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In this week’s Market Outlook, we take a look at the key charts of the week with #NZDUSD, #EURUSD, #USDIndex and more!
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https://youtu.be/vZyPtFADGyE
Today, we’re taking a look at this week’s Forex Market Outlook.
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The strength and weakness opportunities, and the seasonal analysis that we’ve been talking about were focused on the potential reversal of the US Dollar. Meanwhile, the strength and weakness chart reflected the same thing last week.
USD is the currency in focus this week due to the seasonal analysis. Throughout April, the greenback typically underperforms, offering us opportunities on the major currency pairs. The strength and weakness table agrees with the bias that the USD topped out last week and is seeing some sellers come in this week.
We saw a boost to the EUR and the GBP, and a bit of downside to the CHF and the USD. And we have other currencies coming into reversal points.
So, the NZ Dollar potentially buys on a reversal of Kiwi and US Dollar, which seems to be playing out quite well.
We’ve also got the potential for continuation on the JP Yen, but it has been flat for a while. So, we’re not looking to buy yet.
I’m going to be focusing on the US Dollar because of that seasonal analysis. If you watch the Silver (XAG) seasonal analysis video, you’ll see that we did some on the US Dollar as well.
Strength meter
If we look at the USD from the strength meter, we can see that it has started to dip, which is a sign that the price could reverse from this area. In times like that, you’ll want to look at the stronger currencies for potential opportunities.
So, EUR/USD is going to be a big player, together with GBP/USD. But if the US Dollar is going to pull back, we’re going to see some opportunities on the strength meter anyway.
US Dollar Index
We’re getting that pullback on the US Dollar Index. We already broke through last week’s low, which is here.
The USD index today has already broken through last weeks low giving us a sign of what is to come for the week ahead. The weekly timeframe shows the USD in a downtrend so we need to see this reflected in the daily timeframe by the price forming a lower high.
Daily timeframe
If we go to that daily timeframe, you can see a big dip in the US Dollar. We broke through the weekly low, which is usually a sign of what’s to come. If we are to look at the overall trend of this market, it is to the upside because the price is making higher highs and higher lows.
We would typically look for the price to come back down into this area in here for the price to then start to move to the upside then I’m expecting a bit of lower highs to come in play for a bit of a turn around in this market, especially because the price is breaking through this trend line through here.
Weekly timeframe
We also have the weekly timeframe, which is in an overall downtrend. We’re combining that with the seasonal analysis, which means that we could see some downside to this market.
EUR/USD
EUR has been doing very well today despite the European Bank holiday.
In the four-hour timeframe, you can see the EUR/USD rally in the past two sessions. What’s nice about this is that we know that the market is in a downtrend again.
There were significant volumes coming from this point for selling opportunity and pressure. The likelihood is that the price is going to return back towards the 1.1917 level.
EUR/USD is confirming the daily retracement phase by forming an uptrend on the four-hour timeframe. If we are expecting the USD to fall this week, we could see the EUR/USD price rally towards the high volume zone at 1.1917. We could then look for long opportunities from the recent demand zone at 1.1759.
In these pullback retracement phases, you’ll want to see a change in trend in the four-hour timeframe, and that’s exactly what we’ve got. The market rallied up and pulled back into the 1.1917 zone. Now, the market is rallying to the upside.
I’m expecting the price to come back down into this structure, and I’ve pointed out a high volume level at 117.59, and if the price were to come back to this point, I would expect some more buyers to come back in once again and for the market to rally up to the upside.
I think target’s quite reasonable at 1.1917 for EUR/USD going into this week.
GBP/USD
There was selling pressure coming in from here, so we could see selling coming back in at this point.
There’s a nice bullish candlestick in the weekly timeframe. We came up to a high volume zone. We broke through the trendline as well, so that’s breaking higher.
I like the opportunity for a potential buy here. There’s a couple of areas that I like. This area here could be where we’ll see buyers come back into the market.
GBP/USD has broken through the daily trendline resistance we outlined in the recent Forex Market Wrap. This trend could continue if the GBP remains strong and the recent four-hour timeframe lows could offer support in the short-term for long opportunities.
If we go down into that four-hour timeframe, the previous structure area has seen some buyers come back in. So, we could look at the area around 1.3820 or at 137.42 for a long opportunity.
There’s a lot going on but we’re looking for that US Dollar short.
NZD/USD
Finally, we’ve got Kiwi that’s really weak and the US Dollar that’s really strong. Usually, that creates a downtrend in the market.
The US Dollar looks like it’s going to go short where it could go back to 71.68, so I would be expecting the price to come back and retest that zone.
The NZ Dollar and the US Dollar are on opposite sides of the strength and weakness table which could offer a strong reversal opportunity to the current downtrend. Again, we are seeing an uptrend form in the four-hour timeframe suggesting that we are getting a retracement phase on a higher timeframe. The high volume resistance comes in at 0.7168 and will likely be a target for the move.
If you go down to the four-hour timeframe again, we can see that the price changed cycle and made a higher high. We could continue to look for the breaks in the trend here targeting this high volume zone at 0.7168.
Keep an eye on NZD/USD. It could be the one to watch this week. I think the US Dollar selling opportunity is something that we could take a look at, especially since the US Dollar Index is breaking through this weekly low already.
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