Not sure what to make of the forex market in August? Many traders are in the same boat, but imbalances from July could be the driving force in September.
See all the details in today’s video, including how I’m trading the DXY, EURUSD, GBPUSD, and XAUUSD as we head into a new month.
US Dollar Index (DXY) Outlook
The DXY tested the 98.50/60 resistance area again on Wednesday after bouncing from the 97.70 support level. Wednesday’s rejection from resistance could lead to another test of the 97.80 area.
One support level to watch this week is the daily trend line from the July 1st close. It comes in near 97.80, which is close to the 97.70 horizontal level.
However, my base case, as discussed in the weekly forecast, remains unchanged. The poor lows at 96.70 could become a factor as we head into September. We can observe similar patterns in EURUSD and, mainly, GBPUSD, which we’ll discuss next.
For now, the DXY remains range-bound between 97.70 and 98.60.
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EURUSD Outlook
EURUSD bounced from range lows on Wednesday, offering another long opportunity for bulls. The pair has been in this range since August 6th.
As mentioned in recent videos, the 1.1810 poor high, or unfinished auction, could become a magnet, so to speak, in September. However, for that to occur, EURUSD bulls need to clear the 1.1716 resistance area.
If euro bulls can manage that, levels like 1.1788 and 1.1800 become targets for the euro. Alternatively, a sustained break below 1.1580 would expose the 1.1520 area.
GBPUSD Outlook
GBPUSD is up significantly from Wednesday’s low after testing a confluence of support at 1.3440. I secured a long entry on Wednesday at 1.3455, which I shared with VIP Discord members in real time.
So far, the trade is up nicely, but GBPUSD buyers face a significant test at 1.3525. Not only is it a key horizontal from August 12th, but it’s also near a descending trend line from the August high.
Sellers are likely to defend the 1.3525 region, with new support coming in around 1.3480. A sustained break above 1.3525 on the 4-hour chart and higher time frames will open the door to 1.3580.
As discussed in recent videos, GBPUSD may target the buy-side single prints in the 1.3700 region in September. That’s something to keep a close eye on, especially if bulls can take out 1.3525 and 1.3580 in the coming days.
XAUUSD (Gold) Outlook
Gold broke out of its July descending trend line on Monday near $3,370, and is nearing some resistance at $3,400. However, although we could see a pullback from $3,400, the $3,430 highs could be next for gold.
With that said, I’m not a fan of trading XAUUSD right now. Although the market has ranged and produced a few nice opportunities since July, the current price action is too indecisive for me.
Key resistance levels for XAUUSD are $3,400 and $3,430, with key support located near $3,375.
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