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In this week’s Market Outlook, we take a look at the key charts of the week with #GBPUSD, #GBPJPY, #AUDUSD and more!
In the Week Ahead Analysis, we’ll go through the strength and weakness chart and some pairs to keep an eye on.
Strength and weakness table
On the strength from the weakness table, the GB Pound and the Swiss Franc are still the strongest currencies, topping the strength and weakness table. However, the Swiss Franc started to lose strength, so we could start to see a reversal soon. The GB Pound remains strong and is still in the reversal zone. We don’t have any reason to expect a reversal just yet.
The AU Dollar and the JP Yen are still the weakest currencies. We could look for opportunities in these markets again. The JP Yen is in the reversal zone, and it’s starting to gain strength; you’re either going to look for the trend to continue or look for a reversal if the trend changes.
The strength and weakness chart highlights a number of things this week. The GBP and CHF remain at the top of the board. Although, we saw weakness creep into the CHF suggesting a potential reversal. The weakest currencies are still AUD and JPY. The JP Yen is starting to gain strength which could make the currency reverse.
GBP/JPY
I’m starting with the GBP/JPY because they’re on opposite sides of the scale. This week, we’re either going to see a trend continuation or a reversal.
In the weekly timeframe, we have a nice bearish candlestick close. It continues to the daily timeframe, creating a lower high. When that happens, we typically get a break of the low then a change of trend. This means that we could see some downside to this market.
The only problem is that the support rests a bit lower, at 154.47. So, we could anticipate the price to move down.
We need to see how the price reacts to the recent daily swing lows. If the price rejects the swing lows at 154.47, then the trend will likely continue.
The GBP/JPY is one of the interesting charts to watch this week as it could either continue the trend or reverse. The daily price action is currently showing a potential lower high, which suggests a reversal opportunity. If the price reverses, we can expect a move down to the recent breakout area of 154.47.
We could see some further downside in this market. Ideally, we could look for the price to continue and break down this level, look for a retest of that structure low, and then look for the continuation of the downward move. But, this will depend if the USD/JPY and the GBP/USD moves lower.
GBP/USD
The GBP/USD is rejecting some highs. The GBP retested the key area high, around 1.40 to 4040. It rejected that price last week. We have an indecision candlestick close after a retest of the highs as well. If the price breaks lower, then the support on the weekly timeframe moves down to 1.38. So, we could expect a rejection and a breakdown here.
The only problem is that the price hasn’t made a lower low on the daily timeframe yet. Instead, the price rejected previous structure lows. So, if I were a seller on the GB Pound, I’d look for a break below the lows, a retest of the structure at 1.41, and a continuation of the move to the downside.
The GBP/USD rejected the major swing highs at 1.4240 last week, but it’s struggling to break below the 1.4100 support. If we are to look for the reversal in this market, we need to see a close below the 1.4100 level.
That would be the ideal thing to look for on the GB Pound. Alternatively, we could see the price rally to the upside to the 1.42 level in the key high.
AUD/USD
The next pair of interest is AUD/USD. The weekly timeframe closed a bit bullish.
The reason I like looking at this is because the Aussie is at -5, and it’s moving lower in the strength and weakness chart. The US Dollar was actually the strongest technically last week despite the NFP data being poor. We could be having a fake-out week, which means that we could see the market continue to roll over.
We need to see another close below 0.77. If we had another bearish close, then that would give me more confidence to trade this market short. But until that breakdown happens, we can’t look to short the market yet. We have to be patient because we could see the market rally back to 0.7857 instead, so just wait for potential opportunities to form.
The AUD/USD chart is also one to watch for us this week as the strength and weakness table suggests that this market is bearish due to the recent rise in strength of the USD and the weakness of the AUD. However, the price closed back above 0.7700 last week which could offer an alternative long opportunity if the price holds above the level.
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