Bonjour, mes amis! 🇫🇷 I’m in Paris, France right now, as I had a spur of the moment idea to spend a week or so in the French capital. Had a good trading week? This was an absolutely epic week for trading, as we finally saw the VIX move back up and many setups worked out very nicely. Let’s go over them right now!
On the contrary to what I said last week, gold actually shot up. This is totally due to Trump’s comments about North Korea, which catapults the world’s financial markets into risk-off mode. This means gold and the yen shoot up, which is what happened. Oil, on the other hand, was ranging for the most part of the week but did eventually go down. It is currently retesting the support-turned-resistance zone it broke on Friday and I reckon it’s still an excellent setup to take next week if it goes down again.
Next up is the 4H setup on GBPCHF, this was an absolute beauty! It didn’t take much for the pair to break the support level and from there on, it was moving down very nicely. I’m actually still in this trade and believe it could still go lower. We don’t always get clean setups like this, but when it happens, you better ride it for as long as you can!
NZDJPY on the daily charts was another beauty as well. This was helped along a little bit because of the Trump comments, but it still was a very nice setup. It very quickly broke the support level I indicated on Monday and from there on, it was a smooth ride down. This illustrates again that trading shouldn’t be too complicated and if a number of things line up (major resistance level, extended trend, good price action), it’s just a matter of executing your trading plan, simple as that:
USDJPY, on the other hand, didn’t go our way, also because of Trump. I expected this pair to go up, but due to the uncertainty regarding North-Korea, it shot down. No problem, though, because this pair also never crossed the zone I indicated on my charts. This means that no trades were triggered and we just simply stayed out of this pair:
Current market behaviour
The past week didn’t really have a lot of big news events and except the comments Trump made, not a lot was happening. Still, they were enough to move the dollar index during the week, although not in a very directional fashion. After last week’s push up due to the better than expected NFP results, this week saw the index ranging and eventually ending the week a bit lower than it started.
As expected, gold moved in an almost straight line up. The market is in risk-on, which means money flows to gold and this was clearly visible this week. An easy fundamental play could be had if you bought gold after the Trump comments and the bullion ended the week a lot higher. If nothing changes, I could see the pair go up quite a bit more.
Finally, crude oil was ranging for most of the week but made a big drop towards the end of the week on news that the number of active US oil rigs increased. This is actually expected since there are a large number of oil rigs in the US that have been finished but have not yet been taken in operation, in an attempt to artificially push up the oil price. This might work in the short run but eventually, those rigs will be taken into production and this will have an effect on the oil price. This was combined with a rise in US crude production, which resulted in oil tumbling and ending the week lower.
The upcoming week
We have an average week ahead of us. Highlights are the RBA meeting minutes, UK and Aussie employment data and the FOMC meeting on Wednesday. Here is the overview of next week:
- Monday: JPY GDP, AUD RBA Meeting Minutes
- Tuesday: EUR German GDP, GBP CPI, USD (Core) Retail Sales
- Wednesday: GBP Average Earnings Index +Bonus, GBP Claimant Count Change, USD Building Permits, USD Crude Oil Inventories, USD FOMC Meeting Minutes
- Thursday: AUD Employment Change, GBP Retail Sales, EUR CPI, USD Philadelphia Fed Manufacturing Index
- Friday: CAD Core CPI
For this weekly forex outlook, I’m keeping an eye on the following pairs:
Follow my published ideas on TradingView.
Let’s start with AUDUSD on the daily charts. We’ve seen this pair going up for a while now, but something’s changed in the past couple of weeks. It made a swing top with a spike to a previous resistance level. Ever since that, it has been moving down. We crossed the moving average, but Friday showed us that there is still some local support left and it moved back up a bit.
There are two scenarios I have in mind for this pair. The first one is that we retrace and retest the moving average, while at the same time creating a head and shoulders formation. If we see price moving down again after that, it would make for a very nice reversal. The other alternative is that the pair moves strongly lower on Monday with the momentum to convince me that there are still more sellers in the running to push this pair down.
Both scenarios might happen, or none might. We’ll have to see. Either way, I have my price alerts set at the top of the left shoulder and a bit below the current price, so I’ll be notified if something happens either way. If it moves down, there’s little structure in the way for the price to move to the 0.76000 area. Interesting pair to watch!
EURJPY is another pair on the daily charts. This pair has been working at creating a market reversal for the past week, helped along with the geopolitical uncertainties we’ve seen. It’s a pair that has seen a steady and over extended uptrend, RSI divergence AND it’s also at a resistance level that has acted before as both support and resistance.
Again, we can see that it has halted a little bit on Friday on a local support level. The game play is similar to the AUDUSD setup: either we’re looking for a retracement and then a move down, or the pair moves down immediately on Monday. My price alert is set at 128.400.
Let’s move down to the 4H charts! USDCAD has shown us a nice uptrend recently, but there’s a definite shift noticeable in the way price behaves. You can see that the bears are stepping in and have tried to push the price down strongly. However, this was only met with a strong push up again. On Friday, we could see another strong pushdown and that’s where we are now.
It’s very clear from the charts that there is a resistance-turned-support level that the price needs to break before we could consider actually taking a position. I could see the price first move up again for a bit, before moving down and breaking the support level. If that happens, 1.26600 is the price level to watch and that’s where I have my alerts set.
Finally, we have a look at XAUAUD on the 1H charts. You might notice that a lot of my setups just look the same. This is because I know what to look for and ignore everything else, that’s how you can master a specific trading style! This pair includes gold, so something to keep in mind is that this setup is very sensitive to anything that happens in the Trump-North-Korea situation.
But technically, this looks very nice. We could see very steady price action up until there was a strong bearish bar. As is often the case after such a move, we could see a retracement to the moving average and that’s where we are now. There is an obvious support level that needs to be broken, my price alerts are set at 1628. Now, just wait until the alerts are triggered!
Good luck trading!
What setups are you looking at? Share your thoughts in the comments!
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