In this week’s Market Outlook, we take a look at the key charts of the week with #AUDUSD, #EURAUD, #AUDJPY and more!
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Hi, and welcome this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, I’m going to highlight some key charts this week, and what I’m expecting in the markets.
Strength and weakness
Let’s start with the strength and weakness table. There’s nothing here to suggest anything too much of what’s going on.
What’s interesting is the fact that Kiwi has come back up into an area resistance, or a high level of strength, considering the past two days of last week was a pretty poor week for risk currencies.
We saw the stock market dropping; risk currencies took a beating. However, the way the strength and weakness table was calculated suggested that Kiwi still had an okay week, especially during the first three days of last week; we still saw that strength follow through.
It’s giving this high number, but it also gave us that in the reversal area. So, we could probably see that continue this week, considering that the stock markets still look like they’ve got a way to go for a short-term drop.
I’m not expecting the drop in the stock markets to last for a while. I think it’s only going to be one of those short term drops. But in that case, we could be looking to our risk currencies to have a poor week this week.
It could help with what would we consider the safe-haven currencies. So the JP Yen is very weak, the Swiss Franc is also very weak, and they didn’t show signs of recovery apart from going against those risk currencies like the AU Dollar and the NZ Dollar.
So, we could explore some potential there. In particular, AUD/JPY could be an interesting chart to watch this week. So, let’s dive into it.
I’m going to start with EUR/USD. This zone here last week was the area to be watched for any potential breakout and closes above, or any closes below. Eventually, we had a close below.
We had a pretty strong breakout to the upside, to be honest. There was a decent rally around 40 pip in this move here, which was quite considerable, taking into account the candlesticks’ range recently.
The price broke to the upside, completely close back below the low volume area, which was held by this support and resistance area.
The price folded the next day, nice move to the downside. We looked at the short below this candlestick lows, it stops above the highs. That has moved very close to those key targets. We could see this develop and follow through next week.
Now, If I were going to trade this next week, I’ll be watching key levels I’ve pointed out here. 1.2070 is a level of interest because the price has recently found support from these areas, including a false breakout recently.
The prices are resting there at the moment. The price tapped through the level then closed it back. We need to be aware that the support is still in and around this level.
If the price were to break below this area, I think we are going to see some further downside. If we get a pullback and a continuation, that would be nice to see, with a potential target of this 1950 area.
We can see the market found some resistance here in the past. And if I zoom out a little bit, we can see the previous support in the area is coming through there as well.
The 1.2110 area would be a minor area to watch because, again, the market found support, support, and support before the breakthrough. Are we going to find resistance around this area, even slightly higher up here as well?
We could be looking for the market’s potential to pull back, reject from this area, then back down into 1.2070. If the price then follows through and we take that out, we could be looking for further shorts on EUR/USD.
Going into Aussie, it’s a very similar set-up. What I like about Aussie, though, is the fact that we hit that 0.8. That weekly has closed back within these previous weekly highs, leading into a false breakout. The price could drop further, here.
Aussie could start falling, which is why I’m quite keen to look at the risk currencies this week,
The daily is very bearish. When we do get these bearish actions, we need to be aware that there could be a profit-making situation. We could see the price spike again, but we need to watch out for key levels.
For me, I go into the lower time frame. The first level is going to be this one, at 0.7780; this is this key resistance area here.
If the price comes back up into this point and starts to reject, and we start to see some bearish rejections coming at this point, I’ll be happy to look for short opportunities down into the 7670. If we break that, then the next target is 75740.
The risk, to me, would be if the price were to trade back above this level. We’d probably see a little bit of higher trading. Potentially, up into this area here.
We’ll keep an eye on that, and if the price breaks above, then be careful of going short on Aussie.
EUR/AUD could be a good market to watch. I know we just talked about the Euro and Aussie dropping but the trend is quite nice here, and there could be a good reversal situation going on.
Prices finally hit the major swing level, the strong bullish engulfing candle on things’ technical analysis side. The price is trading back up into resistance.
I’m happy to look for some potential reversal opportunities here. If I go to the four-hour, we can see that the price rallied up from this level, broke one, two, three highs, broke four, five here.
So, key levels to be aware of: we have major resistance up around 1.5700. The minor support comes in this level here, which is around 1.5566. If the price were to get here, stop looking for some support. You could look for short-term long opportunities there.
If not, the next level is around 1.5485, and this area, here, is a nice low volume level, which hasn’t been retested yet. This could be a nice area to also look for a long position.
But, the risk side is up to 1.5700. If the price were to break out of that, we could definitely see some further upside to this market.
Closing out, then I’m going to finish on AUD/JPY. The reason why I finish on this market is that this one is pretty much your risk currency pair.
If you didn’t want to trade stock markets or didn’t have the funds to so, then AUD/JPY perfectly reacts to the markets, and you can get some decent moves on AUD/JPY.
Keep an eye on AUD/JPY, there’s a nice weekly bearish rejection of this key area over here. It could trade back down towards 81. If it is going to trade back down towards 81, the key area I would be watching is 83.
If it comes back up into this level, this block of candlesticks here, in particular, then I’ll be looking for a continuation to the downside.
A little bit of support here, the price found resistance, resistance. Are we going to find support in this area? If it cleanly breaks this area, you could use around 81.88 as a minor resistance level to trade back down to 81.
So, I’m going to leave it there. I hope you enjoyed this video update. I hope you have a great trading week, and I’ll speak to you soon.
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