In this week’s Market Outlook, we take a look at the key charts of the week with #GBPUSD, #EURUSD, #GBPCAD and more!
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
In this video, I’m going to take a look at the Forex Market Outlook. We’re going to highlight a few pairs of interest for the week ahead.
Strength and weakness chart
I’m going to start with the strength and weakness chart; see if anything has drastically changed.
The only thing that stands out to me is that the CA Dollar has strengthened significantly, and the GB Pound has lost some strength. GBP/CAD should be starting a nice slight downtrend. We looked at shorting GBP/CAD last week, which worked out nicely. So, GBP/CAD had a nice move. I’m expecting some further downside, so we’ll talk about that one in a bit.
Heading over to the strength meter for the week highlights, the GB Pound was at those plus sixes. But now, we’ve started to see a bit of decline in that.
We can see that CAD is shooting up sharply; GBP/CAD is going to be a great one.
Also, NZD/CAD. The reason is that these two have crossed over in strength and weaknesses. So, Kiwi is flat-lining here; CAD is shooting sharply up again. I quite like the idea of getting involved with NZD/CAD short.
Everything else has flat-lined again, I think highlighting some further upside and downside.
The US Dollar had an off week if we look at it from a weekly perspective. But, there is some downtrend that seems quite interesting across those majors.
First of all, let’s take a quick look at a couple of trending pairs that I like. Let’s look at the daily timeframe on GBP/CAD and identify what’s going on here.
While the price is simply trending to the downside, we had this lower low confirmation here. This is where we look to get involved with the market short. The reason is that it was the previous structure lows. If the daily trend continues, we’d like to look at areas of resistance to see that continue.
So, the price simply came back to that resistance level and dropped. Now, I’m not looking for anything drastically different here. What I would like to see is another pullback into the previous structure low. So, anywhere in this area. The key low is around 1.7465. That matches it with an excellent little level running here, where there was resistance, resistance, support, and support recently.
I would like to see something similar to what we saw here, where we had a retracement. But the retracement was very low, ranging in candlesticks. Once we get back to this area here, wait for a breakout on the lower timeframe for a trend trading opportunity.
Very similar to what we spoke about with NZD/CAD last week; we suggested looking for short opportunities because the price had broken out of this nice channel. We’re breaking to the downside now. The CA Dollar was getting stronger; Kiwi was getting weaker. That’s why we started to see these lower lows being formed. So, I’m expecting further downside to NZD/CAD as well.
This time, I will be looking for a price to come back into this structure level, 0.910, plus we have this area here.
If the price was going to give us a very similar pullback where it’s low ranging candlesticks, not much going on in those. That would be a nice area to start looking for short opportunities to come back through.
CAD is a nice area to target for some strength this week. I mean, to add and wait for this. When I read the sentiment data – the retail sentiment data – the number of retail traders long USD/CAD was around 70%.
We don’t want to trade the same side as retail because retail traders are typically wrong in the markets. That was another sign that the CA Dollar could gain strength because if USD/CAD is going to move to the downside, then the CAD pair should do that and follow through.
That was the reason we were looking at those CAD pairs last week.
We are now going on to the majors. I still like a little bit of EUR/USD downside before we get another move. But in this block of candlesticks here, 1.1831 is the point of control. We came so close to that area last week before the price rejected; we haven’t fully tested it since.
I wouldn’t mind seeing another dip down into this level. Then, we may get a bit of a bullish close to see some potential uptrend continuations weekly.
Looking at the daily, we have continued this downtrend. The market has continued to make lower lows and lower highs. Now, we’re back at this level; we’ve created a nice bearish candlestick. Can we get that continuation down?
The only way I would look to trade this is from that four-hour position because I like to think that when the daily impulses to the downside, the four-hour changes trend, and the four-hour trend continues down. Once we get that break in the four-hour trend, we get the reversal.
So, I need to see the price making lower lows and lower highs. Suppose we can break below this low, particularly this current four-hour low in here around 1.19. If we can take that low out, I think we’ll have a nice short-term trading opportunity for a short down into 1.1831. I wouldn’t necessarily target past that point, but that’s a key area to watch.
Another interesting pair is the GB Pound. The GB Pound is showing a little bit of weakness coming through this week. So, that’s why the GB Pound had some excellent pairs to look at. But if we’re going to look at potentially trading the US Dollar, we need to be careful.
Nice strong bullish close. The daily, however, did close up quite near these previous highs. That’s not usually a good sign. If the price continues the trend, we typically do not see it close back towards these highs.
So, one of two things may happen with the GB Pound: we may see the downside continuation because I think 1.3750 is an excellent resistance level used in the past. That could turn into support at that point, there.
Alternatively, if the price takes out these highs, we will see some further upside from the GB Pound. We have to remember that despite the GB Pound losing a bit of strength, it is still stronger. It is even stronger than the US Dollar. Mainly because the US Dollar is sitting at a neutral zero, whereas the GB Pound is still at a positive four. That shows us that the uptrend is still technically in place here, and we can see that there’s a very strong uptrend on this weekly chart. We have to be careful with these currency pairs.
But again, one way we can tell whether that trend is going to continue is if the price breaks through this four-hour level. If we can get below these current four-hour lows, and if the price can break the lows, then I think we’ll see the price head towards 1.3750.
Keep your eyes on those this week. I’ll update you with some further charts to watch in the week.
I hope you had a great weekend, and I’ll speak to you in the next one.
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