In this week’s Market Outlook, we take a look at the key charts of the week with #AUDUSD, #EURUSD, #GOLD and more!
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Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
In this video, we will go through the Forex Market Outlook and highlight a few pairs of interest going into this week.
Strength and weakness
As always, I want to start with the strength and weakness analysis and point out a couple of things I noticed on the strength and weakness going into this week.
The GB Pound is super strong. We can see that continuation with the price heading towards the plus sixes, which is the top end of the scale. And with that recent breakout, it looks like we could see some even further upside to the GB Pound. But, we’ll take a little look at the GBP/USD price in a second.
Aussie also gained, which is interesting to see. Recently, we’ve seen a little bit of AU Dollar strength. Again, when the price approached that high, we said, there could be a potential pullback. However, the risk is to the upside, and we’ve started to see that break out, and I’ll talk a little bit more about these currencies in a moment.
The biggest loser of the week was the Swiss Franc, which lost minus three. It’s fallen into one of the weakest currencies at the moment, and USD/CHF looks like a potential opportunity if that’s going to continue going into this week.
Let’s dive into the charts. Let’s have a little look at them from a technical point of view, and we can see, here, when we spoke about EUR/USD last week, we said there’s a risk that the price could be forming an inverse head and shoulders pattern and that seems to be playing out at the moment.
If I’m honest, I’d probably keep these key levels in that. We’ve already been watching for a while. I think the 1.2165 zones and the 1.2060 zones could be the ones to keep our eye on and determine which way we’re going to be looking to trade the EUR/USD market.
Because the US Dollar’s still on a balance of strength and weakness. For me, it shows us that there’s a bit of strength there. But, we are still in an overall downtrend. The market still has that weakness, there. We started to see a little bit of that last week. We had a bit of a mixed bag. To be honest with the market, finding US Dollar strength, then pulling back on that US Dollar strength. We need to see a decision made whether that is going to follow through or not.
So, if the price can break above 1.2165, we know that the US Dollar selling is probably going to continue, and we’ll be looking for these highs up here.
If the price reverses and breaks 1.2060, then we know we’re going to be looking for the downside, target is around 1.1840.
Keep your eye on EUR. You may not want to trade the congestion here. You may wait for that breakout for a decision thereon EUR/USD.
We are going into GBP/USD. We were targeting 1.3980. The price is currently resting at 1.4, which is a key level on the GB Pound. So, despite the GB Pound strength, this is where we could expect to see a few sellers re-enter the market because it’s such a key swing level, and we may see some tight profits coming in from this rally that we’ve seen.
I mean, it’s not the most aggressive of rallies. We have seen the market stumble its way up. The reason that it is large is because a lot of the retail market is short at the moment.
So, I think one of the highest shorted pairs by retail traders at the moment is the GB Pound against the US Dollar. We know that by looking at those retail sentiments, retail traders aren’t typically correct; we need to be following what the institutions are doing.
If the retail traders are short in the market, you’ve got to think of what the institutions are probably doing – the complete opposite, and that’s why we see the trend continue here on the GB Pound.
So, sentiment indicators still suggest that retail is heavily short. I wouldn’t be surprised if the price did make another move to the upside. But at the moment, we’re at resistance. We need to either
wait for 1.3856 to be hit for further longs or for the price to break out, retest the 1.4 area, and continue to the upside.
Similarly, retail is very heavily short with AUD/USD, and we can see that the market is still trending to the upside from here. We had a nice pullback into this 7620, then the market rallied up.
Retested the structure highs here, and this is where we said we’ll either get a pullback down or the price could break out to the upside. We had that nice breakout here, and again, sentiment indicators were suggesting that the price was going to rally because retail traders are heavily short around this level, here.
Going to the weekly, it’s an uptrend on the weekly timeframe. Where could that go if the previous highs are now resting around 0.860? I would be looking for a price to continue to head towards this level. We can watch that on our daily or on our four-hour timeframe. If the price comes back into this 780 level in the four-hour, changes trend, then we could look for further upside to this market.
USD/CHF was another one that we suggested taking a quick look at because we’ve come back into that inverse head and shoulders neckline. The price has rallied to the upside. If the Swiss Franc is going to continue to weaken, where could it have weakened from? The previous structure highs.
We can see this in more detail if we go down into the four-hour timeframe. You can see that the market came back, retested this previous structure, and it’s starting to make its way back up again.
At the moment, because it’s in such a deep retracement, we’ve seen a lower low forming there. I’d like to see a double bottom pattern or some change in trend, suggesting that it starts moving back to the upside and looking to buy this back towards the 9040 area.
That’s more off the back of the Swiss Franc weakness than US Dollar strength. So, if you did want to ignore this chart, look for Swiss Franc weakness against the stronger currencies. Potentially, AUD/CHF, GBP/CHF, and things like that.
Finally, I wanted to finish on XAU. We talked about XAU last week. I like the idea of the price coming down a little bit further, potentially into these areas, around $1700. That’s where XAU is going to be heading to.
Again, retail is heavily short, long on XAU now, which suggests that we could see some further declines. The only thing that we need to wait for, here, is that the price is currently at the swing lows. These areas can act as support and resistance.
So, I’m going to wait to see if the price can rally back up. If it comes back up anywhere near here, then we may see the market change cycle from this point. But in other situations, I think the price may be going to break to the downside, and we’re going to see the price move towards 1700 this week.
I’m favouring more downside on XAU rather than the upside. But, this is the upside risk if the price does break and change the trend on that daily timeframe.
So, keep your eye on XAU. We could see some further downside there.
I hope you enjoyed this Forex Market Outlook update. If you have any comments or want to see me talk about any specific charts this week, drop a comment down below, and I’ll speak to you very soon.
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