Technical Analysis of Forex Market for Next Week

It is another week and we are here to help you experience success in the Forex market. In this week’s technical analysis, we will go through the technical positions, sentiment and fundamentals to help you determine the best currency pairs with great trading opportunities for the next week.

The currency pairs that one chooses to trade each week highly determines whether they will win or lose, when it comes to Forex trading. Many people often think that they can use exact trading tactics to determine trade success or failure.

The Forex market has experienced a re-emergence of clear trends seeing it remaining in a settled mood. The breakouts in multi-month highs on some Forex pairs are all against the USD. The USD is experiencing this due to the continuing sour sentiment in the U.S.

Also, last week, both of these currencies got a boost after a hint that a roll-back of QE was supposed to start in October and the bullish meeting minutes released by the Reserve Bank of Australia.

Last week prepared many great opportunities for the next week as short USD/CAD, and long AUD/USD and EUR/USD. The USD/CAD fell by 0.86%, the AUD/USD rose by 1.13%, and the EUR/USD rose by 1.73%, leading to a positive averaged winning result of 1.24%.

This week, there is possibility that the highest probability traders will be short of the U.S. Dollar and long of the EUR, as well as the New Zealand and the Canadian Dollar.

Market Sentiment & Fundamental Analysis


At present, what affects market sentiment is the fact that popular central banks have confirmed that they are in the process of making the monetary policy tight. However, the U.S. has been reluctant regarding the same. As a matter of fact, the U.S. Federal Reserve has shown a slower pace of tightening monetary policy.

The weak economic data experienced in the U.S has led to the USD lugging behind in the Forex market.

Over the past week, the New Zealand Dollar and the Euro have seen new multi-month highs, while the Canadian Dollar has maintained its strength this week after the Bank of Canada applied a quarter-point rate hike over the past two weeks.

Also, take note that the British Pound saw a fall in value against the USD over the past few days, making it weak.

Technical Analysis


USD Index


This pair made a new 9-month low price, closed right on its low and printed another bearish candlestick. While following a bearish trend line, the USD has carved out new resistance.

USD/CAD


This pair made a new 14-month low price, closed right on its low and printed another strong bearish candlestick. Considering the past few weeks movement experienced good bearish quality, this pair shows a dominant bearish trend. The price may be prevented from falling much further, thanks to a key inflection point of 1.2461 just ahead. Take note that the price almost reached “blue sky”.

NZD/USD


This pair made a new 10-month high price, closed right on its high and printed a strong bullish candlestick. The price is trending in “blue sky” and it has demonstrated a dominant bullish trend. However, the price may be prevented to grow further due to a key inflection point of 0.7485, not very far.

EUR/USD


This pair made a new 23-month high price, closed near its high and printed a strongly bullish candlestick. The price is trading high and there is a clear dominant bullish trend. However, the price may be prevented from rising much further due to two key dominant resistance levels including a major multi-year high.

Conclusion


Conclusively, I am bearish on the USD and bullish on the CAD, NZD, and EUR.
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