EUR/USD technical analysis for 22-26 October, 2018. Weekly market outlook
Last week after publishing my forecast for Gold I got a lot of emails with 2 repeating questions:
1. Is there (in gold) opportunity for swing trades and what’s the entry?
2. Why do you think world economy has year or few till next crises?
Let me answer these questions before we will have a look at EUR/USD technicals.
1. I will be looking for swing trades in Gold after November elections. Before it we will see a lot of noise and choppiness. So, it’s better to scalp and take profits fast in coming weeks. After elections we will get clear fundamentals and technicals to find good entry for swing trade.
2. I mentioned world economy still have year or few of rising because of its cycles. Recent sell off in stock market has nothing to do with crises. It’s profit booking before elections and still we can see a bit more decline.
Main problem and risk for world economy is in huge government debt. Let me explain how these things work. To stimulate economy, central bank decreases interest rates and prints more money to buy financial assets. All are happy – markets are rising, credits are cheap and all seems to be rich. To keep it very simple – you earn $10 and buy 10 apples, but loans are so cheap, so, you decide to take credit $1. Now you can buy 11 apples. Means you spend more and someone (guy selling apples) earns more. If he earns more, he can borrow more… And cycle goes up. That is the moment, when middle class almost disappears. Because there are rich people, who own rising financial assets and those, who don’t. On this stage huge wealth gap appears. But all is fine till your debt is less than income. If opposite happens, you have to tighten your belt. In case of government debt, it means tightening monetary policy and increasing interest rates. What will be result? Credit will be unavailable for many people – less credit, less money, less spending, less income… and cycle goes down. This is very simple explanation, economy is more difficult. But I think it will help you to understand money flow better.
Now let’s have a look at EUR/USD. I think upper channel will be build this week.
So, here is my Elliot waves count. Just a reminder, numbers are approximate and you have to watch price action near mentioned level before taking a trade. I always update my trading signals subscribers with entries. Now we are in first wave and I expect it will end this Monday near 1.1545. After it we should see pullback to 1.1475. That should give nice entry for those, who missed the train, with target 1.16300 as end of third wave. 1.15600 and 1.16800 – end of wave 4 and 5 accordingly.
Good luck and good trading!