FOREX MARKET OUTLOOK: 1st Feb
In this week’s Market Outlook we take a look at the key charts of the week with #AUDUSD, #EURAUD, #USDJPY 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 through the Forex Market Outlook. We’re going to highlight what happened on the currencies last week and see how’s that going this week.
One thing that I want to take notice of is the AU Dollar. Now, during the week prior, it didn’t have much going on. It wasn’t in the position to buy nor sell. It was looking at a bit in the mid-ground. But now, the market has made a significant move, and the AU Dollar has lost quite some significant strength against multiple currencies, and it was the biggest loser of the week, alongside the CA Dollar.
In this week’s Forex Market Outlook, I pointed out a couple of opportunities to potentially sell the AU Dollar, highlight a huge level of interest, and then go from there.
We’re also going to highlight a couple of US Dollar pairs. The US Dollar continues to gain strength, and I think we can potentially look up a couple of opportunities. It rallied against the JP Yen last week. We could see a continuation of that going into this week, and I have to look at another couple of positions that we could potentially look into.
First of all, let’s start with the AUD/USD on the weekly timeframe. We can see, here, that the price is in a retracement phase. We know that it’s in a retracement phase because the market is forming this weekly bearish candlestick and, typically, that’s what we get in these retracement moves on the market when we’re in a particular trend. And we can see, obviously, we are in an uptrend. The market is making clear higher highs and higher lows. But if we are expecting to be buyers, we want to be looking at the key support points.
Now, 0.7630 is an interesting level for EUR/USD because the price found resistance and support in here, back into 2018. This is going to be a bit of sticking point for the market. However, if we looked at the strength and weakness chart, it’s said that the Aussie was the biggest loser, with the US Dollar still gaining strength. We could anticipate a breakout of this level and if we were to get a breakout of this level, where could we possibly see the market move to next? Well, 0.7490 is decent where the market, again, has found support, resistance, and support over here.
Again, 0.7490 could be the level that Aussie trades back to if the retracement move continues. As I said before, in this retracement moves, we see smaller timeframe trends within these areas where there would be a daily or a four-hour. The market will tend to have some trend on those lower timeframes.
Suppose I were to go to the four-hour, at the moment. Even though it’s not a deep retracement, the market is starting to make lower lows and lower highs. We’re at a sticking point around 7630.
The strength and weakness chart last week showed some developments to the downside but that doesn’t mean that it will break. We have to be aware of what is going on, and we have this low down here, around 7590, to which if the price were to clear out, is enough to make the lower low pattern. That would then signify that I want to get short on this market at a decent level, and we can see that the market found resistance and support in here.
If you were to get back to 7630 at that point, then that would be interesting in a short position. Let’s say, in theory: it doesn’t do that for some whatever reason. The AU Dollar finds a lot of strength this week, takes out this four-hour high. Then, I think we have to flip the opportunity and potentially look for longs at that point, back into these recent highs; that 7810. However, we do have more favour on the downside, here. And the reason is if I go over to another currency pair of interest like EUR/AUD, I think we’re going to pull back here on EUR/AUD; there are a few key areas here.
I look at EUR/AUD and the first thing to do is to check out this RSI indicator where we can see when the market goes into this overbought and oversold opportunity. The market does sometimes pull back from these levels. You get that first bearish opportunity, through there. Again, a nice little bearish, little pullback here, and we get the big move as well, down through here. And now we’re in an oversold condition. Are we going to start pulling back? I like RSI: overbought, oversold conditions on higher timeframes. Especially the weekly, it shows you a really good opportunity for the market to find a bottom and start pushing back either to the upside or start pushing to the downside.
I like that. We are seeing that the market is again evaluating trend at this point. What is the overall trend? Well, the trend is technical to the downside. We have the market making lower lows and lower highs. In the sense of trend, if I want to be a seller, where I want to be is a seller from – and obviously, this structure area comes up here as a potential area where I would like to get shorts on – is EUR/AUD. If that’s the case, then can we potentially long up into these areas. It all depends on the trend on the lower timeframe.
If I were to go down into the four-hour timeframe and zoom out, we could see how the price is starting to retrace, we get higher highs and higher lows out of the market, and in particular, we have these previous structure lows and a previous structure high to work with.
Again, one or two situations for me, I think, if EUR/AUD can maybe retest these structure lows and find some support, it could be a long opportunity in there. If we break out of the highs, we can look to buy into resistance to become support at that point. We’d look for 1.6144 to be targeted in line with those lows.
So, EUR/AUD is looking pretty good in a weekly retracement.
With USD/JPY, as I said, I like USD/JPY. There are a couple of institutional levels that I quite like the look of on USD/JPY. First, we want this down at 1.0390. And again, I like to line these up with key areas of support and resistance and 1.0390 here. This is nice because it has support, breakthrough resistance, resistance, and a little bit of chop here. I would expect a retest of these highs, around 103.90, for a long opportunity. The next level I like is 105.44. The price has found support, support, support in here, resistance, and resistance. If it can get back into 103.90, then I’d like to potentially look for long opportunities around this area, up into 105.44.
USD/JPY is also pretty good.
To finish, we’ve got USD/CHF. USD/CHF is interesting to me. Not because of the strength and weakness chart, but because of the potential pattern that is forming here. A very common pattern in the markets: we have the inverse head shoulders pattern. We have the left shoulder, the head, the right shoulder, and the neckline area here. If this is the neckline, can we see the price potentially break to the upside, pullback, and go long? We have a nice structure low through here; this is a very low volume area around this point. Low volume areas can be really good to target because you can sometimes see that they have strong reactions. I’d be anticipating a push-up, here into this 0.9, and either a continuation of the downtrend or a break and retest because it will be such a strong level of support and resistance.
Keep an eye on those four charts. For me, there’s a couple of good opportunities. Particularly, EUR/AUD and USD/JPY.
Thanks for watching this week’s Forex Market Outlook video. Are there any other charts that you are watching this week? Have you made your watchlist? If you have, drop a comment below. Let me know which charts you’re watching, and I’ll speak to you soon.
The EUR/AUD has good potential for the week to come. If you’re still on the fence about buying EUR/AUD, you can give it a try at no-risk with a free demo trading account from Blueberry Markets by clicking here. Take advantage of a seed fund of up to $50,000 with our demo account to practice your trading strategies. When you’re ready, you can count on our customer support team to assist you in transitioning to a live trading account.