Forex Outlook: 11/1/21 - 11/5/21

November 01, 2021 •
4 min read

Last week the Forex market once again gave traders plenty of opportunities. We sent out numerous price action analyses in our Discord and Telegram groups, and indeed we had a striking move take place on EUR/USD with a drop of over 140 pips in a single day. Let’s analyze it together for educational purposes, before we look at the week’s opportunities to watch.

Advanced Price Action Study and Analysis – EUR/USD

EUR/USD dropped substantially on Friday, and this move seems to have been prepared since the beginning of the week. Here’s what the Price Action’s story tells when you study its movements with a liquidity approach:

  1. The price was making higher highs and higher lows and thus had established a solid medium-term uptrend. Buyers were introduced little by little on the different rebound zones in contact with the trend line.
  2. EUR/USD broke its uptrend line very impulsively. Buyers having entered positions following the most recent rejections of the trend line are gradually being pulled out by the bearish movement (stop hunt). The bearish impulse breaking the uptrend line may introduce sellers who trade the breakout. 
  3. The price has created a chartist pattern and seems to be having difficulty establishing a real bearish continuation at this point. A consolidation zone is naturally created.
  4. Breakout of the consolidation zone and the hi-hat pattern from the top: sellers are also exited, and buyers are once again introduced to the market after this impulsive breakout. 
  5. Overextended movement and break and retest of the previous resistance zone which seems to become support. What happens at this point? Buyers strengthen their long positions, and traders who were not yet buying have an additional reason to potentially enter. The previous day’s bullish momentum was so great that many traders, at this point, are trying to catch a trend-following setup by FOMO (Fear Of Missing Out) because they absolutely do not want to miss these huge moves.
  6. Now it was Friday, and the odds of continuing upward in a very impulsive manner in the direction of the previous day’s overextended movement are often greatly diminished. The price breaks back below support and falls once the buyers are brought in en masse and the sellers are taken out by this huge bullish impulse. Then EUR/USD continues to fall, reversing its bullish structure. 

It was another excellent week in terms of analysis. All these movements had been explained daily on our free Discord and Telegram groups, as well as on Twitter. You haven’t joined us yet? Now is the time!

Looking ahead to next week: What moves should we be watching for?

USD/CAD: Trend reversal?

USD/CAD could fall after a potential liquidity chase above resistance. The uptrend structure has been broken, but the new downtrend seems to be struggling to take hold for now and the price may introduce more buyers first before reversing. 

EUR/AUD: A rebound ahead? 

After a drop of over 850 pips, EURAUD is coming into a huge contract block area. The price could bounce in this area, in order to create a correction of this huge momentum.

XAU/USD: False trend break?

Price has broken the uptrend line, but this could be a false break. If the consolidation zone on the trend line is re-entered, the price could continue upwards to establish a new high. 

NZD/JPY: Bearish correction?

The price has made a huge overextended impulse and has moved far away from its uptrend line. If this chart pattern is broken from below, the price could start a correction towards the next major support. 

We hope that this article will help you prepare for another week of trading, and that we have helped you to better understand what happened the week before. We put education first and do everything we can to help you progress. 

On top of that, we offer you ideal trading conditions to get you settled in the financial markets for the long term.

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Please note that these analyses are based on price action elements only and are in no way trading or investment advice.

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