FOREX MARKET WRAP: 6th November
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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 to the Forex Market Wrap and we’re going to identify key-levels of the week.
It’s been a slightly uneventful week, since the election. We haven’t had a clear result of that just yet, which could add a few risks to the market. Currently, we also have the possibility that if Biden was to win, Trump would contest the votes in specific states, which could then lead to risks But at the moment, the US Dollar is softened. It’s weakening and it looks like that may continue slightly, and there’s a couple of reasons why I quite like that opportunity.
If we look at EUR/USD, for instance, the price is currently just breaking out of this trendline resistance through here, and the market did find a bottom back down at the key 1.16 level. We were looking at the idea that if the price was to break at 1.16, right to the downside. In the event of the election, which is just this candle here, close below, then we were likely going to see 1.14 out of this market.
Now the price hasn’t done that yet. It’s completely reversed and the US Dollar has softened. It looks to me like we could see a breakout to the upside. Now the risk here is this 1.19 level. So, what we want to wait and see is if the price can break and trade above 1.19. If we can start trading above 1.19, that US Dollar weakness is likely to continue and we’re going to see that further upside to EUR/USD. But at the moment, the price is stuck between these two key areas of support, that 1.16-1.19. I’m going to be watching to see how the market reacts and see if we can push and break those highs.
Also, we looked at gold going into this week, and again we identified a large weekly zone where we would anticipate the market potentially coming into.
But now, we’ve had the price of breaking a couple of different areas of resistance. So first of all, we had this longer timeframe trend line through here, and we said if the price was to break and hold above that, we were likely going to see some further upside.
Again, with gold, there was a shorter-term trendline through here where price also has broken out of as well.
Now the key-lows with the support and area down through here. We said that if the market is going to break through this zone. Very much like EUR/USD, that price may continue to break to the downside.
See this weekly level where we want to be long-term buyers of gold, and in either event, we wanted to be buyers of gold because it looks like it is going to break these key areas seasonally as well. We typically look for gold to rally post-election years, and now we’re starting to see this break out here. We’re also seeing a breakout of the trendline on the RSI as well. This suggests that we could see some further upside out of golds. We might get a short-term pullback on this.
So I’ll go to a lower time frame, perhaps like the four-hour, we can clearly see here there’s a bit of a zone where the price likes to come into recently and may start trending around this point. Around 1930, we could expect gold to bounce into, and continue to push to the upside, things are looking quite good here for gold upside.
Now, that would typically suggest that the US Dollar would weaken slightly, but that’s what we’re seeing on Euro. We’re also seeing that on Aussie, and Aussie was another key chart for us going into this week, and that 0.7 level was one that we were looking for as potential for the market to react, and that’s what we got in the end.
The price came into that key-supporting level, and the election candlestick was just here, through there. Again, we were looking at this as a bit of upside if Biden were to win. Obviously, he’s very close to winning there but there is still a chance of Trump turning it around, so it’s not clear just yet. However, that Biden win the market price that essentially, and we started to see a breakout to the upside.
If Trump wins, we would say that 0.7 breaks, and we would have been looking further downside. But we don’t see that at the moment.
The price breaking to the upside, nice 0.7 level, is a huge weekly level that Aussie has held. We’ve also had this trendline break that we spoke about earlier in the week. We were looking for this as a potential for the market to react from this area, break up of these highs or something. Now we’re starting to see that nice little break out, there. I expect we’re going to see some further upside to Aussie.
Now, we’re just viewing the previous structure points on the RSI, it’s around 81.40. So, we could see further upside to Aussie. Perhaps back up into this 7380-7400. These previous structure highs would be something ideal to look for long-opportunities. Ideally, right now, price breaking out that trend. If price pulls back into these previous highs, I’d anticipate a long opportunity into that 0.74.
So, keep an eye on these charts going into next week. I’m expecting a little bit of US Dollar weakness coming through.
Obviously, don’t hold any trades over this weekend because a lot of headlines may come out. But if Biden wins, then I’m expecting some US Dollar softness, AUD/USD strength, and we’ll look at buying the AU Dollar against those weaker currencies as well.
So, I hope you enjoy the content this week, and I’ll speak to you soon.
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