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In this week’s Market Outlook we take a look at the key charts ahead of the election with #GBPUSD, #EURUSD , #NZDUSD and more!
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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 through the Forex Market Outlook. We’re going to take a look at the strength and weakness table and see what we got from there.
I’m going to focus mainly on the US Dollar. The reason is that we are at that reversal area. We have been at that -5 for two weeks now.
We are coming towards to end of the year. We’re coming to that seasonal play where the US Dollar is usually weak, and that’s what we’ve seen for the past month, but we are coming into reversal stages now. So, we may see some short-term pullback in that US Dollar weakness, and it may come before the end of the year. So, it’s quite interesting to see that we’re in the -5 area, here. It is interesting to see where a lot of the major currency pairs are so that we can see where we’re going to focus our attention.
Kiwi has finally jumped up that last hurdle into a reversal zone, and we talked about the commitment on traders last week, and the fact that there is a strong possibility that the price on Kiwi will reverse. It’s just knowing where will that come into play, and now the strength and weakness table is showing that Kiwi strength continuing. So, NZD/USD is almost the perfect reversal pair we’ve got. The US Dollar is at that -5, and we’ve got Kiwi at that +5. Two reversal zones, ready for a potential move there. So, we’re going to take a look at that market.
EUR lost a little bit of ground this week as well as the GB Pound. The GB Pound is obviously fluctuating due to Brexit negotiations currently. So, we’re going to take a little look at that as well.
Swiss Franc is looking quite strong, but we’re not focusing too much on that in this video.
So, going into the charts, we can see that EUR/USD is around this area that we spoke about, around that 1.22. We can see that there’s a lot of consolidation around this area, through here, which we’re expecting the market to go and retest. We’ve had a slight retest of the low of that move. I’m expecting a little bit of a push to the upside. However, the price has remained within this four-hour zone, through there. So, the market is bouncing between 1.20-1.70 and 1.2040 – 1.2050. And, we’re in that zone where we don’t know what’s going to happen because we’re at the end of a long trend. We’re finding a consolidation. So, if the price was to break out of the lows and we were to see a little bit of reversal to that US Dollar weakness, I’d be looking for the market to break out of this four-hour zone first, and then look for short opportunities or vice versa. If the market breaks to the upside, we know that the US Dollar is going to be a little bit weaker. So, we’ll see how the US Dollar plays out this week. It could go either way and so keep an eye on this zone, here, on EUR/USD.
The GB Pound is, obviously, going to be affected by Brexit negotiations. There is a recent headline suggesting that the negotiations are going to extend past the deadline, which could be a little bit of a positive for the GB Pound. It may show that the UK and EU are trying to come to some agreement and that they don’t want a no-deal. But, we saw this very bearish weekly candlestick last week. Mainly, because the no-deal was really put on the table, and even UK Prime Minister Boris Johnson, was suggesting that a no-deal is highly likely. So, if we were to see that no-deal outcome, I think we could see the market head towards the 1.28 level, these previous structure lows. If we look left at that point, we have nice support, resistance, support. So, this area is likely to be targeted on a no-deal. If they do seem to get a deal across the line, then 1.35, the current resistance, which you can see, here, will be the likely targets and even a breakout for further upside for the GB Pound. So again, two key levels to really watch going into this week.
Kiwi is a big talker for us as well. We spoke about this in last week’s videos. We talked about the fact that the commitment of traders reports area is really highlighting that the contracts are at all-time highs. Now, we did talk about the fact that there is a nice little block up here of recent action where the price was battling for support, and for buyers and sellers. Sellers did eventually win that battle. So if the market headed towards this area, was the seller going to defend these levels? That could be something we could take into consideration. What I like here as well, is the fact that we’re in this uptrend and that we’re heading into overbought conditions on a weekly timeframe that’s always good to take a little look at this week.
If we were going to get that rejection – I’ll go to the daily timeframe we do have or even the four-hour – it shows us again that it is very similar to EUR/USD. We’ve got this box zone, which the market has been working with, and last week, we said that if the market failed to make any lower lows as it did, we’d expect the market to move to the upside. Now, we didn’t get that extension that we were expecting. However, the market has remained in this four-hour trading range. So, if we were to get that breakout, very much like EUR to the downside, maybe that is the sign that the commercials have found a top in the market that they’re willing to offload their contracts, the market would move to the downside, and we would be looking for a little bit of US Dollar strength in that move as well.
So, those are going to be my free key charts going into this week: Euro, Kiwi, and GB Pound. Keep an eye on those key levels. Watch for those key breakouts on the four-hour charts, and I’ll speak to you next week.
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