In this week’s Market Outlook we take a look at the #AUDUSD, #AUDJPY , #DowJones 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 the Forex Market Outlook. We’re going to have a little look at currency strengths and weaknesses and what we can take from that.
We can clearly see here, the Dollar has completely dipped into an extreme area. We’ve lost five places this week, and we know that on the charts. We can see a lot of the charts changing trend for the Dollar. So, really seeing that weakness coming through just through there.
Also, to kind of add things to this, we can see that the Yen is weakening. It’s almost like the safe-haven currencies–so let’s put safe here– Safe-haven currencies are starting to devalue and lose strength.
And the risk currencies are starting to gain a little bit of value. That means to me that we could see the likes of the stocks rallying. We could see the Australian Dollar rally again.
Aussie at an area of extreme. So looking at that, we could see almost AUD/USD, AUD/JPY start to rally. We also have the Swiss Franc, which is extremely strong at that plus six area as well. It could be a bit of an extreme going on here.
Maybe the Australian Dollar is going to gain some value, but we’ll have a little look at that in a little bit more detail. The first thing I want to start with is the Dow. The reason I’m going to start with this is because typically, this is how we look at assessing the risk in the market.
Typically, when the stock markets fall, we call that risk-off sentiment. When the stock markets rally, we call that risk on, and typically in these areas here –let me just put that into here, risk-off– and typically when we see these types of markets, we look for risk currencies to gain value. Safe-haven currencies to lose value. In the risk of sentiment, we look for the risk currencies to lose value and safe havens to gain value.
Now we’re back in, potentially risk-on mode. I say that because the price has recently broken and formed a new higher high on the daily time frame on the stock market. So that, to me, means that we could be looking for longs on pullbacks and prices pull back into a key area of a structure.
If I just grab a rectangle tool and go out like this–this could be an area where the price starts to push back up, even if it’s only into these previous structure highs just through there.
If I go to that four-hour time frame, we can see at the moment price is starting to form a little bit of a reversal setup with regards to sort of an inverse head and shoulders pattern where price dips in, moves up, left shoulder, head. Are we going to see this right shoulder pattern come into play?
So, this area is going to be key, okay. So this is where I’m going to look for price to either continue that risk on. If it does, I’m going to look for a break above these highs here and a retest. If we start moving back and seeing this happen, then we’re going to move into that risk-off sentiment, and we’re going to look for the risk currencies to lose value.
But at the moment, everything’s saying that we should be looking for the reversal. Should be looking for risk on to come back in and looking for longs on stock markets, and the daily time frame is kind of confirming that here as the price comes back into that support.
So going to AUD/USD, for instance, this is saying that maybe we should be thinking about long opportunities. The price obviously, comes back into here on the weekly time frame, and was expecting a bit more downside here. But instead, it started to react and potentially forming a higher low just through here.
Going to that daily time frame. The price you can see lots of reactions from this zone once again. The four-hour time frame as well has changed simplicity, coming back in, forming new highs. So if the price continues to form new highs and breaks higher then I’m expecting that risk on to continue.
I’m expecting the Dollar to get weaker, I’m expecting the Australian Dollar to get stronger, and potentially for the price to continue to rally up and break towards this key high here around about 7350-7360. That’s what I’m expecting Aussie to go if we obviously would continue that uptrend through there. So, really looking for the potential of risk on this week.
Another chart that we can look at which is quite similar to the Dow is AUD/JPY. Weekly to come back down into these lows through here, and typically AUD/JPY follows the stock markets quite similar. The only difference is, really, that we’ve seen recently is that price has sort of not followed the complete plan.
So if I actually just toggle these charts –let me just get rid of these charts just here, and if I go to window tile vertically, we can put the two screens together. Now, typically, when we do see the downside in the stock markets, we typically see the same here on AUD/JPY.
So you can see from around about the third of September. The price has started to move lower on the stock markets here around about the third of September. We started to get that drop on AUD/JPY as well.
The only difference is here, price has made a new high. So around about the 12th of October price made a new high, which is this here.
On AUD/JPY, the price has dipped lower back towards these lows whereas the Dow has actually found support at previous structure points. Now, so it could be the fact that price could start pushing from here, giving us an opportunity to look to buy AUD/JPY this week if the price continues to push to the upside.
So some things to consider here, manually looking at that risk on, risk off play this week. Keep an eye on your Dow Jones. I hope you enjoyed the video. But I hope you have a great week, and I’ll speak to you soon.
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