Markets are heating up, and the US dollar could be nearing an external swing low.
Watch the video below to see exactly how I plan to trade the DXY, EURUSD, GBPUSD, USDCHF, and XAUUSD next week.
US Dollar Index (DXY) Forecast
The DXY broke below 99.40 this week, targeting the 98.90 region. I had 98.90 marked as a level of interest in last week’s video, but the DXY bounced before the level was hit.
That’s okay, because 99.40 remains the “line in the sand” between dollar bulls and bears.
Since the DXY closed the high time frames below the level, it will take a high time frame close back above it to turn the USD bullish.
Until then, the index remains in consolidation mode after rejecting the 100.25 resistance level.
A sustained break above 99.40 would open the door to the 99.75 November open, and a push above that would target 100.80.
We still have several buy-side inefficiencies above 100.50 that could come into play later this month. Furthermore, 100.80 is a must-watch level, as it has played a critical role on the monthly chart.
Although the DXY is still pulling back, I’m leaning more bullish, especially if buyers clear 99.40 on Friday or early next week.
EURUSD Forecast
EURUSD has trended higher since November 5th. However, buyers haven’t quite done enough to reverse the downtrend since September.
As noted in last week’s videos, the 1.1660 level is a key support level for the euro.
Not only is it the level bulls would have to clear to turn the pair bullish, but it’s also a multi-month point of control.
That means the EURUSD spent the most time trading at 1.1660 between July and November.
As for critical support, the 1.1608 September low served as resistance last Tuesday, and later flipped to support on Thursday and Friday.
The question now is whether the EURUSD can sustain this rally with a break above 1.1660 next week.
Or will 1.1600 support fail to target the 1.1528 November open?
This is where patience plays a crucial role. So far, we don’t have the answer to either question above.
But euro bulls need to be cautious here. Even if the DXY continues its pullback next week, dollar bulls are likely to defend the September high.
The same goes for the EURUSD 1.1660 resistance area. That will not be an easy level to get above.
GBPUSD Forecast
GBPUSD didn’t do much last week, following a bullish weekly pin bar two weeks ago.
Although the pair held above 1.3130 support on the high time frames, buyers didn’t capitalize on it, as the pair spent most of its time moving sideways.
If the DXY reclaims 99.40 on the high time frames, GBPUSD could be in trouble.
Areas like 1.2950 could come into play if we see dollar bulls step in next week. There’s an unfinished auction at 1.2966, and 1.2945 is a multi-month point of control.
For now, I’m not interested. A sustained break below 1.3100 next week would pique my interest for a move toward 1.2945.
USDCHF Forecast
USDCHF played out perfectly last week. Two weeks ago, I mentioned that I was looking for shorts in the 0.8060-0.8075 range on November 10th.
Buyers pushed the pair into that range last Monday, and promptly targeted the 0.7987 mid-range.
We even saw USDCHF test range lows on Friday, carving out a nice bullish pin bar in the process.
Given Friday’s retest and bounce, I’ll be eyeing a long from the 0.7910-0.7920 area.
However, the DXY must reclaim 99.40 for me to have complete confidence in buying a pair like USDCHF. Without that, the dollar’s bullish potential is questionable.
If this sets up next week, my targets will include 0.7987 and the 0.8070 region.
XAUUSD (Gold) Forecast
Gold broke above the $4,030-$4,060 area I discussed in last weekend’s forecast. It was the anticipated move considering the consolidation below $4,060 and the buy-side inefficiencies from October.
However, the market structure shifted with Thursday’s pullback.
As noted in Thursday’s VIP video, the aggressiveness of the pullback into $4,147 was concerning, as was the close below $4,211.
Friday’s session broke through the $4,030-$4,060 support area. Notably, the $4,060 sell-side inefficiency was taken, and the $4,030 weekly high was nearly retested as well.
One concern for next week is the XAUUSD daily and weekly close below the $4,140 area.
There is a two-day composite point of control at $4,126 and a buy-side inefficiency at $4,128.
Sellers may look to defend that area if we get an early week rally. If so, I’ll watch for a sweep of Friday’s low into the $4,020 region for a potential long.
