XAUAUD forex

Weekly Forex Outlook: July 31

Hi there, traders! How has your trading been last week? You might’ve noticed that for the past weeks, I took some time off. Partially because I’ve travelled back to Belgium but also as a sort of summer holiday, to make the most of meeting up with my friends in Japan. But now I’m back! This will be a shorter outlook as I won’t include trade reviews this time, but of course, we’ll have a look at the best setups for this week!

 

 

 

Current market behaviour

 

Last week, we had a US dollar that tanked across the board. It fell against all major currencies except for the Swiss Franc. This is noticeable when we look at our weekly outlook for the DXY. It shows a bit erratic price movement because last week was filled with news releases and of course the Fed interest rate decision but overall, it closed the week sharply lower.

 

weekly outlook

 

We’re seeing a very expected inverse behaviour from gold, who has been rallying for the past week. The US economy isn’t showing the performance traders hoped for, and continued tensions with North-Korea (who launched another ICBM) don’t help either.

 

Finally, oil has been on a spectacular uptrend. Every data point related to oil inventories has beaten expectations and the technicals supported the fundamental view, so the only way is up. The way it’s going right now, I could easily see crude back in the $51-$52 regions. Let’s see what this week brings.

 

 

 

The upcoming week

 

This week is NFP week! Be careful trading the USD close to Friday. Other than that, there’s a Swiss National Holiday on Tuesday, so there will probably be a bit less (or more volatile) activity on the CHF. We do have the usual slew of news releases, with the Aussie Interest Rate Decision, NZD unemployment data, GBP interest rate decision as some of the other highlights. Here is the overview of next week:

 

  • Monday: EUR CPI, USD Pending Home Sales
  • Tuesday: Switzerland National Holiday, AUD RBA Interest Rate Decision and Statement, EUR German Manufacturing PMI and Unemployment Change, GBP Manufacturing PMI, USD ISM Manufacturing PMI
  • Wednesday: NZD Employment Change and Unemployment Rate, GBP Construction PMI, USD Nonfarm Employment Change, USD Crude Oil Inventories, USD FOMC Member Mester and Williams speak
  • Thursday: GBP BoE Inflation Report, Interest Rate Decision and BoE Gov. Carney speaks, USD ISM Non-Manufacturing PMI
  • Friday: AUD Monetary Policy Statement, AUD Retail Sales, USD Nonfarm Payrolls and Unemployment Rate, CAD Employment Change and Unemployment Rate, CAD Ivey PMI

 

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

 

Follow my published ideas on TradingView.

 

 

NZDCHF

 

Let’s start off with a setup on the 1H charts. This pair has been in an uptrend for quite a while now and is definitely showing signs of slowing down. The SMA isn’t as steep anymore, we can see RSI divergence and the Fibonacci extension just reached the 200.0% oversold level.

 

But what really gets me interested, is the location of the reversal. You can see the big blue rectangle at the top of the screenshot. This marks the highs of previous swings. This is an area that has been tested multiple times but the price failed every time to break through. It’s clear from price action that this level still holds as a resistance zone and if the current move lower persists, I reckon we might see a larger move down.

 

As always, I won’t jump in immediately. Specifically, I’m waiting for the price to break the 0.72300 level to the downside. If that happens with enough momentum, I’ll likely take a short position on this pair.

 

NZDCHF forex outlook

 

 

NZDJPY

 

Here’s another NZD pair, but this time on a different timeframe. We’re looking at NZDJPY on the daily and although this one is quite different from our previous setup, it also shares some similarities. Have a look at the horizontal line at the top of the chart: this is exactly the level that has acted as support twice already in the past! Every single time, the price spiked down again once it touched the level and this time seems to be no different.

 

All the other ingredients are there too, of course. A long uptrend, clean price action, RSI divergence and a much stronger bearish presence in the past couple of weeks. This feels like a pair that wants to move lower and I’m waiting for the right time for it to happen.

 

There is an obvious local support level (marked up on my chart as well). Price bounced off this level a few times on the way up and unless the price makes another move higher, I want to see this level broken first. By trading this way, we might not always get the earliest entry, but our setups will be much higher quality and have a higher likelihood of working out. If we see a break below 82.100, I might get interested.

 

NZDJPY forex outlook

 

 

USDWTI

 

USDWTI on the 4H charts is interesting due to its location. When we look at the overall context of the charts, we can see that the pair is in a larger time frame downtrend. The pair is consistently making lower highs and lower lows. Now, it has arrived at the upper trendline of this trend again. That’s where I get interested.

 

When we look at the right pane (which is the 4H), we can see an immediate reaction when the price hits that trend line! That by itself isn’t enough for me to get interested, but it does make for an interesting setup to develop. If the pair is actually going down, there’s plenty of downside possible so I’m not in a hurry to get into a position. I’ve marked an area on the charts that I want to see broken to the downside, then I will get interested.

 

USDWTI forex

 

 

XAUAUD

 

Finally, gold-Aussie dollar! It’s a pair that shows interesting price action at a key level, which is basically what we’re looking for. It has been in a downtrend for a while now and is making completely different price swings recently! The pair has been making higher lows and higher highs, which indicates that we’re in a transition zone and potentially at the beginning of a new uptrend.

 

We could see some resistance at the zone where the price currently is, though. It has functioned as a previous support and resistance zone, so I want to first see the price break through that. If it manages to close above 1595, that’s when we can potentially move to action.

 

XAUAUD forex

 

 

Good luck trading!

 

What setups are you looking at? Share your thoughts in the comments!

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Felix

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.