Hi, traders! It’s (a beautiful!) weekend again, so I’m doing my usual routine: trade review, continuous improvement and writing my weekly forex outlook! Last week was a challenging but nevertheless good week. Not every setup from my previous weekly forex outlook did materialise, but that doesn’t matter since we use price alerts to get notified when something happens.
If you got in either the CADJPY trade or the AUDCAD trade (which I documented on TradingView), you could have made a nice profit! I did find the lower time frames a bit more random and less clean last week, so mostly stayed out of the 1H charts in favour of 4H and daily charts. Now let’s look at the upcoming week!
Current market behaviour
Last week was an interesting week. Lots of geopolitical events (Syria bombings, Trump-Xi meeting, etc), but the markets keep on going regardless. We also closed last week off with NFP, which must’ve been the biggest non-event of the week! The initial bearish reaction because of lower than expected payroll numbers was quickly faded because of lower than expected unemployment numbers.
The dollar kind of bounced around for the first part of the week but then moved sharply higher on Friday. Economic data was mixed but the biggest event (NFP) still managed to push the dollar higher.
Crude oil is continuing its trend (which starts to look quite nice on the 4H) and ended the week higher. Crude did mostly rise on the news of Syrian bombings. Syria is not a very big oil producer but its location in the Middle East still warrants carefulness with the traders, hence the push higher.
Gold did end higher for the week but obviously turned lower on Friday as traders and investors moved away from risk-on assets after the non-farm payrolls. Gold is also in an interesting spot now, as you can see from the chart below:
The price action on Friday resulted in a very nice pin bar on the daily. This pin bar coincides with a previous support-turned-resistance level and it’s now the second time price has tested this level. What happens next will depend for a large part of the geopolitical situation. Gold could move lower, but we need a strong dollar for this. Next week will tell us more.
Past week trade review
In this week’s trade review, I want to highlight a trade I took on AUDCAD.
AUDCAD D short
I only got in this trade at the Thursday close, after the pair broke the intermediate support (and the most conservative neckline of the head and shoulders). Stop loss slightly above the previous candle and a preliminary profit level at an area where I could see the price bounce (it has done so before). Depending on the price action, I might also let this trade run and only close if I see a strong break of the moving average.
On Friday, the pair already moved lower quite a bit, aided by better than expected Canadian employment numbers. It’s now at some support level, so it will be interesting to see on Monday if it can break the level and move lower. I’m currently still in this trade.
The upcoming week
An average week is ahead of us. The biggest items are the Canadian interest rate decision, Aussie employment numbers and US retail sales figures. Keep in mind that next Friday is Good Friday in much of the world and exchanges will be closed. Here are the highlights:
- Monday: Nothing of importance
- Tuesday: GBP CPI, US JOLTs Job Openings
- Wednesday: GBP Average Earning Index, GBP Claimant count change, CAD Interest rate decision and BoC Gov Poloz speech, USD Crude oil inventories
- Thursday: AUD Employment change, US PPI
- Friday: US Core CPI, US Retail sales
For this weekly forex outlook, I’m keeping an eye on the following pairs:
Follow my published ideas on TradingView.
An interesting pattern is developing on the EURAUD daily chart. We can see a couple of things:
- The pair is in a larger time frame downwards channel
- The right shoulder of a head and shoulders pattern is in the making and looking good
- At the same time, price bounced from a previous resistance level
To get in on the daily, I would want to wait until the price breaks and closes the neckline. However, if we move to the 4H chart, we can see that a possible earlier entry could be possible. We can see a shorter, 3-wave trend and very strong rejection of the resistance around the 1.41600 level. Pin bars everywhere, both on the daily and the 4h charts! This is accompanied with RSI divergence and a clearly weakening trend.
The level I’m looking at to possibly get in is 1.40860. This is the support of the previous local swing. If the price can convincingly break this level and close below, we’re making lower lows and then I can see the pair moving down a bit more.
As I said earlier, the 1H charts didn’t really give me any interesting opportunities in the second part of last week, so I started looking at the daily charts. My AUDCAD trade was taken on the daily, and the NZDJPY also looks good.
The pair has been trending down for quite a while now, but I suspect it will continue just a bit more until the first larger support level is reached. This level used to be a resistance level (see the left part of the chart) and then turned into support once the price broke it. This pretty much ignited the strong move up (see the very large pin bar around those levels) so I’m hoping for some kind of reaction again.
There’s not too much else to say about this pair except that it still might need some time to develop. The nice trend structure looks promising, though. Something to keep on our watchlists.
This USDMXN pair gets my award for the nicest trend of the week 🙂 Similar to NZDJPY, the downtrend on the daily has been going on for a long time now. It’s almost at a support level with a strong demand zone as well. I marked the origin of the previous upswing on the chart, which was incredibly strong.
The pair is close to its 200% Fibonacci extension level and we can already see a slight RSI divergence as the price is rounding off. My game plan for this pair is to wait a bit more until it reaches the support level and then wait for a reaction.
Finally, the Swedish krona! On the 4H, we can see a nice uptrend where the price has approached the previous swing high. The reaction was very obvious with the pin bar on last Friday’s close. No real signs of a reversal yet, though, but we might get a reaction during the week.
A slight RSI divergence is already visible and we already overshot the 200% Fibonacci extension level. I prefer the price to move down to the 9.01700 level, but will keep an eye on this pair before that to see the price action.
Good luck trading!
What setups are you looking at? Share your thoughts in the comments!
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