AUDNZD

Weekly Forex Outlook: September 16

Well, what a week this was for reversal traders! There were so many nice setups, plenty of sustained moves and much pips to be had in the past week. September is usually characterised by good trading action and this month is no different. We will go over some of the setups from the outlook of last week and see how they did.

 


 

Let’s start with EURGBP on the daily charts. If you still remember, EURGBP was my favourite setup of last week. We could see a strong bearish behaviour, a retest of the moving average and then a continued move down. This is how the chart looked last week:

 

EURGBP forex outlook

 

This is what happened:

 

EURGBP review

 

We don’t always get nice moves like these, but when they happen, they can easily make up so much of the smaller losses that are part of trading. We got continued moves down for the entire week and on Friday, the price just came short of reaching the target I had in mind. Not taking any chances, I took my unrealised profits on this trade and closed it out before the weekend for around a 3R profit.

 

Another trade setup of last week was NZDJPY, also on the daily chart. This setup was characterised by a strong move down that was flattening out and the upsloping trend line I mentioned in the outlook last week. Here was the chart I used:

 

NZDJPY forex outlook

 

During this week, this happened:

 

NZDJPY review

 

Again, we could see a strong momentum candle to the upside here. It broke the level I mentioned, so this was the perfect opportunity to get in. After a moderate retracement, the price continued up on Friday and I can see this pair climb higher next week as there isn’t really a strong resistance level that is holding it back.

 

Of course, geopolitical matters such as the firing of test rockets by North-Korea has an influence on the price as well (specifically the JPY), but technically, this setup still looks solid. The other two setups in my outlook (EURJPY and USDSEK) didn’t trigger as none of the levels I marked got broken. No entry trigger means no trades, so no money lost either!

 

 

Current market behaviour

 

But back to the overall market picture. What happened last week? Quite a bit, apparently. Here are the charts:

 

weekly forex outlook

 

The dollar started the week strong with a move up that lasted a couple of days, mainly on the sentiment that the market was relieved that there wasn’t a North-Korean rocket test during the weekend. It took a dive in the second part of the week, though, and ended the week only a little bit higher than it opened.

 

Gold took the inverse path and moved lower for the most part of the week. Finally, oil rallied for the entire week. The supply issues related to hurricane Irma kept pushing the price up and crude ended the week strongly higher.

 

 

The upcoming week

 

The upcoming week is very average – news-wise. Monday starts off with a Japanese holiday, so less activity on the JPY is expected. The Fed interest rate decision on Wednesday is probably the biggest item on the list for this week, but Friday is also a big day for Canada with both CPI and retail sales data. Here is the overview of next week:

 

  • Monday: Japanese holiday (Respect for the Aged Day), EUR CPI
  • Tuesday: EUR German ZEW Economic Sentiment, USD Building Permits, USD Housing Starts
  • Wednesday: GBP Retail Sales, USD Existing Home Sales, USD Crude Oil Inventories, USD Fed Interest Rate Decision
  • Thursday: NZD GDP, USD Philadelphia Fed Manufacturing Index
  • Friday: EUR German Manufacturing PMI, CAD Core CPI, CAD Core Retail Sales

 

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

 

Follow my published ideas on TradingView.

 

 

AUDNZD

 

A nice setup on the AUDNZD daily chart to start off with! After a long uptrend, we can see that this pair made a double top (see the red arrows) and then broke the trend line I drew along the price. That trend line break was really good already but the pair decided to retrace back a little bit, only to crash back down on Friday.

 

This leaves us with a very favourable setup for the next week! Friday showed us an engulfing bar with much bearish momentum and the price already failed to make higher highs after the double top. That double top happened exactly at the 161.80% Fibonacci extension level, which indicates trend exhaustion. The bearish strength now just shows that this pair might want to go down.

 

The careful play is to wait until the price can break 1.09500, while the more risky play is to enter at market on Monday. I’ll probably wait to see how it opens, but it’s definitely a nice setup to start the week with!

 

AUDNZD

 

 

CADCHF

 

CADCHF does something else here. We are looking at this pair on the 4H charts (to the right), where we can see a market top with a peak, followed by a strong move down. But what really gets me interested is that this price top happened exactly at a strong previous resistance level, which you can see on the weekly charts on the left.

 

If this level holds, we might see a reversal of the uptrend. That trend has been going for a long time already and while it’s not the cleanest, I reckon that if the price can break the trend line I’ve drawn on the chart, we can get some good downwards action. I have a price alert around the 0.78570 level.

 

CADCHF

 

 

EURNZD

 

Next up is EURNZD on the daily, which is looking really nice! We’ve seen this pattern a few times now and it’s a very good signal that more bearish momentum might be coming. This is how it goes: after a long uptrend, we can see a double top, followed by a move lower, followed by a retest of a local lower resistance. Friday printed an engulfing bar on that retest, which shows that the bears are in control.

 

The price has tried to break a local support level before, though. That’s why I’m a bit more conservative and want to see this level broken first, before taking action. My alert is on 1.63200, now we wait.

 

EURNZD

 

 

EURUSD

 

And finally, the pair that seems to go up indefinitely! But still, some change might be coming. EURUSD on the daily chart is starting to show signs that a reversal might be happening soon. One of those signs is that last week pretty much printed most of a head and shoulders pattern, but the right shoulder hasn’t been completed. Yet.

 

Still, this pair has been super overextended and it seems to have difficulties in breaking the 1.2000 level for good. There were some attempts, but none of them was successful for too long. If the price now moves lower in the new week, say below 1.18300, I’ll have no problem selling the euro-dollar. We’re not there yet but as always, we just wait.

 

EURUSD

 

 

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.

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