The Forex Market Wrap is here!
Watch the video to learn what key levels have been hit this week!
We have added the USD in this week’s forex market wrap analysis as the market made a strong move this week.
The USD index was in focus for us this week as in the week ahead analysis video we highlighted the USD has been losing strength. In a recent USD index video we talked about the Commitment of Trader reports and how they showed us that the commercials were increasing their short positions on the greenback considerably. This shows us that a reversal was coming in the market. All we needed to see was a technical reversal which has now formed.
The CPI data reaction completed the minor 4hr time frame head and shoulders reversal pattern. Now this has formed we can assume that the price could be entering a downward trend and we can look for the market to form lower highs and lower lows.
The AUDUSD chart was one of our main focuses this week as we outlined a Commitment of Trader opportunity here. We had the commercials increasing their long positions in the Australian Dollar and increasing their short positions in the USD. This made this pair a perfect CoT signal for long opportunities this week. This combined with the weekly price action which looked to be forming an impulsive phase as the sellers were losing momentum each week.
Now that the price has rallied we could be looking for a continuation of the impulsive phase if the price can continue to rally and break the recent swing highs. A close above these highs would lead to a strong bullish trend which could extend much higher.
The EURAUD chart was one to watch this week as we wanted to buy the Australian Dollar against a weaker currency. The strength meter this week suggested that the EURO was losing strength which made it an ideal pair to look for opportunities. The price has dropped in line with the expectation of the market and is now at a key support level. We could see a short term pullback here and if price breaks through the key support it could act as resistance for another trading opportunity.
Also on our week ahead analysis video we highlighted this chart for a potential continuation of the downward trend. The Canadian Dollar has been very strong recently so we wanted to pair it against the weaker currencies like the USD and the JPY. The price did move down however, and didn’t offer too many pullbacks to consider a trader. The only action we could have looked at was the break of the 4hr consolidation zone. This could have offered breakout traders an opportunity to short the market in favour of the strength and weakness.
This market was the perfect strength and weakness market to watch going into this week. The Canadian Dollar was one of the strongest currencies and the Japanese Yen was one of the weakest. We looked at the monthly time frame previously and highlighted the potential impulse phase forming after the price made an inside bullish candlestick close. Now the price has broken into new highs we could continue to look for long opportunities in line with the major trend.
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