Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to go through the Forex Market Outlook. We’re going to go through the strengths and weaknesses of the currencies and what we can expect this week.
So, the US Dollar remained weak. We can see, here, that it’s still at that minus seven areas. So, that extreme is where we want to start looking for that buying of the US Dollar. Now, we look at the majors that I’ve looked at. There are a few setups, which are quite nice, that we’ll go take a look at. But for me this week, I want to be focusing on the potential to buy the US Dollar.
I want to buy it against currencies like Kiwi, Aussie and maybe, a little bit of Swiss Franc, but also, I’ll probably look to buy it against the Euro.
Now, the reason I’d look to buy against the Euro is the price or the US Dollar index is basically a flipped version of the EUR/USD because the Euro is heavily weighted to the US Dollar index.
So, I think the US Dollar index is made up of around about 56% Euro. That’s why EUR/USD is pretty much looking like the inverse of the US Dollar index. So, if I want to be a buyer of the US Dollar index, I can be a seller on EUR/USD.
So, let’s take a look at the US Dollar Index, I’ve marked out a little area here and suggested that we are potentially forming a double bottom pattern. If I go take a quick look at the weekly timeframe, we can see that the weekly forms an indecision Doji candlestick. The market is also in an oversold condition. So, this has added a little bit of confluence to me to look for that upside. Obviously, seasonally as well, I want to be a buyer of the US Dollar, and the fact that it’s finding support in an oversold condition adds weight to what we’re looking at.
Looking at the daily timeframe though, has the price changed the cycle? No, it hasn’t. It’s almost in the beginning stages of forming a double bottom pattern. Now, a double bottom pattern will complete if the price breaks and closes above this high. So, if we see the market open on Monday, we see this take out of this high, that’ll be great to then look for that continuation pullback move into this weekly area, around about 96 US dollars. So, we’re expecting some upside. If we do get that, and if the market can range. So, if the US Dollar is still struggling, we may see the price still stutter like this. I only want to be a buyer if we can get above those highs, if we get above that high around about 94 US Dollars, then that’d be good to look to buy the US Dollar.
Now, if we look at Euro, that looks the same inverse. So, if the price can break below this low, here, on EUR/USD, I’m happy to be a seller of this market. So, I want to wait for confirmation.
Are we going to get those changes in trend? Or is the market going to stay range bound and eventually break to the upside? What we need to see is how much is that seasonality going to be played out on the US Dollar.
Now, seasonality shows us that the price may find a bottom and rally through August, but it will never tell us the volume of the move. It’ll never tell us the size of the move. All it will suggest is that you should be a buyer of that currency if you get the right setup. So, we need to see the right set up from here.
It’s very much the same with Aussie. We’re starting to get a nice divergence here. Divergence is forming due to the price making higher highs and the RSI is making lower highs. So, I do like the opportunity here to start looking for shorts on these markets, which means a great little four-hour breaking trend here where the market has broken through. Maybe a little retest of 7180 on the short-term. We could look for some short positions there, but Aussie is looking for some downside.
My favorite is obviously, Kiwi. Kiwi has been looking for some shorts to come in due to the commitment of trade reports. And we’re starting to see that coming through on Friday. Our trade is now back in the positive.
So, looking at the four-hour timeframe here, could we look for some add-on positions there? Well, what I like to do is look for a pullback into the previous lows.
If the price rallies back up into that 6640 area, we could look for a continuation trade on Kiwi, but I really like what’s going on here. The daily potentially forming that lower high, looking for the price to push to the downside. So, we’ll definitely look for some add-in positions there.
USD/CHF was on the list for a potential bullish opportunity, but again, the only reason I like this is because of where we’re at on the weekly. If we look left at the huge weekly zone, the price is back down into this area as well – oversold on the RSI.
Could we start seeing this reflect the US Dollar index and potentially push to the upside? Well, again, we need to see that high being broken for me to be a buyer of this market.
USD/CAD was one of the pairs that we looked at last week. I’d still like to be a buyer of this market. Obviously, if we look at the strength from weakness table, CAD is still a lot -4 -0, so the US Dollar could really push up against weak currencies. CAD is one of those weak currencies. We’re still looking for a decent breakout to the upside here. So again, look for the potential change and simplicity of these highs.
Can we get some new highs being formed on the daily timeframe which could lead to some upside in this particular currency pair?
I’m going to leave it there. Keep an eye on the US Dollar. This week’s going to be super important. I think we’re going to get some change in trend. And if we do, obviously, we have to wait for the technicals to line up. But, if we do get those breakouts that we want to see, look to buy the US Dollar.
Thanks for watching, I’ll speak to you soon.
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