Hi guys, 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 to the Forex Market Outlook. We’re going to identify those stronger weak currencies and see if there’s an opportunity for us for the week ahead.
So, the strongest currency of last week was the CA Dollar. We’ve seen the Canadian Dollar change trend on multiple currency pairs, and it’s looking pretty decent for some potential continuation of that. Obviously, we need to be a little bit careful because when the currency has been so strong, it can snap back quite quickly. But it’s just interesting to see that the CA Dollar has strengthened so much.
We’ve got Euro in decline, we’ve got GB Pound in decline; we’ve got the AU Dollar and Kiwi Dollar in decline.
The US Dollar remains, at this point, where it hasn’t really changed the cycle on the major currency pairs.
The only one that kind of continued down was USD/CAD, forming on a new low on the week. So, the US Dollar continues to be bearish.
We just need to, still, continue to watch this, as we could still start to see that reversal, and see some strength coming back in.
But, obviously, we’ll only start buying into that if that does happen – we’ve been talking about it for a few weeks now.
So, we really need to see this starting to form in order to be a confident buyer of the US Dollar. At the moment, it’s still very much down in the -7 area.
JP Yen is also continuing to weaken, just through here, you can see that.
So, one of the charts that I quite like is CAD/JPY. So, that’s going to be a pick of the week that I’m going to look at. And look at the weakest currency of the week to the strongest, which you can see in the background, here.
So let’s go through some currency pairs of interest. I’m going to start off with EUR/USD.
We can see that the market has continued to remain in a consolidation pattern. We had this really nice, maybe, head and shoulders pattern forming, we could expect some downside.
Now, I did like the idea of shorting this currency pair on Tuesday, just through here, which if you did, on a lower time frame, you would have been nicely successful on there. But as soon as I started to see these candlesticks, you don’t want to be trading back to the downside.
What I really wanted to see was a break of this low, through here, and see those lower lows and lower highs being formed. Maybe, a pullback into that recent breakout area – but we haven’t seen that. US Dollars remained bearish, and we’re just in this consolidation. So what I want to see is a breakout of that. I’m going to break out to the upside and see if US Dollar weakness continues, or are if we’re going to break out to the downside. What I’m going to do is just sit on my hands and wait for either situation to form because I’m a trend based trader. I don’t really want to be trading consolidations and ranges. I want to wait for that break out first.
Very similar with the GB Pound. Although GB Pound is looking bearish just because of these wicks that we’re seeing to the upside, and we can see, maybe, head and shoulders play coming out, here – break off these lows. But again, I’m going to, really, just sit on my hands with the major currency pairs. I don’t want to start buying into the US Dollar at the top just because of the seasonal reports. I want to see the technical line up with it, and in order to do that, I need to see a new lower low being formed, to, really, start getting on the back of that US Dollar strength.
So again, just watch that consolidation area. Same with Aussie, watch that consolidation area.
Kiwi, we know, is bearish, which is the only one I’m really sure that the US Dollar is against. So, continue to look for that bearishness, there.
USD/JPY is the only one really that is also showing us a little bit of potential in terms of looking for the trend because, as I said, in the week, we’re at this huge level.
We’ve now made a new high on the daily. it’s price is just going to come out to retest this area of support, and continue to the upside.
The JP Yen is very week as well, which is one feature in it on the chart of the week with the CA Dollar. But that looks very, very good. It looks even similar to CAD/JPY with the fact that we’ve got these key-swing highs, just in here. And the market has recently consolidated, but then we have this nice little higher high pattern being formed. So I would like to see the price come and retest this breakout structure zone, or at least come down and test these previous breakout highs. If it does that, then I’d be really happy and looking for long positions in there.
So if we go to a four-hour chart, for instance, and just zoom out a little bit, I’d be really happy to just see the price dip back into this supporting zone. Maybe, create that double bottom pattern or something, or inverse head and shoulders at this area of previous resistance, and then look to buy on uncapitalized on that potential strength from weakness play.
So I do quite like CAD/JPY in that sense; AUD/CAD as well. Potentially, just because if I go to take a look at the weekly, and just zoom out slightly, you’ll see that there’s a bit of a zone just through here on AUD/CAD.
When the markets struggled that recently, and we can see there’s been a lot of bullishness out of this market for some time now, and we’re at an oversold condition once again, or overbought condition, I should say.
The last time or the last couple of times we had that, we did have one just, here. But it didn’t really follow through, and then a couple of times that it did, it was just around these areas, here, where we did get a little bit more of a follow-through, there.
So, what I do like about the fact is that we can see on the strength and weakness that Aussie started to lose some ground, and CAD is gaining.
So if we look at the daily, we can clearly see that the market has formed a new lower low. So if we looked at it, it might be a head and shoulders pattern and it has completed a bit of a neckline area, running through here.
What I’d want to see is if the price did start to, maybe, continue higher, here, do we get a nice bearish day? Once we get that bearish day, can we capitalize on a potential move to the downside? Because right now, I don’t want to be a seller because of that really nice bullish candlestick. It’s not in our favor.
I didn’t see the price match our bias where we have a nice daily bearish close, and then we continue to trade that to the downside. So, I’m waiting for that here on AUD/CAD as well.
CAD/JPY I’m waiting for, almost, like a bullish candlestick on the daily.
For AUD/CAD, I’m waiting for a bearish candlestick on the daily to then look to potentially trade that CAD strength.
So that’s what I’m going to be watching for the week ahead.
I hope you enjoyed this video update and have a great trading week. Cheers!
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