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FOREX MARKET OUTLOOK: 11th January

In this week’s Market Outlook, we take a look at the key charts ahead of the election with #EURUSD, #USDCHF, #CADJPY and more!

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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 take you through the Forex Market Outlook, a couple of different changes to the strength and weakness this week, and some charts to watch.

We can see in the strength and weakness table, here, The GB Pound dropped quite a few places. It was probably the biggest loser last week, that’s off the back of the whole Brexit deal situation. We’ve started to see that it was a little bit of a “by the rumour, sell the news” situation. We began to see that GB Pound weakness creeping in a lot, especially against the NZD/USD, which has again, gained last week going back into the potential strong versus reversal situation. I’m still expecting a little bit of downside in NZD/USD.

Look what’s happening to US Dollar, this is what we’ve speaking about for the past couple of weeks, and we can start seeing that the US Dollar is starting to gain a little bit of strength and only against a couple of markets that I’m looking.

EUR/USD will be one that I’m going to be focusing on because we can see, here, that EUR is not gaining any strength.

We could look at the GB Pound, but still, because of Brexit dilemmas, I’m going to leave that out for now. We might cover that in the week, but NZD/USD will be one that I’m watching because it’s the perfect reversal pair. If it was to reverse, that is because we’ve got strong versus weak. We’re going to see a strong trend continuation or reversal, and with these numbers, here, we could start to see the reversal coming.

I quite like the USD/CHF as well. Meanwhile, JP Yen was one of the weakest currencies last week, but it’s quite far away from any decent trading levels at the moment.

We’ll take a look at USD/CHF and then potentially, look at CAD/JPY because CAD gained some value going into last week, with JP Yen dropping into that reversal area, but looking very weak at the moment.

I am going to look at EUR/USD. The first thing I want to look at is the most traded level of last week – this is usually a good point of control for the market – and this 1.2268 level is what I’m going to be watching going into this week.

If we look at it in terms of trend, we have a bit of a support level down here as well, and we have the market starting to make lower lows. The candlesticks are still quite clearly seen that there are still some buyers involved in the market. And as we’re starting to dip lower, the bulls are still trying to come back into this.

We could see another rally up into that 1.2268, which will be the crucial area. If we start rejecting here and start making new lows, that will be something exciting for us. I’d want to see that rejection of 1.2268. I’d also like to see the price break out of this 1.22 level psychological level, and the price has found some support and resistance here recently. So, it’s clear to me that the buyers are still active at this point. So, if we’re looking for the price to break this area, here, to start getting onto those shorts, this level, here at 1.2268, seems pretty decent.

Jumping onto NZD/USD, we did have a little bit of a breakdown on Kiwi again. The daily is still very much up-trending, we still have higher highs and higher lows. So it’s going to be very difficult to jump on too many short positions, especially past these recent lows, around that 7160-7150 zone through here, because the price could still come back into this level and find some support.

Going into that four-hour timeframe, what I’d like to see is our most traded level broken down. We have 7251 as the most traded level of last week, the point of control. We can still see, here, that the price is struggling to make any new lower lows, but we do have the candlewick below the low. However, we don’t have a close below the low, and that’s something that I look for when looking for changes in trend. The market hasn’t done that yet. If it were to open and drop towards these lows here, around that 7160-7155 level, and then start finding support, I want to see the price trade up to the 7251 area. If it gets this area, I’ll look for opportunities to potentially go short on that depending on how the trend is shaping up at that point. If the price were to break towards it immediately and break above it, then the likelihood is that I won’t use this area as a shorting, I might use this as support instead. But, that move is very tricky. At the moment, I’d rather see a breakdown and be a short seller of it.

USD/CHF broke up nicely. Again, the weekly’s giving us a signal that the candlesticks are closing back within the previous candlestick ranges. The ranges of the candles, in particular, are relatively short so we should expect some action around this area. The four-hour timeframe has changed trend; we can see that the price has made higher highs and a higher low, and we can see, here, that this is the supporting area. Now the most traded level of last week was 8797. What we might see is a pullback down into this area here. We may even see it drop and wick into this area and if it does find support, then I’d be expecting buyers to step in around this 8797, and that’s where I’d like to be a buyer of USD/CHF if all the conditions are met.

Going for the last strength and weakness is going to be CAD/JPY. JP Yen is very weak, the price pullback gave us some change in cycles, here, on the daily timeframe. We can see that the market had some level, here, at 8106 in the past, rallied up, rejected, then broken through. So, 8106 was the most traded level of last week.

So, we’ve gone into the hourly timeframe. We have this area through here, 8106 as a supporting point. So, if the price was to make it’s way back down here, this is where I want to be a buyer of the CAD/JPY to the upside. We’ve got that nice daily trend; this is almost like the previous daily highs to go off for a long position.

Keep that in mind this week. These are the charts that I like the most, and I’ll speak to you soon.

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