In this week’s Market Outlook we take a look at the key charts ahead of the election with #AUDUSD, #AUDJPY , #AUDCHF 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 a look at some charts of interest. We have the strength and weakness table update here and we can see there have been quite a few changes.
So Aussie and Kiwi were the biggest gainers from last week. Swiss and JP Yen were the biggest losers.
You can see that JP Yen has come from that overextended level and dropped that strength.
Aussie also came from the overextended level that dropped that weakness.
So AUD/JPY, obviously, is still an important chart, whether we’ll see that trend continue or not.
We have yet to see it but let’s just jump on this chart first and have a little look at what’s going on here and how we can possibly build a bigger picture to come into play.
So what I find interesting about this market is that after the election week, the price did break below the recent swing lows, just through here. We had that break and closed below the week before the elections. The election week then saw the price close back above now.
Naturally, that would form a false break-out, and typically, when we do see these false breakout moves, the market tends to break in the opposite direction of the original breakout. We can see, here, the price has started to break to the upside.
Now what’s interesting about this as well is if I bring in some trendline resistance, we can see that the price recently has broken out of some trend line resistance as well.
So, a couple of factors here are adding together that we could potentially see AUD/JPY to continue this move to the upside.
Now, if I go to the daily time frame, what else do we need to see?
Well, typically, when the price breaks and forms a trend, we’ll see the market making higher highs, and we’ve had the market making lower lows, lower highs, breakout. So the market has broken out of this previous structure point, suggesting that we have a new higher high being formed. Now, we need to see a higher low come in. So what I tend to look for is for the price to retrace back to the previous breakout zone.
So, that would be these previous structure points, through here. So around 74.90 or even 75 hours to put a supporting point,. A nice whole number, then we look left.
How does the market tend to react around this level? Well, we can see its support, resistance, support, support, support, and resistance most recently.
So, what we can judge from this is that if the price does pull back into this 75 area, we may then see the opportunity to go long in line with this weekly breakout trend. If the price doesn’t come down at this level and form a bullish price action, then the likelihood is that the market will continue and break to the downside. So this key-level here of 75 is something of interest for us moving forward.
If we can reject that 75 levels, could we look for some further upside? And could we potentially see the price back towards this 78.40? Or if we just blend that into around 78 and say that?
What we got there was 78.6, so let’s do 78.10. That would be our potential resistance coming through, there, this week.
So, if we can see a potential retest of this structure, look for bullish price action, then look for opportunities to the long side. One way we can look for that bullish price action is a change in the cycle in the four-hour time frame.
Now, the four-hour is showing us that there’s a bit of minor support, a little bit further on. So, around 75.50. So, if I were to drop that on 75.50, just pop a blue line in there,we can see that the 50 and the 200 are moving through here. So, again, there’s again another little option that we can look for. Now typically, when the daily trend is going to change, and the dailies impulse into the upside. We see four-hour changes in trends.
You can see it down here. For instance, the four-hour started to make higher highs and higher lows as that daddy trend changed. Now, the daily is pulling back. We’re seeing the market make lower lows on the four-hour time frame. If the price comes into this 75.50, double bottoms, or anything like that, and rejects. We could start looking for longs from here, or if we drop back into 75, look for that move from there.
So, AUD/JPY is looking pretty good going into this week, and if we just take a look at some of the majors:
Aussie is reacting from this 72.40 level. Now, we said we’d like to be buyers down around 71.50. That coincides with AUD/JPY being back at that 75-level. However, the market is finding a bit of support on AUD/USD, where it is now. That’s why we looked to sell GBP/AUD last week.
So, we’re expecting this market to, maybe, break to the upside. If we can start taking out further highs here, the resistance for the week would be around this 73.42. If we can break through that, see further upside, I imagine AUD/JPY will be finding support in and around the 75.50 level as well.
And another one, AUD/CHF was a chart to look at as well.
If we just take a look here, the price is just finding a little bit of resistance, around that 6670 at the moment. Not as clear cut as AUD/JPY. I don’t think the price has trended to the upside on some Swissy weakness.
So for me, if you were going to be buyers of this market, I would much rather see this resistance taken out first, and I feel that price has already made a little bit of a move through there.
So the risk-reward ratio to that point isn’t big enough for us to really want to get too much involved with that.
I’d rather see this move from here and a break towards that out of 10. Lots of room to work with whereas also not so much room.
So Aussie, it’s really a chart to focus on going into next week. We’ll talk about others going into the market on Monday, and I hope you’ve enjoyed this video update, and I’ll speak to you soon.
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