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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 weekly charts. We’re going to look at the Forex Market Wrap and see how the markets have played out this week.
The US Dollar strength seems to be creeping back down; this is something that we spoke about at the start of the week. We looked, in the Forex Market Outlook video, on the strength and weakness chart, and we identified that the US Dollar was at a very weak point.
Typically, through January, we see an increase in the US Dollar strength and the fact that we had this weakness in place suggested to us that we could start seeing a little bit of bullishness starting to creep into the market.
The key level that we pointed out was 1.2335, where we had this candlestick consolidation over here; the most traded level through that point was 1.2335. The price has now rejected that on the weekly timeframe. We can see that it’s closing back within last week’s high and last week’s range, this suggests that we could start to see a retracement.
Now, I would love to see a change cycle on a lower timeframe. And by the lower timeframe, I mean the daily timeframe because the price is still technically trending to the upside and at the moment. We’re in this channel, here, and what I’d like to see to confirm the potential for this downside is a break of recent lows. We have a bit of a level, around 1.2150, where the price has rejected it, broken through, found support at this level, and taken off to the upside. Now we’ve found that resistance, but will we breakthrough? Retest? Maybe form a head and shoulders pattern? Break to the downside and then look to trade lower towards this 1.19 area? That’s what we’re looking for there on EUR/USD, but it’s nice to see there’s a little bit of US Dollar strength starting to creep back in. It’s still early doors with this, but it’s nice to see that it is starting to come back in a little bit.
NZD/USD was one that we were targeting as well. We spoke about this and its potential to change trend. I still haven’t seen that on the four-hour timeframe despite seeing this recent pullback into this low area and seeing a bit of a bearish reaction. To me, the level that needs to break is around here, because we’ve found a recent resistance of this point, broke through, support, support, dropped into it again. I’d like to see this level taken out to look for a more short opportunity there.
Again, the Commitment of Traders signal is quite high here. If the commercials start offloading those short positions, we should start to see NZD/USD roll over a little bit. But again, it’s very early doors; the market is still bullish here, I’m looking for a nice bearish week to see that momentum starting to come through on the market.
We speak about XAU; we speak that the price was coming in into the most traded level of the month, which was through here. We did get an initial reaction, and the price did push away from it; this is today. However, the price has now sunk to the downside. Lots of volatility in XAU at the moment, it is bullish throughout January. If we were to see next week that the price came back above the level and maybe an inverse head and shoulders or anything around here, that could be an opportunity. However, US Dollar strength could be a problem for this market and would likely see the price fall a little bit further. This level might act as a resistance in the short term. But, looking at that heat map, it suggests that XAU does stand a little bit strong, so interesting that we’ve broken below this level right now. There’s a lot of volatility in the market as you can see in this move – this bearish move has been quite impulsive compared to what we’ve seen recently on the uptrend side of things.
It’s interesting to see what could happen with XAU going into next week. But we’ll update you on the Forex Market Outlook, and I’ll speak to you soon. Have a great weekend.
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