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FOREX MARKET OUTLOOK: 12th October

In this week’s Market Outlook we take a look at the #EURUSD, #AUDUSD , #AUDJPY 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 go to the Forex Market Outlook. We’re going to look at how those markets have changed. And unfortunately, for us last week, the Dollar weakness didn’t follow through. There were lots of changes of trends on the daily timeframes, which was something that we looked at, and we wanted to see that Dollar strength to continue rally up.

We were very eyeful of those four-hour charts and looking back at what we did last week. If we looked towards those four-hour charts a little bit more, it probably could have helped us in some decision-making. Nonetheless, with appropriate risk management and things like that hasn’t dented our current returns, which is great.

What I’m looking at this week is just going to take in a little bit of a bigger outlook. Let’s have a look at those weekly time frames, and go from there. 

 

So EUR/USD just looking at this, you can see here that price obviously came to the downside, we’re expecting the move back down into that 1.14, and we could still look for that.

The market is technically just kind of in this uptrend. However, when we do look for those changes in trends, we often see prices make these sort of double top moves. So looking at this and looking at the makeup of it at the moment, what I’m expecting is the price to rally into this area here. Which is sort of the previous swing highs on the weekly time frame. Now, then it’s up to the market to say, are we going to see that Dollar strength come in, or are we going to see a continuation of that Dollar weakness?

Now looking at this, we could see a short-term rally into these highs. Then if we get some bearish weekly rejection, that could suggest to us that the market no longer wants to continue that uptrend, and we could see that move to the downside. Otherwise, the price will break out, and the trend will likely continue to the upside.

So, EUR/USD looking at this short-term, Dollar looks to continue that weakness. And one chart that we did want to look at or we kind of touched upon last week was the stock markets, and we looked at the Dow. But I’m just going to look at the S&P right now because the price is looking quite in favor of the stock market’s rallying, which typically would lead us into a risk on market.

Now in a risk on market, we know that the Australian Dollar, the Kiwi Dollar, and the Canadian Dollar tend to continue to get stronger, and that’s what we’ve seen the markets move back to this week. And looking at the S&P on a weekly time frame. The price came retested these previous highs in here, started that trend continuation. So, I’m expecting the price to retest these highs through there. 

Daily time frame, change of trend, looks like an inverse head and shoulders pattern, breakout. So what I’m looking at here is the fact that price could pull back into these highs, continue its trend to the upside. If that’s the case, then we’re looking for that risk on continuation. We’re looking for the likes of the Aussie Dollar to continue higher. 

So if I go take a look at AUD/USD. What we looked at last week was the fact that we had this nice bearish setup. Now what I was expecting was the price to just retest these lows again, form that double bottom pattern, and then potentially continue to change trend. Unfortunately for us, it didn’t happen. The market broke back to the upside. 

But we’ve got to take a look at that weekly, price come back into these weekly highs. All we were expecting was one more test of those lows, didn’t get that, nice bullish close on the weekly again. It looks to me like we could just be forming again, like reverting back to EUR/USD. A short-term rally back into these highs, then it’s going to give us a little bit more of an idea of what’s going to happen to the markets because going into the daily time frame, we do have a current break of high. So if I just kind of place this line through here, that’s the current high. The market has broken and closed above.

Now, what I want to see from that is a secondary close because we don’t want to trade a false breakout. If the market can rally again, close above on Monday, what I would look for, then is the continuation of that move from the weekly time frame. If the price closes back below, it could lead to a bit of a false break, and we could see that move down. But, looking at the stock market, looking at what we’ve seen on these weekly timeframes, looks to me like that Dollar weakness it’s just going to follow through slightly. 

Unfortunately, seasonal bias doesn’t really show us the length of moves, it just gives us a timeline to what could potentially happen, and usually, the Dollar does find a low through the end of September, the start of October, and typically rallies until November. But it doesn’t give us the timeline of the movement or the amount that the Dollar should move.

What we have to take into consideration is the fact that we may get that sort of double top pattern. The price might drop, It may even come back to test these weekly highs, to then continue its way down.  For me, we could be looking for that risk on play in the short term this week. 

Last week we were looking for that sort of risk-off play, it switched on us, it looks to me like we could see that continuation. We’ll go into more depth in future videos. I hope you enjoyed this video. Let’s have a better trading week this week, and  I’ll speak to you soon.

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