AUDUSD forex setup

Weekly Forex Outlook: September 24

Yo, crew! ✌️ How has your trading week been? This week was again pretty good for reversal traders, with many setups going through! A few of the setups of my last week’s outlook did also materialise, so we’ll go over them in a few moments.

 

 

The first one was AUDNZD on the daily charts. I indicated last week that there was a double top, followed by a move down. As expected, the price kept on moving downwards and even though these are not the types of movements we saw two weeks ago, it’s still a very nice development.

 

The price is approaching a smaller intermediate support level, so while I think this setup still has room to move lower, conservative traders might want to take some profits off the table already. I’m still in this trade since, with daily setups, closing trades over the weekend is not that important.

 

AUDNZD review

 

 

The next setup is CADCHF on the 4H charts. We got a pretty early move on this pair and initially, we got the break of the trend line and the move lower. I indicated a potential entry as the trend line and the horizontal support was broken at that point:

 

CADCHF review

 

However, not every trade will see the follow-through you want. After the initial move down, we got a smaller retracement and some sideways movement. At this point, it would’ve probably been good to take some profits off the table. Eventually, the price moved back into the entry, which would definitely be a trigger for me to close the trade completely.

 

The setup was good, the initial move was good, but then it got a bit messy. It happens, not all of our trades are picture-perfect textbook examples of what should happen. It’s how you manage these types of trades that will make the difference between winning and losing.

 

 

Finally, I want to talk about EURUSD on the daily charts. While this setup didn’t trigger any trade for us, it’s still interesting to have a look at. If you remember correctly, I said the following about this setup:

 

Still, this pair has been super overextended and it seems to have difficulties in breaking the 1.2000 level for good.

 

EURUSD review

 

After one week of trading, it respected the 1.2000 level pretty well! The right shoulder of the H&S setup has now been formed and the reason I’m including this pair in my review is that it’s still a very interesting setup to keep an eye on. Friday printed a bearish pin bar and if we get follow-through to the downside early next week, this will probably be one of my favourite setups!

 

 

Current market behaviour

 

But back to the overall market picture. We had an interesting week, but the main item of the week was the FOMC meeting on Wednesday. This event showed a pretty hawkish Fed, which resulted in a strong push up for the US dollar. The DXY has since then given some of its gains back, but still ended the week a bit higher than it started.

 

weekly forex outlook

 

Gold has been selling off pretty strongly for the past week. Of course, this move was helped by the FOMC meeting, which pulled away some of the money from risk-off assets, but nevertheless, gold ended the week much lower.

 

Oil is a bit of a difficult one to trade right now. It shows very erratic price action behaviour and I’m currently staying clear from it. Lately, it’s driven a lot by natural disaster events and those are difficult to anticipate. Regardless, crude ended the week higher.

 

 

The upcoming week

 

The upcoming week will be interesting. The big-ticket item is the German election on Sunday. Depending on the outcome, things can get a bit volatile for euro-related currencies on Monday, so it’s probably best to take a cautious stance in the markets.

 

Around mid-week, USD data such as consumer confidence, home sales, durable goods and GDP is dominating the news releases. Friday sees a whole slew of Japanese data as well. Here is the overview of next week:

 

  • Sunday: EUR German Federal Election
  • Monday: EUR German Ifo Business Climate
  • Tuesday: NZD Trade Balance, USD CB Consumer Confidence, USD New Home Sales
  • Wednesday: GBP GDP, USD Core Durable Goods Orders, USD Pending Home Sales, USD Crude Oil Inventories
  • Thursday: RBNZ Interest Rate Decision, USD GDP
  • Friday: JPY Household Spending, CPI, Retail Sales, EUR German Unemployment Change, EUR CPI, CAD GDP

 

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

 

Follow my published ideas on TradingView.

 

 

AUDUSD

 

The first setup we’re starting off with is AUDUSD on the daily chart. As you can see, this pair has been pretty much ranging after a strong uptrend. However, it’s having a lot of difficulties breaking a strong resistance level created by previous highs. You can see three spikes into this level, all of them were pretty strongly sold down again.

 

Especially on the last try, the pair couldn’t make higher highs again and the bearish bar that followed was very strong. To sell this pair, I would want to see a few things happening, though. First, it should break the 0.79000 level (indicated by the black horizontal line). At this point, it will probably also have broken the up sloping trend line that the price has been respecting so far.

 

If we get a break of those two levels, I’ll be ready to short this pair.

 

AUDUSD forex setup

 

 

CADCHF

 

A little less clean is this CADCHF setup on the daily, but still very interesting. The pair has been in an uptrend for a while now and when we look at the Fibonacci extension levels on this uptrend, it’s very much overextended. Since the last major price swing, the RSI has been diverging from the price and recently, it has put in a market top, exactly at a very significant previous swing high.

 

I want to see the price break the upsloping trendline first and also move past the horizontal blue rectangle just below the price. This matches the 0.78000 price level, which I want to see broken with some good momentum to the downside. If this happens, I will take a short with the initial target around the 0.75500 price level. The price could easily move lower still and a potential second target would be around the 0.72700 price area.

 

CADCHF forex setup

 

 

EURJPY

 

Next up is a 4H setup on EURJPY. I think this is the weakest setup of the 4 of this week and the reason is that, while it looks like the price might reverse soon, it hasn’t run into any resistance level that might support this reversal idea. Still, if price gives us a good signal to enter, it’s still a setup worth taking but I’ll be monitoring the chart on this one extra closely.

 

On paper, this looks like a nice setup. The price action is clean, the trend has been up for what seems to be an eternity and is well overextended. RSI is pointing down while the price is making (moderate) new highs. The level to watch is the previous push down, which is around the 133.500 round number. If it manages to break this level, we have our entry trigger.

 

EURJPY forex setup

 

 

USDSGD

 

To finish the setups for this week, I want to have a look at the daily charts for USDSGD. This is a trend line play combined with a very strong support level created by the previous swing low. The price has been respecting the trend line for a while now and has spiked down to the bottom of the support level, after which is just started ranging a bit.

 

The price might still move lower or retest the support to create a double bottom, but if it breaks the trend line and pushes upwards strongly, this might be a good reversal signal to buy this pair. I will want to have some confirmation, though, so I have my price alert set at 1.35400.

 

USDSGD forex weekend

 

 

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.