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Forex Weekly Outlook, Jan 21-25: Top Forex Trade Setups this Week

This week begins with a holiday in the New York session. The US stock and bond markets will be closed on Monday in observance of the Martin Luther King Jr. holiday. Likewise, the commodities especially the yellow metal gold will close early at 18:00 (GMT). Forex trading hours will be normal, however, the volatility is likely to remain thin.

On Friday, most of the forex pairs had massive breakouts which defined the new range of the market. With that, the market has been offering some real hot trade setups in forex and commodities. In this update, I’m going to share those setups, so brace yourselves.

Top 5 Setups Worth Trading this Week

EUR/USD – Bearish Breakout, Just Wait for a Buy Signal

The EUR/USD bias is bearish beneath the 1.1415 resistance zone. The bearish engulfing bar signal could send prices further lower towards 1.1325. On the 3-hour timeframe, EUR/USD is likely to form a triple bottom support area around 1.1325.

By the time the EUR/USD pair reaches a double bottom level, the RSI is likely to reach an oversold zone. We are looking for sell signals from relevant resistance levels.

EUR/USD Trade Idea

Fellas, I have two ideas in my mind.
1) We will consider selling below 1.1400 with a stop above 1.1425 and take profit around 1.1325.

2) We will consider buying above 1.1320 with a stop below 1.1300 and take profit around 1.1360 and 1.1390.

GBP/USD – Bullish Channel In Play

The GBP/USD long term bias is bullish, as we can see on the 4-hour timeframe. The pair is trading in a bullish channel which provided strong resistance around 1.3000.

The bearish inside bar triggered a sharp sell-off in the GBP/USD right below a resistance level of 1.3000. The Cable is likely to face immediate support around 1.2825 and the bearish breakout can drive further selling until 1.2720 this week.

By the way, the leading indicators stochastic and RSI are also trading below 50, signaling a bearish bias of the pair.

GBP/USD Trade Idea
Consider taking a buy position above 1.2825 with a stop loss below 1.2800 and take profit around 1.2900. Selling will be preferred below 1.2800 with a target of 1.2725 this week.

USD/JPY – 61.8% Fibonacci Resistance Level on Radar

The Japanese Yen lost safe haven appeal over a risk-on sentiment as investors moved their funds from risk-free assets to high-yielding stock markets.

On the daily timeframe, USD/JPY has completed 50% retracement at 109.200 and it’s likely to go after 61.8% retracement at 110.400. Below this level, the pair can take a bearish reversal. However, the continuation of the bullish trend and breakout of 110.400 is likely to lead the Japanese Yen towards 111.750. On the lower side, the pair can find support around 108.100 and 106.800.

USD/JPY – Trade Idea

Consider taking a buy position above 109.200 with a stop loss below 108.850 and take profit around 110.400. Selling will be preferred below 111.750 with a target of 109.100 this week.

Good luck for the week ahead!

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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