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Hi guys, and welcome to today’s Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
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In this video, we’re going to go through the Forex Market Wrap. We will go through a few charts of interest, which could stay mainly on the major pairs because the US Dollar has sold off significantly, which has given a massive boost to the commodities, especially Gold or XAU. We can see this week that XAU rallied significantly and to the point of it’s coming into a major monthly swing level.
If I look left on the monthly timeframe, we’re approaching this huge high back in the 1st of September of 2011. It’s been a good old while since the price has been anywhere near these previous highs. We’re approaching a huge level on XAU. How will the market react at this level? If the US Dollar continues to break down, we could expect a breakout here on XAU, and we could anticipate some further upside.
That’s only if the US Dollar continues to weaken. Seasonality does show that in August pretty much the US Dollar goes on a move long, we may anticipate a reaction from this monthly level up here and see the commodity push to the downside, in-line with a bit of US Dollar strength. Letting you know that the price is approaching a huge level on XAU that we need to consider.
I’m going to go to the US Dollar Index, and we’re also going to take a bit of a bigger picture. The price continued to the downside this week: it came towards these lows, and it’s breaking. Again, this weekly timeframe is very significant, especially if it continues to drop and close below the low. If it closes below the low, we need a second consecutive close below the low to confirm the breakout. Still, it’s a sign that the US Dollar weakness could continue for, maybe, another week or so before seeing a decent turnaround or seeing any buyer step back in.
At the moment, lots of bearishness on the US Dollar leading to a few breakouts, including EUR, which has taken out these weekly highs and breaking above. Is this the weekly highs? It’s this year’s high. It’s taken that out with ease, which could lead to some further upside here as well.
If we go to the monthly timeframe, many people are looking at trendline resistance, and you can see that the price is approaching this trendline resistance here. I’m not the biggest fan of trendlines. They’re a bit subjective. But if we look left as one on that monthly timeframe, the price is approaching a monthly zone or already in a monthly zone. It could all start to crumble here for EUR/USD if the US Dollar seasonality does start to play out.
The daily timeframe is looking very overbought here. We’re coming up into some areas of resistance. Are we going to start seeing a push down now? If we wanted to be buyers of the market, we’d want to see that retracement anyway. If the market did drop back into here, for instance, we’re probably saying to ourselves: “Well, if I want to be a buyer and be a buyer with a breakout area and if the market did come back down into here, let’s look for that buying opportunity.” But if the seasonality comes into things and shakes things up a little bit, we could see a move down, a move up in line with the trend, and then maybe a break of the trend from this key resistance level, and a push back down heading towards the yearly lows. That’s going to be super interesting,
Letting you know that the prices with that US Dollar sliding are causing the major currency pairs to come into many decent areas of resistance.
I’m going to go to GB Pound. I’m going to head up to those higher timeframes, and the GB Pound is looking quite bullish. Once again, a little left that I’m looking at here, the price action there is quite a decent area of resistance. I would need to see GB Pound take this weekly high out to continue buying the GB Pound, up into that 1.33 area or 1.34. But now, I like that the market has dipped, it’s come back to this coronavirus dip, through here, but we’ve made our way back up now. I don’t tend to use fibs, but I’m going to see how far the market has come back on itself towards that 23.6. We’ve got quite a deep retracement there – huge resistance level. How is the market going to react at this point?
Once again, looking at the trend of the market. The trend is quite clearly to the upside. You have to follow that trend until the trend changes. If the market did come back down into the support level, I would still be looking for buying opportunities until that daily timeframe starts breaking to the downside. And we start seeing some decent lower highs, lower lows coming out of that because my idea is I want to follow the trend as much as possible. If the price did come back into here, I would look for buying opportunities. Still, towards more of the short-term side of things and then if it rallies, retakes that test the high and then drops again, we can start maybe looking for shorts in-line with that seasonal opportunity on the US Dollar.
The markets are coming into some huge areas. Keep an eye on that US Dollar Index it’s going to be the key to show you where the US Dollar is off.
I hope you’ve enjoyed the content this week. Once again, have a great weekend, and I’ll speak to you soon. Cheers!
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The #Forex Market Wrap is here!