In this week’s Market Outlook, we take a look at the key charts of the week with #EURUSD, #AUDJPY, #GBPJPY and more!
In this Week Ahead Analysis, I’ll show some strengths, weaknesses, and key charts to watch.
Strength and weakness table
The JP Yen came out as the biggest gainer last week. A lot of JP Yen pairs change trends because of the US Dollar getting stronger.
When the USD is strong, other currencies tend to be weaker. This causes changes in trends in a lot of markets,especially the JPY, as it is also a safe haven currency. When the USD gets stronger, the JPY is more likely to strengthen as well, depending on how the other currencies are affected.
So, there are lots of JPY trend trading opportunities coming up. Next week, we’re going to look at the AU Dollar as it has been moving lower.
The strength and weakness chart highlights the JP Yen as the biggest gainer of the week, alongside the USD. Meanwhile, the AU Dollar and the EUR were the weakest.
I’ll also be looking at GBP/JPY because the GB Pound has been reversing from the highs.
We spoke about the potential for this market to drive lower. It broke through the key 1.2 level where the market recently found resistance and support.
If I want to be a trend trader, I want to look for key areas to act as resistance. So, I want the price to go towards the 1.2 level and reject it. Ideally, I want to see a slow, controlled move to that level. If the price gets stronger and we see a huge reversal in the price, I don’t want to be short because that’s not showing me that the momentum is still with the sellers. I really want to see the price make its way back up, then a reversal pattern on a lower timeframe for the shorts to continue.
The EUR/USD price dropped significantly last week and broke below the major level of 1.2000. If the trend continues, we can expect the price to retest the key level. However, we need to see the price to form low ranging candles at the resistance first to support the bias of sellers being in control.
We might see a retracement this week, and 1.2 is the level that I’ll be watching on EUR/USD.
I’ll be looking for long opportunities with EUR/AUD because the Aussie has been losing some ground. We had a weekly bullish candlestick, so now, we’re expecting that momentum to continue to the upside.
In the daily timeframe, I would need to watch the 1.5770 level, where previous structure highs came into play. If we get low ranging candlesticks there, I’ll be looking for buying opportunities on a trend trade.
EUR/AUD could continue the trend this week after finding support at the range highs. The daily timeframe made a new high last week and the price could retest the highs at 1.5770 for a trend continuation move.
Moving on to one of the JPY pairs, the price in AUD/JPY recently changed trend and we’ll likely see that continue.
The price has been trending in an uptrend since October 2020. So I’m expecting some further downside to this market. If the price goes back to the 83 or 84 level, that’ll be a great level to see some longer-term swing trades because that is the current weekly low.
AUD/JPY formed a new low on the weekly timeframe, showing a big shift in the market sentiment. We should expect this downside momentum to continue if the price retests the swing lows at 84.00.
I’m going to look for the price to come back to that area for short opportunities. But, this may be a bit further in the future because there has been a lot of selling pressure in the daily timeframe.
We may see a reversal this week and either a continuation or a pullback into the 84 level.
GBP/JPY hasn’t gone as far as the rest of the currencies, but there are still some levels to watch out for.
The 152 level was used as resistance, so we may see support come back to the market. The market also found support around the 153.50 level and then finally, we have support up at 154.50. The 50 numbers are acting as support and resistance across the board for GBP/JPY.
There are different options on how to deal with this because if the price finds support, then we may get an opportunity for a reversal at 153.50. And if we get a significant pullback, 1504.50 could act as resistance.
GBP/JPY is the one to watch this week as the price made new lows on the daily timeframe. If the price retests either of the key levels, then we can look for short opportunities on bearish reversal patterns.
I’m going to be watching for either a break and retest of 152 or a reversal to 153.50 or 154.50 as we can see the trend continue from those positions.
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