USDCAD

Weekly Forex Outlook: October 1

Good morning, traders! 👋 It’s the weekend again so after an interesting week, I’m back writing my weekly outlook! How was your trading week? Please let me know in the comments! Again, this was a good week for reversal traders and there were plenty of pips to be made by following my outlook.

 

We got some excellent market moves in the beginning of the week and a bit more mixed action in the second part of the week. As you’ll see, every 4 setups of last week’s outlook materialised in some way and I’d like to go over them right now.

 

Out for a walk in the afternoon, I ❤️ daily life in Tokyo! 🇯🇵 One of the benefits of being a trader is having the freedom to create the life you want. Not being stuck in that 9-5 routine. But the truth is that it takes hard work and yes, you won’t like to do some of that work! Initial motivation only gets you so far, you need grit and persistence to keep going. It will take time but eventually, it’ll pay off. Remember: Most people overestimate what they can do in one year and underestimate what they can do in ten years. ✌️🙏🇯🇵 . . . . . . . . . . #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

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Past Week Review

 

The first one was AUDUSD on the daily charts. Remember that we had 3 spikes up and I indicated that if the price managed to break the trend line and the local support, this would be a good time to enter? Let’s see what happened:

 

AUDUSD review

 

On Tuesday, price did break the levels I indicated. I took a trade on this (and indicated this in a mid-week update on Twitter) and for the rest of the week, it continued to move down. It did find local support at the previous swing low, so that’s something to be aware of. I took some profits at this point and will likely increase my position again once I see that this level can be broken.

 

 

Next up on the list was CADCHF, also on the daily. I kind of lost all markup on this chart due to a TradingView bug, but you can still see what happened to the price during the week:

 

CADCHF review

 

These were the entry conditions I mentioned in my outlook: a break of the trend line and move beyond the first blue rectangle – the local support. We came close on Monday, but actually the price never really broke the support zone. This was very noticeable on Tuesday when we got a bounce back up.

 

Wednesday was the most interesting day for me: a rejection of previous highs and a strong move down (this is one of the variations of the pin and drive entry!). This is where I got in. The price action for the rest of the week wasn’t super convincing, but we still got a decent move lower and I can see this pair going much lower still. Patience is of course required with these daily setups, we need to give our winners the time to run!

 

 

Next up is EURJPY on the 4H charts. This would probably be my favourite setup of last week. After a Monday open gap to the downside, this pair quickly moved up again but then moved sharply lower:

 

EURJPY review

 

I’ve indicated the candle that showed me strong momentum to the downside after the Monday open failed to make higher highs. This was followed by an even stronger move down so when I woke up on Tuesday, I was welcomed with a very nice result of this trade hitting its take profit.

 

The pair has currently retraced 50% from an intermediate support zone. It is possible that next week brings us a continuation move lower, as this retracement has been very gradual. However, as this isn’t a reversal setup anymore, I’ll probably look for better opportunities in the market.

 

Finally, there’s also USDSGD on the daily. I’ll leave it to you to see what happened there, but let me just say that this pair has triggered an entry as well. We need some more USD strength to give this one the momentum it needs, but it could still be an interesting one for next week!

 

 

Current market behaviour

 

Let’s have a look at the overall market now. A lot of the setups of my last week’s outlook were depending on USD strength and, well, the dollar delivered. We could see a strong move up for a big part of the week. Only in the second part of the week, we could see some retracement, but nothing too serious. I still believe we might see a “dollar revival” in the coming weeks but as we’re not in the business of predicting, I’d rather just see what happens 🙂

 

weekly forex outlook

 

With the exception of a strong move up that quickly got pushed down again, gold was moving inversely from the USD. The bullion ended the week quite a bit lower than it started. Finally, oil is in a recovery process. Finally, oil moved up strongly in the beginning of the week but saw unpredictable behaviour on Thursday. It still ended the week higher.

 

 

The upcoming week

 

Lots of news releases next week. The one on the top of the list is obviously NFP on Friday. We are seeing a lot of PMI data throughout the week and traders will also be looking at two other important events: the RBA interest rate decision on Tuesday and the ECB, who are publishing the account of their monetary policy meeting on Thursday. Here is the overview of next week:

 

  • Monday: JPY Tankan Large (Non-)Manufacturers Index, CHF Retail Sales, EUR German Manufacturing PMI, EUR Manufacturing PMI, GBP Manufacturing PMI, USD ISM Manufacturing PMI
  • Tuesday: German Holiday, AUD RBA Interest Rate Decision and Statement, GBP Construction PMI
  • Wednesday: GBP Services PMI, USD ADP Nonfarm Employment Change, USD ISM Non-Manufacturing PMI, USD Crude Oil Inventories
  • Thursday: AUD Retail Sales, EUR ECB Publishes Account of Monetary Policy Meeting
  • Friday: USD Nonfarm Payrolls, USD Unemployment Rate, CAD Employment Change, CAD Ivey PMI

 

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

 

Follow my published ideas on TradingView.

 

 

GBPCAD

 

We have two GBP setups this week and this GBPCAD one on the 4H is the first. There are multiple things I like about this setup: a good uptrend with a 200% Fibonacci extension reached and RSI divergence. Price is flattening out, with price action currently happening mostly in a range. But what is interesting is the spike we saw on Friday last week.

 

This spike happened just at a previous major swing high. If you’d scroll to the left a bit on the chart, you would see that this exact point is where a previous high happened, which makes this a significant resistance level. The spike indicates that it couldn’t break this level, so for now, I’m looking to the bearish side of things. But first, we need some things to happen.

 

There is a trend line I want to see broken and there is a level that the price needs to break. I have a price alert at 1.56700 (just below the blue rectangle) and if price manages to break this with some momentum, we have our entry trigger.

 

GBPCAD

 

 

GBPCHF

 

Another GBP setup on the 4H, this time GBPCHF. We can immediately see that this setup is a bit further along already, but it’s still an interesting one to look at. After a decent uptrend, the price made a head and shoulders formation (remember that textbook H&S almost never happen) and the price is currently very close to breaking the neckline.

 

Of course, everything else is also present: RSI divergence, Fibonacci extension and a flattening of the trend. And look at that huge (yuge?) bearish bar in the middle of the H&S formation! It shows that there is bearish momentum but as reversal traders, we don’t want to get in too soon. When the price can break the 1.29500 level with some momentum, I’ll get interested in shorting this setup.

 

GBPCHF

 

 

USDCAD

 

Now we move away from the pound and have a look at a USD setup: USDCAD on the 4H charts. This is a setup that still needs some time to develop, as the price hasn’t made any lower highs or lower lows yet. Still, it’s my favourite setup of the week:

 

USDCAD

 

Still, when you look at the spike on Friday, that tells us a story. Especially if you know where this happened. You can see the black horizontal line, which is a level I put on my charts because there was a major swing low in May 2016 that happened exactly at this level. A chart will make this much clearer:

 

USDCAD_D

 

Exactly at this point, the price spiked up and shot back down! Interesting. Now, of course, we need a decent push down first before we can get in. I marked the level on the first chart, which pretty much means that if the price can break the 1.24200 level with momentum, I’ll be interested in shorting this pair.

 

 

USDJPY

 

And finally, USDJPY on the 4H. This is again a classical reversal: good uptrend, flattening of the trend, RSI divergence and now ranging. This isn’t the strongest setup of this week but it’s interesting nonetheless. The reason I’ve decided to include this one is that if we can see a strong push lower, I’d still be interested in shorting this pair.

 

But there are two levels to break. I’ve indicated both on my chart and that’s where I think some caution is useful. If the first level breaks, I might only take a partial position and wait until there is enough momentum to break the second level as well. But for now, I’ve set my price alert at 112.241. We’ll see what next week brings!

 

USDJPY

 

 

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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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.

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