In this week’s Market Outlook, we take a look at the key charts of the week with #AUDUSD, #USDCHF, #GOLD and more!
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In today’s Forex Market Outlook, we’ll look at a few different opportunities and focus on the US Dollar weakness that we saw in the markets lately. There are a couple of opportunities surrounding that.
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Currency strength meter
One of the strongest currencies last week was the Swiss Franc. The market has been coming from really low levels and is now moving higher.
Last week, we talked about the potential of USD/CHF to move to the downside. That worked out really well with the Swiss strength.
We are at the +5 levels, which suggests that the Swiss Franc is strong and we could see either a continuation or a reversal.
I’m leaning more towards the option of further upside for the Swiss Franc, especially against weaker currencies.
The weakest last week was the JP Yen. It dropped back to -5 on the strength meter, which suggests that it is still fragile.
But, let’s go talk about the US Dollar because it was a weak currency last week. It didn’t do particularly well against the majority of pairs; and I wanted to talk about some technical opportunities that we could see in those markets.
The strength and weakness of currencies last week showed us that the JPY and USD were the weakest, while the CHF was the strongest. This will likely continue this week as the price of many major currency pairs head to key levels.
Starting off with EUR/USD. The market remains in an uptrend. We had some pretty shallow pullbacks apart from one, which suggested that we will see the US Dollar strength end to the market.
But, it just didn’t happen. Instead, the price went back down towards the key area at 1.2. It was a nice level. It rallied back to the upside, and it’s currently breaking through the highs.
We could point out a couple of places where institutional selling of the market is. We could also argue where those came in.
The first one is going to be the 12160 area, where the price is, because we saw a lot of aggressive selling coming from that area. You could argue that the same thing could happen again: the price could come up, hit the highs at 1.2242, then see a reversal at that point.
However, the origin of the move was up at 1.2295. We want to round that up to 123. That could be an area where we could start to see the US Dollar strength free entry in the market.
We may see a continuation up before we see a reversal in the market. So, we may still want to look for short-term long opportunities on EUR/USD towards the 1.23 level.
Looking at EUR/USD, we can see that the market is still bullish, with the price recently finding support at the lows at 1.2000. Now that the price broke through the recent highs, we should expect a continuation of the trend until major resistance is hit. There are two supply zones to watch: the one where the price is currently at and the one at 1.2300. The supply zone at 1.2300 is where the origin of the downward move formed and could be where institutional orders remain. If the price got to this supply zone, then we could see sellers step in again.
USD/CHF is another market that we pointed out last week for a downside. I’m expecting further downside, still.
Do I want to be a seller where the price is now? Not particularly, because we’re in the midst of that impulse move. I want to be a seller of this market after the price retraces.
Where is the market retracement and resistance area that I want to trade from? It’s at 0.9105. The reason is that the high volume levels are within this point at 0.9105. I’m expecting the price to pull back to that level then see a continuation down, with the demand zone sitting lower at 0.8955.
USD/CHF fell last week in line with our analysis of the price heading to a key demand zone. The strength and weakness analysis suggests that the price will continue to trend lower. However, we do not want to sell at a demand zone. The recent retracement phase shows a high volume level at 0.9105, which is an ideal area to look for short opportunities if the trend remains the same.
So, that’s what I’m looking for on USD/CHF. We may not get that opportunity this week. The price could sit there before moving back, but that’s the level where I’d want to be short from.
We didn’t really focus on AUD/USD last week because the price was still stuck within range. But now, the price broke out of it and we’re getting a nice higher high. I’ve got to look for areas where I would expect the price to come to.
There is a lot of aggressive selling here. The origin was in the 0.7912 area, all the way up to 7965. So, I’m expecting the price to rally towards that level.
I pointed out a nice high volume level within a consolidation on the four-hour timeframe. And 0.77765 is a nice high volume level on the short term side.
If the price were to have a couple of days to pull back, then we could expect some bullishness. Otherwise, we’re gonna see the market continue up to 7912, then find some sellers in the market.
AUD/USD also made a new high recently, suggesting that the trend will continue higher. If the market will move higher, then we should identify an area of resistance where the price could head. The supply zone at 0.7912 would be a great place to expect sellers to come back into the market. The high volume level of 0.7776 could be an area where we see buyers come back for trend-trading opportunities.
Moving on to Gold, it’s quite an interesting seasonal char. We should look to short XAU.
May is usually a bad performing month for the precious metal. However, the US Dollar has been underperforming. It is not in line with the seasonals at the moment, so we should see the potential for this market to continue to the upside.
On the weekly levels, we pointed out that 1850 is a nice area where the market had a lot of trading action.
I’m expecting to have this higher low pattern between the end of April until the beginning of May.
I’m looking for the potential of the market to come in. Maybe we could have a double top pattern here, with the price driving back towards the high volume level at 1781.50. That would be for the potential of the market to bounce off of that area.
Finally, Gold (XAU) is an interesting market to watch as the trend continues higher, in line with the USD weakness. Seasonally, this isn’t the case. However, the USD has weakened, pushing the price of XAU higher towards a key weekly level of $1850.00. If the price gets to this zone, then we could look for a short-term reversal opportunity back to the support of $1781.50.
Alternatively, the price could break to the upside. I’m looking to either buy at 1791 or wait for reversal opportunities at 1850 on XAU.
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