Thursday, Oct 27, in view of the persistently challenging environment, with historically high energy costs and rapidly rising interest rates, as the very high inflation, especially in food and household costs, we have less optimistic about GDP forecast.

Main Pairs Movement

The Dollar Index lost 0.05% over the course of yesterday’s trading. The Greenback strength is at a three-week high as rising global bond yields weigh on equity markets and Asian currencies, and the greenback is more robust against all its G-10 peers

EURUSD gained 0.2% over the course of yesterday’s trading. The comeback was from the announcement about of combating inflation and the meeting on Thursday with European Central Bank.

GBPUSD gained 0.78% over the course of yesterday’s trading. Retail Sales declined by 1.4% in September, and the estimate was 0.5%, the core sales tumbled 6.2% YoY in September with an estimation of 4.1%, which indicates the high inflation in the UK.

Gold gained 1.57% over the course of yesterday’s trading. Gold is headed for the second consecutive weekly decline, and the higher borrowing cost will continue denting the non-yield metal.

Technical Analysis

EURUSD (4-Hour Chart)

The EUR/USD pair edged higher on Friday, regaining upside momentum and rebounded towards the 0.9800 mark amid speculation the US Federal Reserve will debate smaller rate increases starting in December. The pair is now trading at 0.9842, posting a 0.61% gain on a daily basis. EUR/USD stays in the positive territory amid renewed US dollar weakness, as the safe haven greenback is losing ground and retreats to the 112.7 area amid a less hawkish stance from the Federal Reserve. The latest reports showed that the Fed could debate on whether and how to signal plans to approve a smaller increase in December, as few officials signalling greater unease with big rate rises to fight inflation. For the Euro, the concerns about a deeper global economic downturn and the protracted Russia-Ukraine war could keep acting as a headwind for the shared currency.

For the technical aspect, the RSI indicator is 60 figures as of writing, suggesting that the pair is preserving its bullish momentum as the RSI climbs sharply towards 70. As for the Bollinger Bands, the price regained upward strength and crossed above the moving average, so a strong uptrend continuation can be expected. In conclusion, we think the market will be bullish as the pair is testing the 0.9861 resistance. The rising RSI also reflects bull signals.

Resistance:  0.9861, 0.9921, 0.9986

Support: 0.9757, 0.9667, 0.9551

GBPUSD (4-Hour Chart)

The GBP/USD pair edged higher on Friday, coming under selling pressure but then rebounded back to the 1.1300 area despite the release of the disappointing UK Retail Sales figures. At the time of writing, the cable stays in positive territory with a 0.30% gain for the day. The Wall Street Journal reported that Federal Reserve officials are likely to debate then whether and how to signal plans to approve a smaller rate increase in December, which led to a goodish recovery in the equity markets and weighed on the greenback. For the British pound, the UK Retail Sales declined 1.4% MoM in September, which is worse than market expectations of -0.5% and suggests that consumers are feeling the pinch of high inflation. On an annualized basis, UK retail sales also plunged -6.9% in September. Therefore, the downbeat UK data further fueled the growing fears of a deeper economic downturn and exerted bearish pressure on the GBP/USD pair.

For the technical aspect, RSI indicator 53 figures as of writing, suggesting that the upside is more favoured as the RSI stays above the mid-line. As for the Bollinger Bands, the price witnessed fresh buying and touched the moving average, therefore the upside traction should persist. In conclusion, we think the market will be bullish as long as the 1.1131 support line holds. A sustained strength beyond the 1.1390 mark might trigger a short-covering rally and allow the GBP/USD pair to reclaim the 1.1470 mark.

Resistance: 1.1390, 1.1476, 1.1566

Support: 1.1131, 1.0968, 1.0392

XAUUSD (4-Hour Chart)

As the US dollar failed to preserve its upside momentum after the Wall Street Journal mentioned that Fed officials are split about December’s rate hike on an article, the pair XAU/USD regained bullish strength and rose sharply towards the $1,647 level during the US trading session. XAU/USD is trading at $1655 at the time of writing, rising 1.59% on a daily basis. Fed officials are adjusting the pace of rate increases as they try to cool down inflation and policymakers are weighing whether to hike rates at a slower pace in December. Therefore, the US bond yields retreated lower after the article was published, providing strong support to the dollar-denominated gold. The report has also offset the impact of the hawkish tone of the Fed officials’ recent comments, as Philadelphia Fed President Patrick Harker reiterated on Thursday that the bank will keep raising rates for a while.

For the technical aspect, RSI indicator 57 figures as of writing, suggesting that the pair is preserving its upside strength as the RSI stays near 60. For the Bollinger Bands, the price extended its intra-day rally and climbed towards the upper band, therefore the upside traction should persist. In conclusion, we think the market will be bullish as the pair is heading to test the $1666 resistance line. The pair seems to be well supported by the $1620 support and a break above the $1666 mark could open the door for additional gains.

Resistance: 1666, 1681, 1705

Support: 1620

Economic Data

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