Another weekend, another weekly forex outlook! There wasn’t a weekly outlook last week since I suffered a bad cold, so I took a little step back. The past week, I was feeling better though and besides the weekly outlook, I would like to share some of the setups I’ve taken as well. It was a relatively quiet week with not a lot of high-impact economic news, but plenty of interesting setups nonetheless.
Let’s have a look at the overall market last week. The US dollar gained quite a bit and ended the week with just a small retracement. Gold initially climbed up a bit but the market found resistance, made a double top and sold off in the second part of the week, only to partially rally back up on Friday. Oil pretty much ended where it started, but not without a major swing. After an initial sell-off, better than expected OPEC numbers made oil rally again and it ended the week strong.
Past week trade review
Two weeks ago, I started with the past week trade review. It’s a way for me to highlight some of the trades I took (both winners and losers). This week, I took about 5 trades, two of which I want to share with you. Since I didn’t write a weekly outlook last week, I don’t have a before and after picture. However, I still believe the setups are useful to analyse.
I took a 1H trade on the AUDNZD. I liked this setup since it basically was a textbook head and shoulders pattern after an uptrend with a clean price structure. After the price broke a previous low at 1.04740 (indicated by the black horizontal level), I entered on a retracement to this level. The target for this trade was a previous resistance turned support level at 1.04150. This was also the area where a very strong bullish reaction was previously visible, so I expected the price to return at least to this area.
The move wasn’t sustained though and price reversed a bit later on, but this happens often enough with setups on the 1H charts. If you can get in at a good price and the risk:reward ratio is good, these can be very nice setups.
Next up is a short trade I took on the EURUSD 4H chart. As far as entries and exits go, this was probably one of the best-timed trades I took in a long time! Again, we can see a head and shoulders pattern on this chart. When price moved strongly lower after completing the right shoulder, I put a pending order at the neckline (the black horizontal line) since price often retraces to these areas.
Price barely touched this level and moved lower immediately. My take profit level was initially at 1.06460, but I took profits a bit earlier once I saw that price found support at a previous area. In this case, I could’ve just as well stayed in the trade as the price eventually moved lower again. As by then, I had a 1:2 risk:reward on the trade, I was happy with it regardless.
The upcoming week
Now for the upcoming week! Quite a bit of news from the US (retail sales and FOMC speeches), but not too bad overall! There are bound to be opportunities left to trade in between the major news announcements.
Noteworthy economic news for this week is:
- Monday: JPY GDP
- Tuesday: Chinese, German and UK CPI, US PPI and Yellen speech
- Wednesday: US CPI and retail sales, crude oil inventories and (again) Yellen speech
- Thursday: AU employment numbers, US building permits and Philly Fed manufacturing index
- Friday: UK retail sales
For this weekly forex outlook, I’m keeping an eye on the following pairs:
Follow my published ideas on TradingView.
Let’s kick off with AUDCAD. The pair has recently been in an uptrend and is now at a very interesting level. As you can see on the daily chart (left), we’re at a resistance level that has been tested multiple times before. The pair had an initial reaction to this zone already, visible by the pin bar on the 4H chart (right). The sell-off that followed already provided some opportunities to sell the reversal on the shorter time-frames, but the price managed to climb up again, supported by the 1.0000 psychological level.
So it goes without saying that I want to see a break of this 1.0000 level first before I will get interested in trading this reversal. Price reacts strongly to this level, but at the same time, the powerful upwards trend waves seem to be diminishing. Price has been trading below the moving average, which is another sign that a reversal might be imminent.
My game plan for this pair is as follows: wait for a break and close of the 1.0000 psychological level. At the same time, I want to see a strong bearish push. From then on, I will be looking to enter on a retracement, with a first profit target around the 0.99200 level. Keep in mind though that often, the more a level has been tested, the weaker it becomes. I wouldn’t be surprised if the 1.0000 level holds and price makes a run higher, but we’ll see.
Another Aussie pair! This time with a fairly similar setup as AUDCAD, but on a lower time frame. As you can see on the 4H chart, the price showed a strong reaction when it moved into a major resistance zone. Every time this zone has been tested before, it resulted in a strong sell-off. You can see that price is basically trading in a big range, this being the higher bounds of that range.
When we move to the 1H charts, we can see the perfect trend structure. There have been 4 trend waves already, every time with a larger bearish retracement. That last trend wave showed us a clear RSI divergence as well, which is something we always like to see. On Friday, the price already tried to make a push downwards, visible by the Doji candle.
However, I first want to see lower lows before I get interested. I marked the area with a green rectangle around the 86.700 level. Once this is broken, I’ll look for a retracement of the price to get in.
NZDUSD is a reversal that has already started. I’ve been looking at this pair for the past month, I believe. There were many areas in the trend where a reversal would’ve made sense, but price never made a lower low, so we stayed on the sidelines. Patience is the name of the game in trading. On Wednesday, we could finally see the break we were waiting for. Price moved lower very strongly and unfortunately, I missed the move.
However, the price is stalling a bit around the 0.72000 level. If the price can make a move back up to the 0.72400 level, I’d be interested in selling on that retracement. Since the pair has been a bit volatile lately, I will, however, wait for a clear indication that the price is ready to move lower. This will be a trade where I wait for the momentum shift, only then I’ll get interested.
Finally, EURNZD. This is a WhaM setup and what made me interested is the strong reaction at the nose of the M pattern that has formed. After a very defined uptrend, price created a double top around the 1.48400 level. This is also a previous resistance level. Price moved back lower, but as is often the case with WhaM patterns, we could see a reaction back to the nose line.
Good luck trading!
What setups are you looking at? Share your thoughts in the comments!
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