In this week’s Market Outlook we take a look at the key charts of the week with #AUDUSD, #EURUSD, #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, and I outlined some key support and resistance levels to be watching this week as we head towards the middle of February.
First of all, I’m going to start with EUR/USD. Last week, we talked about the price’s potential to head into 1.2 and see if we could get some reaction at this point. Whether it would be a breakout or a reaction of support coming in and we had the support come through, and this was mainly driven by the recent non-farm payroll data out of the US, it’s suggesting that they had created a significant amount of jobs. However, they were lower-income jobs. And that suggests that there’ll be less money pumped into the economy, which has led to some US Dollar weakness. We see the price has recently been in this pullback phase and what we are looking for is for the price to get into these areas. Is the market going to react from this point, or is it going to break down continually?
Now, we’re expecting the US Dollar to go on a bit of a decent run. So, I am expecting the market to breakthrough. 1.1840 is a decent level, which is what I’m looking for in the midterm. With short-term, however, we could see that the US Dollar felt the weakness and the aftereffects of what’s going on here recently. We could see a slight pullback this week in this move, here.
One telltale sign is that four-hour trend that we’ve been discussing quite a lot in our videos recently, where we talk about watching for the trend within the impulse and retracement phases. We can see, here, that we have the four-hour timeframe making lower lows and lower highs in the impulse move to the downside. When we are in the retracement phase, the market makes higher highs and higher lows through here. When we get that potential breakout to the downside and start seeing that phase come back in, we see the impulse move down. And what we’ve got, here, is a potential change in trend because the price was making those lower lows and lower highs, it hits the major support level and is now looking to break above this high here.
If we were to see the price break out of this, I think we may see that short-term upside to EUR/USD where the price could head towards one or two levels, around 1.2165. I like this level so much – if I zoom out a little bit – because the price has found support and resistance in this area. Quite a lot recently, we’ve had the resistance, support, support, resistance, resistance, and resistance. Is the market going to head back towards this and retest this level here? We want to think about that this week.
Keep an eye on the four-hour trend though, because we also have a decent level of resistance here around 1.21. One or two options: If the price downtrends there, we could look for some short-term countertrend opportunities into these levels here and here. When the price gets to this point, look for the change in trend. The four-hour will give you the sign that the price is going to start making that move down. 1.2 is a huge level, so wait for that to break out for the market, potentially moving a little bit lower.
I’ve got a couple of levels to watch:1.2165, 1.21 is the other level of interest for me this week. I’m going to be watching this four-hour timeframe. If I get those four-hour changes in trend at these positions, I’ll be looking for short opportunities down into this 1.2 level. If the price breaks that, I’ll consider looking for further shorts on a continuation of that trend.
AUD/USD is another interesting one to look at. AUD looks a lot more bullish. Last week, we looked at the strength and weakness table, and it suggested that the price was going to continue to push to the downside.
Aussie was one of the weaker currencies in that period. However, the price didn’t want to break to the downside, and in the end, it stayed within the area, and it ended up reacting and rallying to the upside, which is something that we didn’t expect. We were expecting that market to start pushing a little bit lower and look again.
We are going to the four-hour time frame now. The price didn’t want to break through these lows here. Unfortunately, it remained at these lows and has broken and changed trends. That suggests that if the price were to pull back into this area, we could see some long opportunities coming back into this market. We do have some key resistance up around 0.78. If the price is going to trend to the upside, are we going to see a move back-up into the likes of these levels? That could be an interesting watch.
Finally, looking at the USD/JPY high here, around 105.40, This was the area where we could see the price finding some resistance; we’re starting to get some bearish price action coming into play. Are we going to start seeing a pullback? I don’t quite think we’ll get back into those lows, but it wouldn’t be an ideal area to look for buying to step back into the market around 104.40. That would be an interesting place to look for longs to come back in. However, we’re just going to keep watching this four-hour timeframe for potential opportunities. We do have a high volume area around 104.90, where the market has recently found resistance and support. Is the price pull back into this area and then find some support and move back to the upside? The signs are going to be from the US Dollar Index. EUR/USD will give us a big sign as well. If EUR/USD is rallying to the upside then as the US Dollar will rally higher, USD/JPY will push lower. So, we’ve got some signs that we could be watching for those insights into what could potentially happen.
But those are the key levels. Keep an eye on those, and I’ll catch you in the next trading video. If you did like this video, give it a thumbs up. What key charts are you watching this week? Comment below.
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