Hello, champs! The week is done and I’m spending my weekend doing some trade analysis and of course writing the weekly forex outlook! I’ve spent last Thursday travelling on the bullet train from Kyoto to Tokyo and I’m now spending a month in Tokyo. So far, I love it here!
🚅 All aboard the spaceship! 👽🚀After a comfortable Shinkansen ride, I’m now spending a month in Tokyo! I ❤️ Japan, the friendliness and hospitality of its people and the incredible food. Feels like I’m in heaven 😍✌️🇯🇵 . . . . . . . . . . #trading #forextrading #forex #forextrader #fxtrading #fxtrader #tradingforex #forexlifestyle #igdaily #lifestyle #currencytrading #forexsignals #smartforex #trader #tradinglife #dailymotivation #money #winning #success #hustle #finance #grind #instadaily #japan #tokyo #wanderlust #travel #globetrotter #stocks #digitalnomad
Last week was a bit challenging with lots of setups that didn’t have a follow-through. It’s in these times that knowing when to cut a trade is very important. I took 3 trades: the EURUSD 4H short, the USDCHF 4H long and a 1H short on EURNZD. It ended up being a break-even week for me.
If you want to keep up to date on setups during the week, have a look at my TradingView page. During the week, I will often publish a chart setup over there as well if I think it’s worth looking at.
Current market behaviour
The dollar took a dive this week, mostly due to disappointing numbers. The downtrend was already set in the middle of the week, but a smaller than expected NFP number made the greenback tank into the weekend.
As expected, we could see an inverse reaction on gold. The metal was flirting with a reversal to the downside, but the payrolls numbers pushed it firmly higher for the week.
While the oil inventories numbers are all better than expected, crude still was down for the week. From a technical perspective, the move down was ignited last week when the OPEC deal wasn’t what investors hoped. This week’s move seems to be just the continuation of that, purely on technicals.
Past week trade review
In this week’s trade review, I want to highlight a 1H short trade I took on EURNZD.
EURNZD 1H short
In this week’s trade review, I’m going to look at a trade I took on Friday. This was a play on the 1H charts and it was a combination of a reversal setup with a strong support & resistance setup. If you look at the higher timeframes, the overall trend was clearly down. You can even see this on the 1H chart below:
At some point (on the left side of the chart), some local support was established. The price bounced off 3 or 4 times from that support, before breaking it convincingly. The price moved further down and then started to move back up. In a way, this was just a break-and-retest play. A break of the support and subsequently a retest of the same support, which had turned into resistance.
We see that the price spiked into this resistance and moved down immediately. Then the price moved sideways a bit, again establishing a local support level. It was only after the price broke this level, that I got the confidence to enter a trade. The price continued to move down without much issue and I exited the trade for a little over 2R before the NFP data was released.
Basically, this was the motivation for this trade:
- overall trend down with clean trend waves
- break and retest setup
- spike of resistance, signifying a strong level
- break of local support, continuation down
The upcoming week
With NFP week behind us, let’s look at the next week. It’s a pretty low-news week, starting off with a holiday for a couple of countries. The most important news will be the UK elections on Thursday. Here are the main points:
- Monday: CHF, NZD and Germany holiday, GBP Services PMI, USD ISM Non-Manufacturing PMI
- Tuesday: AUD Interest Rate Decision, USD JOLTs Job Openings, CAD Ivey PMI
- Wednesday: AUD GDP, USD Crude Oil Inventories
- Thursday: UK Elections, JPY GDP, EUR ECB Interest Rate Decision
- Friday: GBP Manufacturing Production, CAD Employment numbers
For this weekly forex outlook, I’m keeping an eye on the following pairs:
Follow my published ideas on TradingView.
For our first setup, we have a look at the 4H chart of AUDNZD. If we have a quick look at the daily (left), we can see that the price has been in a long-term downtrend and is now approaching a previous support level (indicated by the blue rectangle). This makes it interesting enough to have a closer look.
On the four hour chart, we can see a clean downtrend with multiple price swings that all respect the moving average. There are no signs of a reversal yet, but I wanted to put this in my outlook nevertheless since there’s a good chance that we will see some reaction. I’ve indicated on the chart the area I want to see broken to the upside, before I become interested. If we see a good bounce from the support level, this might be an interesting setup.
This next setup is on a lower timeframe, namely the 1H charts. The price has been in an uptrend for a while and the blue rectangle at the top of the chart is a very strong resistance level that is being tested at the moment. There’s RSI divergence and the price is testing the 200% Fibonacci extension levels.
We can see a bit of bearish momentum recently, though. On Friday, we could see stronger bearish bars and the week closed with a bearish engulfing bar. Of course, that’s not enough to get me in a position, so I’m looking for a break of the 114.400 level before I get interested.
The next setup is a classic reversal setup. On the daily charts (left), we can see that the price is approaching the previous swing high. The Euro has been in an uptrend for a while now and while there were some attempts to push the Euro down again, it hasn’t happened. But for EURGBP, the chart is starting to look good. We can see RSI divergence and the price is again reaching the 200% Fibonacci extension level.
On the 4H chart, we see an uptrend with multiple upswings. The price might not be ready to move lower yet, but I will be looking for signals that a push lower is in the books. The first area I want to see broken is the 0.87000 level. A more conservative entry would be to only enter a little bit lower, around the 0.86600 area.
Finally, a setup for USDNOK on the daily charts. This is a relatively simple setup, with a previous trend that was slowly creeping up. Very deep trend swings in the uptrend and it finally broke lower. What we can see now, is that the price has made a lower low, followed by a retracement to a previous support level.
The price action on Friday then printed a bearish engulfing candle with a very strong close. This was obviously due to the disappointing NFP numbers but paints an interesting picture for next week. Both technically and fundamentally, I can see the USD move lower and I’ll be looking to take a position early next week.
Good luck trading!
What setups are you looking at? Share your thoughts in the comments!
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