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Weekly Forex Forecast (April 17 – 21, 2017)

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The EURUSD closed last week just 24 pips above the open. The pair continues to teeter on trend line support that extends from the current 2017 low which has quite literally kept buyers on edge.

A comment from President Trump concerning the strength of the U.S. dollar spurred a 60 pip relief rally on Wednesday, but the gains were short-lived.

I was asked on Twitter whether I thought the bullish sprint had legs and responded by saying I wouldn’t be a buyer. That was my way of saying no without excluding the possibility of an extended bullish move.

Less than 24 hours after Trump’s comment, the EURUSD lost the 1.0635 handle. We’d expect buyers to hold this area if Wednesday’s bull move was truly the beginning of a larger rally. But that didn’t happen.

From here I’ll be watching for a daily close (5 pm EST) below trend line support near 1.0610. A subsequent retest of the area as new resistance could set up a favorable short opportunity.

Key support below that comes in at 1.0520. This is the location of several lows between mid-February and early March. A close below 1.0520 would pave the way for a move toward the multi-year lows at 1.0370.

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EURUSD trend line

Despite showing strength in late March, the GBPUSD lost the 1.2410 support level on April 7th. This area has served as a pivot since late November of last year.

However, the first 24 hours of last week suggested that the break was false. Tuesday’s price action confirmed the suspicion with a 77 pip rally. But buyers soon hit a brick wall near 1.2570 which is a level I’ve mentioned several times in recent weeks.

I’m not too interested in the GBPUSD at the moment. In fact, I haven’t been for some time now. The choppy and directionless price action since October of last year has made a lasting move hard to come by.

For the week ahead, key support comes in at 1.2410 while resistance can be found near last week’s high at 1.2570. A close above that would target the range high near 1.2670.

GBPUSD range

As anticipated, the AUDUSD found a bid last week in the 0.7500 area. This is a level that’s been a key factor since March of last year.

We had previously discussed the pair quite a bit between late February and the April 4th RBA rate decision. However, after a couple of profitable short trades, I decided to leave the AUDUSD alone last week given the likelihood of a rebound.

But with the pair fast approaching the 0.7608 key level, it seems appropriate to refocus our attention on the Australian dollar.

For the week ahead, I’ll be watching for a sell signal on a retest of 0.7608 as new resistance. This level has acted as a pivot since January 24th, and if past price action is any indication, we should see offers begin to emerge if tested over the coming sessions.

If buyers should close the pair above 0.7608, we could see prices extend toward former trend line support near 0.7700. This area is joined by trend line resistance from the 2016 high.

Key support comes in at 0.7495 with a close below that exposing the 0.7330 handle. A more appropriate target, however, might be the 0.7380 region which is the location of two prominent highs (among other things) between October and December of 2015.

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AUDUSD resistance

I mentioned the AUDNZD last weekend. The bullish pin bar that had formed on April 7th from the 1.0765 handle suggested that buyers were ready to take the pair higher.

The 1.0765 area previously served as resistance between May of last year and March 2nd of 2017. The March 3rd close above the level meant that any retest of the area as new support was likely to attract a bid.

Looking at the price action since the March high at 1.1018, it appears the currency cross has carved out a bull flag pattern. Of course, the structure is unconfirmed until buyers manage a close above resistance near 1.0900.

Buyers did have some trouble last week getting prices off the 1.0765 floor. With that said, I’ll take recent price action with a grain of salt given the limited holiday volume last week.

I should note that 1.0765 is also the neckline of what could be a ten-month inverse head and shoulders pattern. I commented on this formation last year, and as long as 1.0765 holds on a daily closing basis, the 1.1300 area remains the most likely objective.

AUDNZD bull flag

I don’t trade the EURCAD often, but the activity on March 27th caught my attention. On this day the Euro cross retested a trend line that extends from December 3, 2015, as new resistance.

This level could also be the neckline of a 2,000 pip head and shoulders pattern. I first mentioned this structure on October 16th of last year.

I didn’t manage to catch the 4-hour bearish pin bar on March 27th although several of my members did. However, I did take a short on April 6th from 1.4321 and added a second position at 1.4170. Both were covered last week for a total gain of 271 pips.

Thursday’s bullish engulfing candle hints at a move higher, but buyers had some trouble on Friday. With that said, as I mentioned above, the limited volume last week isn’t conducive to generating high probability signals.

For the week ahead I’ll be keeping a close eye on the 1.4185 area. A sell signal from here could reestablish the bear move toward 1.4095 and perhaps 1.3960. A close above 1.4185 would turn our attention toward the next key resistance at 1.4260.

Alternatively, if sellers regain control at the open, I’ll look for a daily close (5 pm EST) below 1.4095. Such a break would keep the bearish momentum intact and would warrant consideration for another short entry.

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EURCAD range

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8 comments
Shyam says

How far JPY ‘s rise will last? When is the good time for going short on JPY?

Reply
    Justin Bennett says

    Shyam, nobody knows the answer to that. Use the technicals to your advantage.

    Reply
Fred says

Hi Justin
What do you think about the euraud recent trend line breakout .
Fred

Reply
    Justin Bennett says

    Fred, I didn’t trade it; looks like that was a good decision.

    Reply
Graeme Normington says

Thanks for all that Justin.
Regards: Graeme

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Malik says

I want to ask you a question about GBPUSD as it has broken the important level of 1.2775, although not on daily closing yet. This is a very important level and if it is broken on daily basis, what is your opinion about this pair for near future. Thanks

Reply
    Justin Bennett says

    Malik, I’ll update my view over the weekend, but I’m not touching the pound at the moment.

    Reply
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