In this week’s Market Outlook we take a look at the #EURJPY, #EURUSD, #AUDUSD and more!
EURJPY is our forex pair to watch this week in line with our strength and weakness table.
Watch the video to learn more…
Hi, and welcome to today’s Forex Market Outlook with me, John Kibbler, Head Currency Analyst.
In this video, we are going to go through the Forex Market Outlook, and we’re going to look at our strength and weakness table, and identify a currency pair of interest.
Strength and weakness table
We can see that EUR is starting to lose a little bit of ground; again, it’s minus two. I like the idea of selling EUR against the JP Yen and the US Dollar.
Now, the US Dollar is remaining at minus four. It hasn’t pushed into the minus six or the minus five area, which we would have liked to see for a bit of reversal. But, we know by the US Dollar Index the fact that the market is at support. We could still see that the US Dollar gained a little bit of value.
Aussie is remaining at minus six. So, Assie shorts are still on the cards.
What I’m going to focus on today are those major currency pairs, and then I’m going to take a look at EUR/JPY.
So, EUR/JPY is looking quite good for some downside. I’ve already put some zones on the charts to identify those, and we’ll go through what we could see on that chart, in particular.
US Dollar Index
Let’s start with the US Dollar Index; we’ll take a look at the weekly. We had a nice weekly bullish close here. Please take a look at that daily timeframe: we can see that the price has made a nice little move here, forming a higher high.
That suggests that we will get that pullback we were looking for in these range lows, here, with the first or low being around that 98.56.
What I’m expecting is for that price to continue and head towards those lows. We could see a little bit of a pullback continuation move – something like that on the lower timeframes. But, I’m still looking for the US Dollar to continue this retracement phase.
If we look at the four-hour timeframe, we can see, here, that the price is starting to make higher highs and higher lows. So, looking for those key areas to continue for that market to push up on this timeframe, in particular.
So, going down to Euro. We’ll see something similar: the market came into this big area and we had this head and shoulders pattern. Then, we start seeing forms from the lower lows, and that’s what we’ve got here. I’m looking for that downside to continue on EUR.
If we take a look at the daily timeframe, we can see that the market broke through a daily low, which is this one, there. When the daily starts forming those lower lows, we know that we’re in that retracement phase, and we want the market to pull back down now.
So, where could the price pull back to? The most ideal would be these previous structure highs and this breakout area around 1.1. That is an area of real interest because we have this range, and the market capped at these two points through here.
I do like the idea of the price coming in and retesting at that point. So, what would it take for it to happen? Maybe, a massive move to the downside; and in the case of EUR, a nice pullback continuation move is what we’re going to look for to identify it here on EUR/USD this week.
We’ll look at the four-four, there’s a bit of an area when the market does like to break and retest, which is the 1.1220 area. I’d like to see a bit more of a pullback, and then start looking for those shorts. Especially on EUR/USD because we can see that from the US Dollar Index, price is starting to create that retracement phase. I quite like the move here.
Jumping on the GB Pound, you can see that the four-hour trend is very much to the downside. We had a bit of a pullback. We were looking to buy the GB Pound potentially, and it gave us a false breakout, which wasn’t what we wanted to see. The prices made a new low so, my bias has changed slightly on the GB Pound. We should potentially be looking for some downside here, especially against the US Dollar.
Look at this daily timeframe when we were making those higher highs, but now everything has changed. We’ve created a new lower low on the daily timeframe, so that cements the idea that the price could start pushing a little bit lower.
Maybe you’ll see the price come and retest this 1.21 area where the price found support before. What I’d be looking to do now is to look at this daily swing low. Will that be retested? Are we going to start pushing back to the downside? Anything like that would be of interest to me next week.
If I go down to that four-hour, you can see a nice little pullback into this zone, around that 1.25 area. Now, we’re looking for that continuation to the downside.
Aussie is still on the list to go short. From the strength and weakness table, it hasn’t shown us much to get us going. It is forming that lower high and that bearish candlestick sentiment. But, the four-hour has been a little bit choppy, a bit all over the place.
So, what I’d like to see is the market to start forming those lower lows. If we get a break of all these lows here early next week, we could look for that pullback continuation trade into the 0.67, which we’ve been talking about for the past few weeks now.
Still on that Aussie short, looking for the price to push to the downside. Hopefully, we can get that this week. The markets have been a little bit range-bound, which has been unfortunate for us — but looking for that to play out going next week.
Let’s look at the chart of interest: EUR/JPY. I like this chart because of different reasons. If we go to the monthly – I don’t like looking at the monthly straight away because of where we are in the month – the monthly candle hasn’t closed. But, I highlighted it because it’s important to look at where the price is finding resistance – we’ve got the previous structure highs, which is this double bottom and neckline area.
That’s a good sign that the price could drop. This major zone is also where the market has found some support and resistance in the past. We’ve seen the price break through it, and reject it.
That, to me, is a good sign that the price could continue down for the rest of the month, which is suitable for some shorting opportunities, and is in-line with the strength and weakness table.
If we go to the weekly, we can see it in more detail. We’ve got that false breakout week; it continues to be bearish. Can we see that drop to the downside? Let’s go to that daily timeframe. We can see that the price has started to make lower lows; nice little break there. All are pointing to the downside.
I’ve placed first targets, here, since this would be the area I’m looking to target for shorts. That 118, because that is the previous breakout on the daily, it hasn’t retested yet.
I’m saying that I want to see the price retrace and push lower to this area where price could find some support, maybe then breakthrough, and head to the lower zone. That’s what we’re looking for to identify here on EUR/JPY.
But going to that four-hour, we can see that the trend is starting to push to the downside. We are getting those lower lows, lower highs, and we have a bit of complex pullback here. But, the price failed to make any significant higher highs. We break down, and the market is continuing to push lower again.
What I want to see is another drive down, a pullback, maybe a double top pattern in this key resistance zone, and then look to short it into that 118 area. If the price continues, you can hold down to that 116.50. But that’s what I like here on EUR/JPY. You can see that the trend is down. Even if I bring in my 50 moving average, you can see the price 250 is now trading below that 50, which is also a good sign. It’s not interchangeable and it pushes to the downside.
I quite like EUR/JPY for some shorting opportunities. To be honest, it’s a good chart to continue to watch going into this week. It’s pretty much the chart of the week from the strength and weakness table.
I hope you enjoyed this video update, and I’ll catch you in the next one.
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