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Technical Analysis Review: July 2021

Fawad Razaqzada Fawad Razaqzada 03/08/2021
Technical Analysis Review: July 2021 Technical Analysis Review: July 2021
Technical Analysis Review: July 2021 Fawad Razaqzada
In this monthly bulletin, we review some of our calls made in the month that has just ended and provide a before & after chart to show how prices evolved. Our hope is that you will learn how we analyse the markets, which could help with your trading education. Without further ado, we bring to you…

TA review 
  

Gold

 
Article posted on 06/07/2021
https://www.thinkmarkets.com/en/market-news/july-2021/gold-extends-recovery-ahead-of-ism-fomc-minutes/
 
What we had expected: “With gold breaking through the upper resistance of the short-term consolidation around $1790-$1797, the path of least resistance is now back to the upside. Potential dips back this area will likely be supported on the first retest. At the time of writing, gold was testing the next area of trouble around the $1810 area, formerly support. If resistance holds here, then a re-test of the above-mentioned broken resistance at $1790-97 would become likely. But ideally, what the bulls would like to see is a clean break above here. In this potential scenario, gold would then pave the way for a possible move towards $1850, which is where the 61.8% Fibonacci level converges with prior support/resistance.”


gold before

What actually happened: Gold did indeed pullback before breaking that $1810 resistance, leading to a continuation of the move higher to $1833 where it then started to struggle again. So, it didn’t quite get to our bullish target, although the technical outlook hasn’t changed much one month on, and it could get there this month.

gold after

 

Crude oil

Article posted on 07/07/2021
https://www.thinkmarkets.com/en/market-news/july-2021/crude-oil-rebounds-but-damage-already-done/

What we had expected: “It is possible that we may see a big breakdown from here as OPEC supply is slowly restored to offset the strong demand. Meanwhile the daily chart shows a potential bearish signal after forming a bearish engulfing candle on Tuesday. This candle pattern shows sellers overtook the buyers and pushed prices aggressively lower. Potentially, the momentum may have already turned at this key technical juncture around the $75-$77 area.”

Brent before

What actually happened: Crude oil did indeed go on to drop big, losing some 13% from its high to the low, before bouncing back strongly to re-test the breakdown area of $75-$76 later in the month. At the start of this month, oil prices have dropped sharply again. Is this going to be the start of a new bearish move and will we see a re-test of the longer-term trend line some $7-8 lower? Or will prices recover and break to a new high for the year? Place your bets.

Brent after


DAX

Article posted on 08/07/2021
https://www.thinkmarkets.com/en/market-news/july-2021/stocks-dumped-as-risk-off-continues/
 
What we had expected: As it is the “ECB day,” let’s keep an eye on the DAX. The German index has just broken out of its recent range, so there is likely to be more downside risks than upside in the short-term outlook. We could see a possible drop to test liquidity beneath 15280 soon. Key resistance now comes in around 15500.

DAX before

What actually happened: Indeed, there was further short-term downside as the DAX dropped to test the long-term bull trend before rising again. With the trend line still intact, could we see new all-time highs for the German DAX index, especially with the ECB implying monetary policy will remain in place for a long time to come?

DAX after
 

Gold

 
Article posted on 13/07/2021
https://www.thinkmarkets.com/en/market-news/july-2021/gold-all-eyes-on-us-cpi-and-bank-earnings/
 
What we had expected: “Gold prices have been able to hold their own relatively well in the past few weeks as yields dipped and dollar rally slowed. However, it hasn’t been able to reclaim $1810 resistance yet. A closing break above this level is needed to tip the balance back in the bulls’ favour. If so, a quick rise to the next area of trouble around $1850 could be next”

gold before 
What actually happened: Well gold played the bearish scenario as we expected, before closing back above $1810 to put the technical bias back in the bulls’ favour. But as noted above, gold is yet to make a move towards that $1850 hurdle or higher.

gold after


 

EUR/USD

 
Article posted on 22/07/2021
https://www.thinkmarkets.com/en/market-news/july-2021/ecb-likely-to-maintain-dovish-rhetoric/
 
What we had expected: “The EUR/USD looked poised to drop to test the 1.1700 support level ahead of the ECB. An ideal scenario for the bulls would be a drop to 1.1700 and a quick rejection to create a double bottom-like reversal pattern. For the bears, a continuation lower is what they are looking for, and acceptance below 1.1700 would be rather bearish. The next obvious support below 1.1700 is at 1.1500, a level not visited since last July.”

EUR/USD before

What actually happened: Neither of the “ideal” scenarios we were looking for came to fruition. Instead, the EUR/USD broke out of its channel and started to head higher.

EUR/USD after
 

Bitcoin

 
Article posted on 26/07/2021 
https://www.thinkmarkets.com/en/market-news/july-2021/bitcoin-nears-$40k-amid-cryptos-resurgence/
 
What we had expected: “Bitcoin and other cryptocurrencies are higher across the board today with some solid gains of around 10% or so at the time of this writing…The key question is where do we go from here? Key resistance around the $40K area (shaded on the chart) remains intact for now. We need to see a clean break above this zone to tilt the bias completely back to full-on bullish. Until and unless that happens, traders will need to proceed with a higher degree of caution as this could turn out to be a short-lived spike.”
 Bitcoin before

What actually happened: Bitcoin did in fact go on to break the $40K resistance, but after just a couple of days above it, prices went back below this hurdle. This failure is not something the bulls would have liked to see. The failed breakout attempt means Bitcoin could be heading back down to the middle of the prior range again. Consolidation continues, in other words.  

Bitcoin after
 

Tesla

 
Article posted on 26/07/2021 
https://www.thinkmarkets.com/en/market-news/july-2021/monday-s-bullseye-26-july-2021/
 
What we had expected: “TSLA has managed to hold around its rising 200-day moving average ahead of its earnings results. Bullish investors and speculators will want to see a clean break above the triangle pattern, while a breakdown below would be deemed a bearish outcome.”
 tesla before

What actually happened: Tesla shares continued to hold the 200-day average support and broke out of the triangle pattern to tip the balance back in the bulls’ favour. The breakout means the potential has increased for further technical buying in the days and weeks to come.

tesla after
 

Dollar Index

 
Article posted on 28/07/2021
https://www.thinkmarkets.com/en/market-news/july-2021/all-eyes-on-fomc/
 
What we had expected: “…the Dollar Index was testing its bearish trend line and 21-day exponential moving average with no clear directional bias. A daily close below 92.00 would be bearish, while a potential move north of March’s high at 93.43ish would create a higher high for the index in a bullish development.”
 DXY before

What actually happened: The DXY continued to head lower on the back of a dovish Federal Reserve as the trend line held and support levels broke down one after another. At the time of writing, the DXY was holding below key short-term technical area between 92.10 to 92.20, which meant the technical bias was still bearish.

dxy after

 

GBP/USD

 
Article posted on 30/07/2021
https://www.thinkmarkets.com/en/market-news/july-2021/monday-s-bullseye-2-august-2021/
 
What we had expected: “After breaking above old highs and resistance around 1.3900/10, this area will need to be defended if the short-term bullish bias remains intact. If the buyers hold their ground here, then it will likely pave the way for 1.40 next. However, failure to do so would be a bearish development.”
 GBP/USD before

What actually happened: At the time of writing, the buyers were clinging on to that 1.3900/10 support area, but there was no urgency as traders awaited the outcome of the Bank of England’s policy meeting and macro data from the US, including the latest monthly employment report.
gbpusd after


Sorce for all charts: ThinkMarkets and TradingView.com
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Meet our contributors
Fawad Razaqzada
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Fawad Razaqzada
Market Analyst, London

Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms. He leverages years of market knowledge to provide retail and professional traders worldwide with succinct fundamental & technical analysis. Fawad also offers trading education to help shorten the learning curves of developing traders.
 
His colleagues consider him an expert at reading price action on the charts. This together with his deep understanding of economics and fundamental analysis, and trading experience, puts him in a great position to forecast short term price movements. Fawad covers a wide range of markets, including FX, commodities, stock indices and cryptocurrencies and his comments are regularly quoted by the leading financial publications such as Reuters and Market Watch. In addition to ThinkMarkets, Fawad also provides analysis and premium trade signals on his own website at TradingCandles.com.
 
 

Carl Capolingua
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Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Kearabilwe
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Kearabilwe Nonyana
Market Analyst, South Africa

Kearabilwe is an experienced Sales trader and Analyst specialising in Equity and Equity derivatives. His career in the financial markets has seen him hold various positions in global investment banks and global CFD and Spread betting firms. He has deep interest in using quantitative methods to help him understand and teach the fundamental drivers of asset prices.
 
 
 

Fawad Razaqzada
Fawad Razaqzada
Fawad is an experienced analyst and economist having been involved in the financial markets since 2010, producing market commentary and research for a number of global FX, CFD and Spread Betting brokerage firms.
Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.
Kearabilwe
Kearabilwe Nonyana
Kearabilwe is an experienced Sales trader and Analyst specialising in Equity and Equity derivatives.

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Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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