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In this week’s Market Outlook, we take a look at the #GBPUSD, #EURUSD, #GBPAUD and more!
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Hi guys, welcome to today’s video update with me, John Kibbler, Head Currency Analyst.
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Today, we’re going to go through the Forex Market Outlook. We’re going to highlight those currencies of interest for the week ahead. We’re going to go for our major currency pairs and then pick out a couple of different pairs that we can take a look at.
So, looking at the strengths and weakness table like we do at the start of every week, we can see that the GB Pound is the strongest currency of last week – changing a lot of trends on a lot of daily timeframes, which is why the score is so big for the GB Pound.
We’re looking to continue to buy the GB Pound this week, while the AU Dollar has lost some ground. We’re already in GBP/AUD long, but it looks like that could continue. We’ll take another look at that.
Kiwi is in a reversal zone, in terms of the strength and weakness table. We could start seeing a little bit of weakness creep in on the NZD/USD.
The US Dollar also lost a big ground as you can see, here. The US Dollar index behind this shows that the weekly chart shows a bearish candlestick there. So, the US Dollar is losing some ground, as well as the Swiss Franc and JP Yen.
But I quite like the idea of GBP/AUD or GBP/NZD. We’re going to take a look at those, but essentially, we’re looking for that GB Pound potential strength to continue this week, and this is how I go through things. I’m going to explain why it’s probably fair to continue to focus on cross pairs this week. If we look at the US Dollar index, we are still at this huge supporting zone where the market has bounced through several times already. It’s failing to take out these lows.
If we go into the daily timeframe, we can see prices are very much static. There’s no real clear movement: the price came back down into this previous low, through here, which is what we anticipated and we started to get some bullish closes and a lot of indecision.
We need to see something out of the US Dollar. We need to start seeing some lower lows being formed or a breakout that’s higher. For me, the market is still in a consolidation phase between these two points, and we’re either going to push towards the highs this week, or we’re going to break the lows and continue trends.
So, that’s the key for us. The key for us is where the trend is forming. At the moment, there is no trend here. There’ll be no trend on the EUR. The spot is coming from an area uptrend where we’re getting higher highs and higher lows. The consolidation pattern here still doesn’t fill me with many opportunities to trade to EUR/USD, in particular. Same with the GB Pound. Although, the GB Pound does look a little bit cleaner since we have formed this higher high structure. We could see a bit early pullback in, around 1.25 before seeing a continuation out of the GB Pound.
The GB Pound’s the only one that’s starting to gain a little bit of value across the board and against some currencies of interest. We’re already in the GBP/AUD long that looks like it’s going to continue this week. As I said, we’ll jump on that as soon as possible.
But, Aussie is still very much in a consolidation pattern as well. I think a lot of these major currency pairs are. I want to see some breakouts. I want to see some clarity in markets; I don’t mind a breakout to the upside or a breakout to the downside. I want to see that clarity coming into it. I’d rather not be doing guesswork around these areas.
Now, the strength and weakness table suggests that the Aussie is getting weaker, but the US Dollar is weak as well. That’s why we get in this consolidation pattern. If we are to see the US Dollar gain value, we should expect a break to the downside. If we’re expecting the AU Dollar to lose value, we could see that break to the downside as well. So, I’m favouring more of a breakout lower. Still, it depends on what the US Dollar’s doing for this market now; but we’re in that consolidation still. We should wait for the breakout because then the direction is clear and we can look to trade these major currency pairs the same with Kiwi.
We banked our opposition last week because the price was getting stuck at this previous high here. Again, we’re ranging from these two points. Are we going to get a break? Are we going to get yet to be decided, lots of indecision? We could go either way.
If you do get that close above, look for the pullback, look for the continuation. If we don’t, and the price starts putting back, you can either trade within the range or wait for the breakout to the downside. But ultimately, If you want to trade trend, you have to wait for the market to push to the upside or retest the supporting zone at the moment because the price is moving higher and it’s consolidating at the minute.
Same with USD/CAD. Unfortunately, we got stopped out on this one. But the price again is very much similar to the patterns on these major currency pairs. That’s why I want to take a look at cross pairs because a lot of these major currency pairs are in these consolidation patterns.
The only one that’s giving us a little bit of joy is CAD/JPY short at the moment, which is moving quite nicely.
The GB Pound is the mover. We can see, here, we discussed this weekly chart last week and the fact that the price was at this supporting zone. It was giving us a bit of an indecision candle. The market is oversold on the RSI. We’re starting to see that push to the upside, and it’s got a nice bullish close coming out of here. I was looking for the market to push back to the upside.
If we look at the daily timeframe in here – look at what we’ve got: a nice change in cycle. The market formed a double bottom pattern at this support, then broke to the upside. We’ve now formed a new high here. What I’m expecting is a pullback into this zone where we can look for secondary buying opportunities or add in trades for long opportunities if the market does pull back on the four-hour or one-hour timeframe on another change in a cycle pattern. GBP/AUD is looking very good.
GBP/NZD hasn’t moved that much yet again, very much like GBP/AUD. We have a nice weekly bullish close. If I look left and place a support line at the lows there, we can see that there was support here, here, and here. We are, again, in that oversold condition. We could see some upside to GBP/NZD this week. No changes in the cycle on the daily timeframe yet. So, what we need to see is either something like GBP/AUD, a double bottom pattern or a break of this swing high. That would be enough for me to start looking for buying opportunities on GBP/NZD.
GBP/CHF has started to push to the upside. We’ve got this nice higher high pattern in here. Again, this would be very common on GB Pound pairs. Now, we’re starting to see some breakouts. You need to line up these areas of support and then trade whatever’s cleanest.
And what I mean by that is where will the price action be the cleanest on the chart. Let’s say that GBP/CHF is here, it’s giving us the right price action, but maybe GBP/USD will pull back to the zone and isn’t giving us an excellent price action. I’d instead trade GBP/CHF because it’s giving us that right momentum opportunity.
If the price comes back here, diving to that four-hour timeframe, we look for those changes in the cycle again and trade to the upside.
GBP/JPY, the JP Yen gained a little bit of strength, but GBP/JPY is still pushing higher, and at this double bottom, rally, a bit of a move down here, then a rally. The market is testing that zone now and finding a little bit of support. If I were to draw this horizontal zone here – go to that four-hour timeframe – what I’d want to start seeing from this is some trades to the upside and some trends coming back to it.
If the market does drop further, I’d want to see like an inverse head and shoulders or a double bottom, a breakout and then when the price comes back in, this is where I want to be buying the dip to the upside. Very much like here, when the market became a double bottom, you had a consolidation, it rallied, it pulled back, it rallied, then it pulled back into the zone. I’m looking for buys for each of those times there. The markets then rally again then pulls back, I’ve been looking for buys here as well as on the dips when I look for the same thing on GBP/YEN.
To cover XAU, because we spoke about XAU last week, daily timeframe or weekly, should I say, is pushing to the upside; still weekly, still bullish. If we look at the daily timeframe within that uptrend, the market will form higher highs and higher lows. I’m looking for a pullback into the previous structure highs for a continuation long. What I’m going to be looking for is the price to dip back into this same process. Look at the four-hour timeframe, can the four-hour start trend into the upside? At the moment, we’ve got lower lows, and lower highs being formed out of XAU. So, I’m looking for higher highs to start forming to start looking to buy the market once again. I’m trying to show you that it’s looking for the trends within trends. I am looking for the trends to line up on separate timeframes.
Keep that in mind for this week, very much focusing on GB Pound pairs. GBP/AUD, to me, is probably the best opportunity out there. Suppose it gets another pullback, it could be another long. We’ll discuss other charts later in the week.
I hope you have a great week trading. Thanks for watching. If you did like it, please give it a thumbs up. If you have any comments or questions, please feel free to drop a comment below, and subscribe if you want to see some more trading content. Thank you.
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