AUDUSD Forex outlook

Weekly forex outlook: January 21

It’s weekend, so I’m back with my weekly preview of the most interesting setups! Last week was a bit of a dud for me, with multiple setups either not materialising (AUDUSD, Gold) or being quite hard to trade (I’m looking at you, Theresa May and EURGBP). On the one hand, these situations make it clear how worthwhile it is to wait for confirmation before getting into a setup. On the other hand, it shows that being a trader is never easy! Last week ended in a loss for me, which happens. This is totally fine and only motivates me to keep on learning and improving!


The big news last week happened on Friday, with the inauguration of president Trump. Because Trump also gave an inauguration speech, I kept on the sidelines for most of Friday. The speech was quite moderate and the USD seemed to be relatively unaffected. However, let’s see how the market opens on Monday.


The dollar saw an initial increase in the first part of last week, but then gave some of its gains back in the second part. It seems that Gold is at a turning point (which I talked about in last week’s market outlook), but ended the week only slightly higher up. It still shows signs of a pending reversal, but it’s too soon to tell and I’d like to see the price move lower before taking action. Oil ended up higher last week, but the price seems to be ranging for now in search for a clear trend.


Market overview



The upcoming week


The upcoming week has nothing too special in store for us. We have the usual economic news reports and speeches, but it’ll stay relatively quiet. Noteworthy is that on Thursday, Australia takes a day off for Australia day.


Noteworthy economic news for this week is:

  • Monday: EU ECB Draghi speech
  • Tuesday: US existing home sales
  • Wednesday: AU CPI and US crude oil inventories
  • Thursday: NZ CPI, NZ RBNZ Wheeler speech, UK GDP and US new home sales
  • Friday: JPY unemployment rates, JPY CPI, US GDP and US durable goods.



For this weekly forex outlook, I’m keeping an eye on the following pairs:


Follow my published ideas on TradingView.





This week, I’m starting with AUDCAD. The pair has been in an uptrend for quite some time and has now approached an interesting resistance level. As you can see on the daily chart (left), this zone held as resistance for 3 of the last 4 upswings. Multiple times, we could see a strong sell-off. This could potentially happen here as well.


Although price shows some initial push back from this level, the overall uptrend is still strong. Notice the strong bullish upswings and very small retracements. While there is no sign of a reversal yet, I’m keeping my eye on this level.


There is a little bit of RSI divergence, which is a good initial sign. To switch to a bearish bias, however, I need to see price move and close at least below the 1.00300 level.  Once this happens and we crossed the moving average, there is a lot of potential downside with very little structure in the way of price moving lower.


AUDCAD Forex Outlook





We’re back with AUDUSD! This is the second week the pair makes it to our watchlist, and I still very much believe a reversal is possible. The price point at which I thought that the reversal would happen actually broke after a small retracement. Because I aways want to see confirmation before entering a reversal setup, I didn’t yet have any order in so no worries. I’m not trying to enter at tops and bottoms. I prefer the higher probability setups so often patience is the game!


If we look at how price progressed this week, we can find multiple clues as to why price might be reversing soon. I traced the price swings with arrows. From this, you can see we move from a trend structure of long upswings and short retracements to a structure of shorter upswings and longer retracements. This in itself is a very good measure of how powerful a trend is.


Additionally, there are multiple swings that show RSI divergence, another clue that the trend is losing steam. On the last two swings, the retracements also happened quite fast, showing large bearish bars. However, we wait until price makes lower lows and lower highs, and for this, I want to see price close below the 0.75000 level (indicated in green). If you want to take the conservative approach, it might even be wise to wait until price moved below the origin of the thrust bar (indicated in orange), as it is likely that sellers will find some support there as well.


AUDUSD Forex outlook





NZDJPY has been in a range for the past couple of weeks. What first seemed like an interesting reversal setup, basically ended up going horizontal. I’ve indicated the range in orange and price largely respected this but broke out to the upside last week. Since then, we saw a retracement back to the previous resistance turned support.


What I’m looking for in this setup is a retest of the upper boundary of the range, to then continue upwards and test the resistance level at 83.500. Although this isn’t one of my usual reversal setups, it offers us a potential trade where the risk to reward can be quite good. I will be monitoring price action around the green rectangle and jump on board if the market has found some more bulls to drive price higher.


NZDJPY forex outlook





Gold is the second setup that I’m transferring from last week’s outlook to this week. It’s actually very similar in nature to the AUDUSD price chart. This should come as no surprise since gold and the Aussie dollar are highly correlated. As we were also waiting for confirmation to get in on this pair, it triggered no trade entry so nothing’s lost.


What we can see here is that price is starting to make the start of a rounded reversal. On the way up, you can see multiple pin bars to the downside. This indicates that multiple times, gold already tried to move lower but there were still enough bulls to move the price higher. As is very common with these reversal setups, we can see RSI divergence. What’s more: just before the close on Friday, gold showed us a nice pin bar, further confirming a potential move to the downside.


As always, I’m waiting for the price to break lower and look to enter with momentum on my side. As such, I’m looking for a break of the 1198 – 1200 zone first.


XAUUSD forex outlook



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.

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I'm a full-time, independent forex trader. I've been trading for over 10 years and specialise in reversal trading, trading psychology, algorithmic trading and coaching others. When I'm not trading, I'll either be travelling the world or rock climbing (likely both). Read my story here.

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