FOREX Market Wrap: 18th December
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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 Wrap. We’re going to look at the key levels that have been hit this week and focusing on those major currency pairs.
We spoke a lot about the majors this week and the fact that we’ve approached some key areas of interest. We can see EUR/USD entered this zone that we’ve been speaking about, around 1.22. Interestingly, around this point, the market or institutions were trading in this area, or rather, short-term traders were happy with the price around this area. Typically, this is where we see institutions build up large positions, and after that, we saw a massive move to the downside. Many of these institutions will be holding short positions around this area to see the market defend that point.
We’re looking for some downside going into the new year. Christmas and New Year are coming up, so the liquidity will be relatively low. There won’t be too much action going on over the next couple of weeks, but the price has headed into this key area. So, we’re expecting a little bit of downside.
We also have a little bit of confluence on the weekly timeframe. We have the price going into the overbought condition, and we have the RSI forming a lower high while the price is making the higher high. We have some divergence going in here as well. So, I’m looking for the price to reject this zone and move back lower.
We are going on to GBP/USD. Again, GB Pound rallied into the 1.36 area. If we look at the weekly timeframe, it is still really struggling at this point, here.
With Brexit negotiations continuing, they’ve extended past the deadline, which helped GB Pound move a little bit higher this week. I’m still expecting a rejection hit or a breakout depending on the outcome of those talks. A no-deal would see price bounce from here. A deal would see price break above 1.35 and 1.36, and head to the upside. So, we still have to watch GB Pound here.
The other chart that hits a key level is Kiwi. We spoke about The Commitment of Traders in the Forex Market Outlook – very similar to EUR/USD. We have a nice little zone up here, and when we do see consolidations like this, large institutions are building up positions, as I said on EUR/USD. Price is approaching this area. So, I’m expecting to see some downside in the new year from this level as well. It has a Commitment of Trader signal short on this. The commercial short positions are very high at the moment and heading towards extremes. So, I’m expecting a little bit of further upside before dropping potentially back into the 0.67 level.
We’ll keep an eye on Kiwi going into the new year, and it could be one to watch out.
XAU was something we spoke about bouncing from this area. Unfortunately, we didn’t get many positions through this area because the price didn’t pullback. Still, we’re expecting a bit of further upside towards the new year, and we hit that key area or these key lows recently – around 1.8 or 1.874, I should say.
We’re looking to see a reaction from XAU here, for it to make a small retracement before seeing that bigger move to the upside. We do have this weekly trend line resistance that I expect the price to retest before seeing any actions. But if we make a breakthrough, I’d expect to see the highs retested through the new year.
Thanks for watching this Forex Market Wrap, and I’ll speak to you soon.
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