It’s the first day of the new year and I couldn’t be more excited about 2017! There are so many exciting things in the pipeline so I can’t wait to get going. But first, let’s pick up the weekly outlooks again.
I’ve skipped last week’s outlooks since I wasn’t trading during the holiday period. Not trading during times of low liquidity (when most traders are not trading anyway) is always good advice, since you can really get unexpected and volatile moves if the market is so thin.
A prime example of this is a move that happened last week on Thursday, when the euro suddenly spiked up without any news announcements. Algo strategies are then often blamed, but regardless of the cause of this spike, it shows that your trades can very easily get wiped out during times of low liquidity.
The upcoming week
Traditionally, the first week of the year starts off relatively quiet and this year is no different. Monday is an observed holiday for the US and UK, so expect a relatively quiet market until Tuesday. This week is NFP week though, so keep an eye on Friday.
Noteworthy economic news for this week is:
- Tuesday: US ISM Manufacturing PMI, German Unemployment numbers
- Wednesday: EU CPI, US FOMC
- Thursday: ECB Monetary Policy Meeting Accounts, US ISM Non-manufacturing PMI
- Friday: US NFP, US Unemployment numbers, CAD Unemployment numbers
For this weekly forex outlook, I’m keeping an eye on the following pairs:
Follow my published ideas on TradingView.
As the first pair, we’re going to have a look at AUDUSD. The pair has been on a downtrend for a while now and on the daily chart (left side), we can see that the price touched a major support level last week. If we move to the 4H, we can see that there’s quite a nice trend structure down. Additionally, it has all the characteristics of a classic rounding reversal: RSI divergence and a double bottom followed by a higher high.
Price has moved a bit lower, but if the bulls can keep the price from moving down too much, there is a nice buying opportunity on this pair. One of the risks is that this setup assumes that the USD will continue its downwards push of the last week, so I’m keeping an eye on the DXY as well.
CADJPY is a pair that has been in a long uptrend for the past two months. Recently though, it broke the trend line and showed the beginnings of a reversal. I’ve already taken a trade on that initial move down, but I believe that price could still move further down. If we see a push down again, there is still plenty of downside potential without too many intermediate levels that could prove to be an issue.
If we look at the 4H chart on the right, we can see that after the initial move down, price has retraced quite quickly to the upside again. This might provide us with a new entry, but the move up was quite strong. I’ll be waiting to enter until I see price action that confirms that the bullish momentum has passed and price is ready to continue its move down.
With GBPCHF, I’m eyeing a buy for multiple reasons. Firstly, the pair has been in a downtrend, but approached a significant support level last week. This is very visible on the daily chart (left), with the support level also being the bottom of the range the pair was in a while ago. The spike in EUR pairs I was talking about in the introduction also happened here, and since this happens exactly at the previous support level, this also acts as a bullish signal.
But rather than to only rely on that spike, we can also see a nice downtrend with multiple waves and RSI divergence on the last wave. All these things are not yet enough for me to enter, but I’ll be keeping a very close eye on this pair. I have an alert set around the 1.26000 level. If price is able to break and close beyond that, I can see a potential long trade happening.
NZDUSD is nearing a long-term uptrend trend line that is visible on the daily chart (left). At the same time, this level is also a resistance level from previous swings. Those two things along make it an interesting level and we can see that last week, price initially already reacted to it. The price structure on the 4H is very nice, with a rounding reversal quite similar to what we could see in AUDUSD.
It is very possible that the market will want to test the resistance-turned-support level once again and only then move further up, so I’ll be careful with this trade. The most recent move to the downside on the 4H is relatively powerful, so I will be in wait and see mode for the first part of the week. However, if the market can find a renewed bullish momentum, we could see a very nice upside on this pair. As with AUDUSD, this is counting on the fact that the bullish USD is losing steam, something that is far from sure given the strong bullishness we’ve seen after the Trump election. Nevertheless, I believe this trade setup has the potential to unfold.
Good luck trading!
What setups are you looking at? Share your thoughts in the comments!
Risk disclaimer: The information presented on Smart Forex Learning is for educational and entertainment purposes only. Nothing on this website serves as investment advice or recommendations. Trading is risky and you can lose more than your initial investment. Smart Forex Learning cannot be held responsible for any decisions visitors make. Please consult a financial advisor before making any investment decisions.