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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 go through the key charts of the week and see what has happened.
Basically, the US Dollar weakness that we expected to follow through has followed through the US Dollar index. For instance, it has broken through that 92 US Dollar level and was in pretty much freefall.
We can see that via EUR/USD after the price broke out of these 1.19 or 1.2 highs, pretty much just through here, ever since the market has continued to rally to the upside.
One thing that we spoke about this week was that four-hour trend in identifying the fact that until the four-hour trend really starts to change, then we can look for short-term relief to that US Dollar. We talked about the idea of bouncing off 1.2 and heading off of that 1.19 area, where we expected that trend to either continue or break to the downside. It depends on how the US Dollar reacted to that 92 US Dollar level.
Now, strength and weakness suggested that the market would break to the upside, and we’ve seen that now. We’ve seen this four-hour trend continue ever since.
Now looking at the weekly timeframe, we’ve now broken into some new highs on the weekly time frame. How is the market going to react? Now that we’ve done that, and so this weekly trend has continued.
The next thing for us is to try and spot an area of support and resistance on these higher timeframes. The next point of resistance for me is up around 1.2250. If the market heads anywhere towards there, we may start seeing a little bit of reaction, and what’s interesting in this weekly timeframe so far? Is it that the market has this confirmed high, just here? We’ve pulled back, and the market’s making higher highs. But at the moment, the RSI is not agreeing that this is a higher high currently. So, if we were to rally up into this 122 area, we may see a rejection, which may lead to some downside on this weekly timeframe, just back into the key supporting areas.
So, that’ll be interesting to watch going into next week. We might see some short term further upside, maybe the week after, we’ll see a little bit of downside.
But the US Dollar is typically weak this time of the year through the end of December. What we may actually see is a couple more weeks of bullishness until the end of December, then start seeing the US Dollar strength coming back into the markets in the New Year.
The GB Pound has been an interesting one as well. Lots of Brexit chatter and lots of stumbling blocks when it comes to Brexit. But still, GB Pound has had a really good week.
We’ve come right down from these 133 all the way up into 135 now. That’s a really good move on the GB Pound despite the breakdown in negotiations on Brexit, the GB Pound has continued to rally up into this resistance area, through here.
So, it would be interesting to see how the market does react going into this point. We are heading into an overbought condition again on the weekly timeframe. The last time the market did that, through here, we saw a little bit of a rejection of this main level and a pullback.
Are we going to, maybe, get the same again and pull that down into the 125? That’ll be something that we’ll keep an eye on. But if the price breaks to the upside, the GB Pound could really be the one to watch moving forward.
USD/CAD was another one on our watchlist on that 1.3 level. We said it would be really important. Again, watch that four-hour timeframe, really keep an eye on that four-hour trend. When you start seeing that four-hour trend move within the weeks, you can see that the market just continues to press lower, and after breaking that 129-13 level, the markets have been down ever since. This has really been backed up by that oil moving higher, trading above that 44 US Dollar area, and we can see that the market has obviously helped the USD/CAD pushed to the downside. So, we’re expecting more falls here on the US Dollar until the end of the year, as we said. So, keep an eye on the likes of USD/CAD.
One commodity that has benefited well is gold. The 1760 level was something that I was watching going into this week as well. A nice little weekly supporting point, through here. The market came into that area and bounced right off of it, and we’ve got this nice little pullback into the previous structure lows.
So, what we may see is another drop back down into the level and a continuation or just a slight pullback and a breakout because that US Dollar weakness is going to continue. XAU will likely benefit from the back of that. We may even see a rally up into this resistance trend line, just through here. So it’d be interesting to see what happens here, but XAU is approaching lows. be a little bit more cautious buying this where it is right now. If it does break through these levels, then look for that further upside. We may even get a pullback into that high slight pullback, rally up into the trend line resistance.
But this week, the US Dollar weakness is the topic going into the next week and I’ll speak to you in the Market Outlook.
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