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EURUSD

Weekly Forex Outlook: March 26

Another week has passed, so we take the time to look at how the trading week went and at the same time, make our outlook for the next week. The past week had many reversals happening and many of the setups I indicated last week played out really well. We’ll have a look at some of these in a moment.

 

This week, it was a little harder to find good setups. We see less trending markets and if they are trending, they’re either in between S&R levels or just not trending cleanly. Nevertheless, I have selected some pairs I find worth looking at.

 

Current market behaviour

 

This week, we could see the USD continue its path downwards. Wall street might keep betting on the infrastructure and regulation changes that the Trump presidency has promised, but for now, we see a weakening dollar, indicating that the initial rally high after the inauguration has largely worn off. By now, Wall Street wants to see some concrete evidence – not some vague promises – in order to get the dollar higher.

 

For now, this is good news for technical traders. In the absence of political news, the dollar is respecting the technical elements more than anything. Price is also nearing a previous swing low, which should act as support and might give us new opportunities to buy the dollar next week, but let’s see.

 

Market overview week 25 March

 

Gold had a good week, ending quite a bit higher than last week and oil had another very skittish week, ending the week a bit lower after higher than expected crude oil inventories.

 

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pin and drive

The pin and drive reversal entry trigger

As you might know, I’m mainly a reversal trader. I use other strategies as well, but my bread and butter setups revolve around swing trading reversals.

 

This article is about an entry trigger I often use for my reversal trades. I describe it in my trading plan as pin and drive, which basically means that if I see a pin bar followed by a drive in the opposite direction (a momentum candle, if you wish) AND some additional conditions are fulfilled, I have found that it is often a good trigger to enter a reversal.

 

But first, let’s make it clear what I mean with a chart:

 

Pin and drive reversal trigger examples

 

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AUDCAD

Weekly Forex Outlook: March 19

Hi traders, how’s your weekend going? I had a very short trading week since as of Wednesday, I was out of the country for a business trip, so no trading from then on. I did, however, have one trade in the beginning of the week that I want to go over with you and we’ll get to that in a minute.

 

Last week was also filled with fundamental news releases, so, on the one hand, it was a good time to be away since I don’t trade news releases. On the other hand, I saw most of the previous week’s outlook unfolding really nicely (like CHFJPYGBPCHF and NZDUSD) without being able to trade them. Then again, new opportunities will always present themselves, so I’m just looking forward to the new week!

 

On the US Fed rate hike

 

Last week finally had the much anticipated US Fed rate hike event, which went down a bit different than most people thought it would. A rate hike is basically a positive event for the USD, so many were expecting a rally after the hike. However, on Tuesday I mentioned this on Twitter:

 

 

And then on Wednesday, this happened:

DXY rate hike

 

An initial short run up when the FOMC statement was released and then a huge sell-off at the time of the FOMC press conference.

 

It makes sense. Think about it. The market was pricing in a 100% rate hike already, so the hike was no surprise. Everyone who wanted to had already positioned themselves. Additionally, there was one dissenter (Minneapolis President Neel Kashkari), so the decision to hike rates wasn’t unanimous.

 

And greedy as the market is, we were already looking for signs of even more improvement and potentially 4 rate hikes for 2017. Unfortunately, this didn’t happen. Fed chair Janet Yellen mainly kept the same tone as in previous statements and the Fed’s economic projections stayed pretty much the same as what they released in December. Hence the sell-off.

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NZDUSD

Weekly Forex Outlook: March 11

Another week has passed, so I’m back with my weekly trading outlook! Last week was quite interesting, with a couple of nice opportunities in the market. Most of the setups I mentioned last week didn’t yet materialise, though, so we needed to be patient. Since we always want to see some confirmation first, I just didn’t take any of those setups, which is fine. There were some interesting other opportunities in the market too.

 

Current market behaviour

 

The US dollar index saw some up and down this week. Initially, there was plenty of positive momentum to drive the dollar higher against the basket of other currencies. However, as the rate hike was priced in as an almost certainty (over 90%), there wasn’t a lot of news that could push the dollar higher. The NFP release on Friday was quite good – better than expected – but we saw a classic “buy the rumour, sell the fact” reaction. The dollar ended the week a bit lower than it opened.

 

Forex market outlook

 

Often, gold and the dollar will have an inversely correlated price pattern, but this week was different. Markets felt quite risk-on and equities have risen in the past week. This leaves money flowing out of the safe havens such as gold and the Japanese yen, which we could clearly see in the past week. Gold sold off almost the entire week to end sharply lower.

 

Finally, oil dropped below $50 a barrel in quite a strong move. In fact, we haven’t seen these prices since the OPEC production cuts were announced and it was the worst week for oil since November. This might be a move that’s not over yet, but we have to see what next week brings.

 

 

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GBPCHF

Weekly forex outlook: March 4

Hi traders, I’m back with another weekly outlook! Lots of nice setups lining up for next week so even though the weekend has just started, I’m already looking forward to next week. Last week, I moved to a new place (in Brussels), so I was a little busier than usual, but it was an interesting week nonetheless.

 

Current market behaviour

 

A general observation is that the markets seem to be more skittish than usual, mainly fuelled by various fundamental factors in the world right now. Just yesterday (Friday), we could see the euro taking off on news about an early poll on the French election. Tuesday was focussed on the Trump speech to congress, which was the first time president Trump gave such a long speech since the inauguration. Markets were hoping for some details on the proposed tax cuts and infrastructure spending, but Trump was remarkably vague on details. In all, it was a rather uneventful speech and a rehash of the promises he made during his presidential campaign.

 

Let’s have a look at the overall market last week. The dollar initially surged on hints by Fed officials that a March rate hike would be likely. In the second part of the week, it made a market top and seems to have set in a downtrend. Even though almost every Fed official including Yellen indicated that a March rate hike was on the table and that the US economy had met Fed objectives, the DXY ended the week little changed. This could indicate that the rate hike was already largely priced in and the market was more focussed on other, mixed economic news.

 

Gold has ended the week quite a bit lower, continuing the downtrend initiated by the double top from last week. Even though the dollar was down for the second part of the week, the market seems to believe in dollar strength. This risk-on environment is the likely reason gold is selling off.

 

Finally, oil has moved down for the week. Better than expected crude oil inventories couldn’t prevent the commodity to sell off, but it rebounded near the second part of the week to around 53.20 a barrel.

 

Market overview

 

 

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