In this week’s Market Outlook we take a look at the key charts of the week with #EURUSD, #AUDUSD, #USDCHF and more!
In the Week Ahead Analysis, we’ll look at the strength and weakness of currencies and a couple of charts to watch.
Currency strength meter
The currency strength meter is showing the US Dollar gaining strength.
The strength meter shows the USD gaining strength from the lows. Major currency pairs are showing similar traits with low ranging weekly candles which means that momentum could be shifting.
The US Dollar is the red line. It was at the -7 level, which was telling us that it could reverse. The market was in key areas, especially the major currency pairs, and we’re now starting to see a potential reverse.
There are a couple of charts that I want to look at, but we’re mainly focusing on the US Dollar because if we are going to see that strength, there could be some good weekly reversal opportunities.
US Dollar Index
We’re going to start off with the US Dollar Index. In the past couple of weeks, we spoke about the opportunity because this area has been showing the market slow down as it comes to a key supporting point.
Last week, we spoke about the past two candlesticks showing us that sellers are losing momentum. This week, we have a Doji candlestick showing indecision at this level. This suggests that we could see some buyers step back in the market.
The USD Index formed a Doji indecision candle at support. If the price breaks the weekly high, we could see buyers step back in the market.
I’m looking for that across a few major currency pairs. The first one is EUR/USD. The price came up to an overall structure.
We had strong momentum on the way up. Now that we’ve approached the resistance area, can we have a lot of selling again?
In the daily timeframe, it is making higher highs and higher lows. I want to see the price break through the low.
If we can break through last week’s low, it’ll show us that the momentum is definitely with the sellers. What we currently have just might be a fake move just to entice some buyers into the market.
If the USD gets stronger, we should see EUR/USD break to the downside. But, the price could still rally and hit previous structure or weekly highs before moving down as well.
EUR/USD could be the one to watch this week if the USD strength enters the market. Again, if the weekly low breaks, it could be an incentive for sellers to jump in. Alternatively, we could see a double top pattern form at the highs, offering us reversal opportunities.
That is an option that we could see, even at the 123 level. But looking at the weekly and higher timeframes, the USD is getting stronger. So, we could see a rollover in EUR/USD with a move down to the 1.2 area.
Moving on to the USD/CHF chart because it is inverse with the EUR/USD chart. The price went back down. The big bullish move came from here, so we could see buyers stepping back.
I like the low range and weekly candlesticks since they are all in a row closing back within each other’s range. This shows us that sellers are losing momentum.
I’m looking for a breakout to the upside in the four-hour timeframe. The price is getting capped at previous structure highs.
I’d like to see the price break above and then look for long opportunities on USD/CHF.
USD/CHF on the weekly timeframe shows the momentum shifting with low ranging candles at the support. In the four-hour timeframe, sellers entered the market at recent highs. We need the market to trade above this area if we are to look for long opportunities.
AUD/USD is an interesting one. In the strength meter, Aussie is the grey line, and the USD is the red line.
The two currencies are starting to cross over, which suggests a change in trend. We’re in this massive range and we have a head and shoulders pattern. If the price takes out 0.77, we could see a reversal in this market.
AUD/USD could be the one to watch as the currency strength meter shows the USD crossing over the AUD, which shows a potential downtrend forming. Looking at the daily chart, we can see a large head and shoulders pattern forming. If the price breaks the lows of 0.7700 we can look for short opportunities here.
So, consider AUD/USD for a potential reversal pattern as well.
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