Daily Price Action
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Weekly Forex Forecast (August 13 – 17, 2018)

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

Click here to get access to the same charts I use.

The U.S. dollar made a big push last week, sending the EURUSD and other major currency pairs lower. It also put an end to the range-bound price action that persisted for more than two months.

After retesting former wedge support as new resistance last week, the single currency plummeted more than 200 pips. I first mentioned this continuation pattern on August 2nd and again last weekend, so this was no surprise to readers.

Not only did the EURUSD drop 200 pips in 48 hours, but it also took out range support that had held since late May. As such, any retest of the 1.1510 area this week will likely encounter an influx of selling pressure.

However, given the aggressiveness of Friday’s selloff, I would be a little surprised to see the pair climb that high before the next leg lower. Still, it’s never a good idea to chase a runaway market, plus we have other opportunities to keep us busy.

As I mentioned last week, the 340 pip height of the wedge suggests the next key support comes in just below the 1.1300 handle. The area served as a pivot in June/July of 2017 and is also the November 9, 2016 (U.S. elections) session high.

I remain short here via my entry just above 1.1600 on August 3rd. I’ll be interested in adding to the position this week should we get a rotation higher ahead of a 1.1300 retest.

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EURUSD wedge pattern daily time frame

The GBPUSD finally broke free from the descending channel that has directed price action for the past two months. It is unusual to see a downside break of a descending pattern such as this, but apparently the selling pressure was too much for buyers to handle.

While Thursday’s close below channel support is unmistakable, what isn’t as clear is where Friday closed in relation to the 1.2770/80 horizontal area.

If we draw it using the August 2017 low at 1.2773, then Friday’s close of 1.2769 broke the level. But as you may well know, these support and resistance levels are often better thought of as areas rather than exact prices.

However, even if sellers didn’t clear the horizontal level on Friday, they still have to deal with former channel support near 1.2810. As such, any retest of this 1.2780 to 1.2810 area this week will likely be met with selling pressure.

As for key support, we have to look back to the June 2017 low at 1.2590. And based on the dollar strength we saw last week, I don’t anticipate this downtrend will reverse anytime soon.

Only a daily close (New York 5 pm EST) back above former channel support at 1.2810 would negate the bearish outlook.

GBPUSD descending channel break down daily chart

After carving a 140 pip range over the last six weeks, the AUDUSD finally broke down on Friday. The 0.7293 close puts the pair below former range support at 0.7320.

So, just like the EURUSD and GBPUSD above, any retest of support turned resistance should attract sellers. Only a daily close at 5 pm EST (New York close charts) back above 0.7320 would negate the bearish outlook.

You may also recall the retest of the 2016 trend line in early June. I mentioned this retest back on June 7th when the pair was trading 350 pips higher at 0.7646. It seems a simple trend line break has once again signaled a change in trend.

Key support for the week ahead comes in at 0.7160. The area served as support for the AUDUSD in May and December of 2016. It’s also the 2017 low.

Another reason to suspect a move to 0.7160 is the height of the 140 pip range between 0.7320 and 0.7460. Upon breaking out, a market will often traverse a similar distance to that of the former range.

If we measure 140 pips lower from the 0.7320 handle, we get 0.7180 which is just 20 pips shy of the 0.7160 key support I mentioned above.

AUDUSD range breakout on daily time frame

Another pair I’ve had on my radar for some time now is the EURCAD. Apart from selling the EURUSD on August 3rd near 1.1600, the EURCAD is the only pair I’ve traded since late June.

The first entry came back on June 25th at 1.5580 which I announced in the member’s area. I’ve since added to the position at 1.5300 and again this past Wednesday following the rejection from the confluence of resistance at 1.5150.

But if you’re thinking the EURCAD has run its course, you may want to reconsider. A view of the price action since last November shows a pattern similar to that on the GBPCAD. No surprise there given their similarities.

If this is indeed a head and shoulders reversal, it could set the pair on a crash course to the 2016 and 2017 lows near 1.3800.

Now, it’s important to keep in mind that even if the pair does move that far south, it won’t be a smooth ride. There are bound to be several bumps along the way including but not limited to the 1.4740 area and especially the 1.4500 handle.

It also won’t be quick. Even a move to 1.4500 will likely take another month or two to play out, so you can imagine how long it might take for sellers to reach 1.3800.

For now, it’s going to take a daily close (New York 5 pm EST) below neckline support at 1.4970. Without a close below this area, the head and shoulders reversal will have to wait.

As always, there are no guarantees. The above does not mean the EURCAD will drop to 1.3800, 1.4500 or even 1.4740. As traders, the best we can do is determine what’s probable and then establish and follow a game plan that prepares us for every outcome.

EURCAD head and shoulders pattern

On August 6th I pointed out what could be a 1,200 pip head and shoulders pattern on the GBPAUD. At the time, sellers hadn’t closed the pair below the neckline at 1.7520 which was needed to confirm the reversal pattern.

That confirmation came a few hours after that post. The close on August 6th was marginal at best, but the next 48 hours put those doubts to bed.

After five straight losing days totaling more than 500 pips, the GBPAUD caught a bid on Thursday. And although that session did respect the June low at 1.7400, Friday’s session extended the relief rally by 100 pips.

The late week strength also triggered a retest of the neckline as new resistance. Given the way the pair closed on Friday, I wouldn’t be surprised to see a third push higher.

Another level that could attract sellers is 1.7580. When viewed on the weekly time frame, you’ll notice how this area has influenced the pair’s direction since the May 2017 swing high.

That gives us a confluence of resistance between 1.7540 and 1.7580. Of course, we could see an intraday surge about this area, but as long as it holds on a daily closing basis (New York 5 pm EST), I will remain bearish.

Key support for the week ahead comes in at 1.7400 followed by the year to date low near 1.7100. Only a daily close above the 1.7540/80 area would negate the bearish outlook.

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GBPAUD head and shoulders pattern

Leave a Comment:

68 comments
majid says

sir what about usd/jpy ?

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    Justin Bennett says

    What about it? The pair is a mess at the moment. I much prefer some of the pairs above. That’s been the case for weeks now.

    Reply
      ayesha says

      Why you dont cover fundamental analysis?

      Reply
        jerry says

        Hello ayesha
        Because price action has proven to be profitable more often than not..

        confluence is when the circumstances are right for a long or short position.. eg bearish pinbar at a previous support is a confluence for short position

        Mr justin prefers swinging

        and I can tell that his strategies are simple and the best

        Reply
          jerry says

          Previous support turned resistance**

          Reply
      ayesha says

      CAN you tell me about confluence?

      Reply
      ayesha says

      And tell me about scalping.you favour scalping strategy or not?

      Reply
    glory. says

    its will be a bearish

    Reply
    Bobby says

    I think it’s going to go down for 3 days.. Using fundamental analysis and pattern recognition though. However, maybe Justin have better opinion.

    Reply
    Tshepo says

    Yeah coz I was gonna go long on monday but now price seems to be bearish

    Reply
    Pierre Mifsud says

    Perfectly agree with Justin….because it is consolidating so there is no specific trend here

    Reply
Bankole oluwasayo says

Nice breakdown

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    Justin Bennett says

    Cheers.

    Reply
MIMI says

Thank you!

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    Justin Bennett says

    You’re welcome.

    Reply
Frederick Exaud Kileo says

Sir can I get the analysis for Gold (XAUUSD)?

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Frederick Exaud Kileo says

You’re so genius in this platform basing on your daily price action

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Rene says

Hi Justin, I dont understand this:
Upon breaking out, a market will often traverse a similar distance to that of the former range. Can you explain to me?

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    Justin Bennett says

    If the range was 140 pips, measure 140 pips from the breakout point. That’s your target.

    Reply
matt says

thks for the weekly update.honestly it seems to look like there are lots of good trades in the market at the moment, am jst holding my self not to over-trade

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    Justin Bennett says

    You’re welcome. Conditions have been favorable for a while, but you’re right, a few more currency pairs are finally breaking free from consolidation.

    Reply
Olu says

I always look forward to your daily analysis and it has never disappointed me. I can’t wait to join your mentorship forum.

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    IDOGEI emmanuel says

    Me too.

    Reply
    Justin Bennett says

    Look forward to having you as a member.

    Reply
      Chidokwe Hycienth says

      Pls from you post am unable to know buy and sell pairs from marvellous info you give, pls can I be put on the track. Thanks in anticipation

      Reply
        Tony Frank says

        That was a very clear breakdown, almost like spoon feeding, if you were not able to understand the language honestly go back and read the basic staff, two books i recommend: Forex Bible (start with this) and Naked Forex. Knowledge is the secret for success in FX trading

        FX Bible has a lot of pages but its a easy read, it gives all the necessary basic info you need to know about financial markets and how to trade forex, after that go to Naked Forex, plus check other online videos from, or best register for Justin’s courses.

        Reply
Uzoma Nnamdi says

Thank you sir, your analysis have helped me to analyse and trade better. You are the best. I entered a short position on Friday on the rejection of the trend line on gbpaud, should I hold or close it

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    IDOGEI emmanuel says

    If you account can accommodate the surge but looks as if you should exit and wait to re-enter. You decide.

    Reply
    Justin Bennett says

    You’re welcome. That’s for you to decide.

    Reply
Ethelbert Obialor says

I need news update

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    Justin Bennett says

    You won’t find news updates here. Try Forex Factory’s news feed and calendar.

    Reply
Yinka says

Thanks for your consistent forcast for rhe week. It put confirmation on my analysis.

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    Justin Bennett says

    My pleasure.

    Reply
IDOGEI emmanuel says

Powerful and detailed analysis every weekend. Thank you Justin.

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    Justin Bennett says

    Happy to help. Cheers.

    Reply
Lesley says

Thank you Justin for your analysis. I have been following the way you do your analysis and I am starting to get the beat. Patience is always the key in trading and thank you for teaching me that. I will always wait for the close of the New York time and this always makes me take valid decisions. Yes indeed last week we saw the strength of the dollar and how price action reacted.
Thank you once more

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    Justin Bennett says

    You’re welcome. Tons of patience coupled with New York close charts is the way to go. Above all, keep it simple.

    Reply
Xoliswa Nyawo says

Thanks a lots Justin, we appreciate your effort… What can you say about EURAUD this week?

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    Justin Bennett says

    My pleasure. We’ll have to wait and see. Nothing has changed since my August 8 commentary.

    Reply
Lyon says

What about euraud

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Gideon says

Thanks a lot for your weekly forecast is educative and precise it’s always give me directions for the week there is no short cut for me than to be part of your member very soon I will join

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    Justin Bennett says

    Glad to hear it’s helping.

    Reply
Taofeek says

From your eurusd analysis, you said ‘I remain short here via my entry just above 1.1600 on August 3rd.’ But from the chat you shown, 1.1510 is the resistance.
Which level is your entry point? 1.1600 or 1.1510?.
Thanks for your valuable and reliable analysis.

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    Justin Bennett says

    As mentioned above, the entry was in the 1.1600 region. I’m not sure what today’s resistance level has to do with an entry from six trading days ago.

    See the two links above within the EURUSD analysis. It’s all there.

    Reply
bojjilov says

Like

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Max Violet says

Great job! Thanks a lot

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    Justin Bennett says

    Cheers. You’re welcome.

    Reply
seydou nourou sy says

Your analyses are relevant and simple and clear explanations All the best master

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Paul says

Thanks Justin, looks promising! In the meanwhile I was focussing on USDCAD weekly graph, do you agree there is a trend since Sep 2017? Last week candle looks like an engulfing candle, is my assumption right? Thanks

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MD. ABU SUFIAN says

Thanks

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young guy says

This one is not good at all

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Dilshodbek says

i liked GBPAud more potential

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    Dilshodbek says

    Thank you Justin

    Reply
Thabang says

Thanks a lot Mr Bennett

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Adamh says

EUR/GBP? Why do so many leave this out?

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Samuel says

Thanks for the gifts of this week analysis. i remain very grateful to you.thanks.

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Praise says

thanks a lot for that forecast.

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paul says

which pair is the best to trade today?

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Brian says

Excellent report yet again thanks

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derrick says

good work sir i appreciate

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grace says

Justin I’m grateful for your in dept analysis. im really learn a lot God bless you a big thank you for carrying us the newbies along. any tip on gbpjpy?

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Mac says

Very lovely and knowledgeable analysis

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Roy says

Gbpaud set up looks good.

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waheed atunnise says

Nice job,but am still having little difficult understanding this build up on daily time frame very well,please what book/ video watch or read to understand it better.

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jawwad says

great analysis justin i think eur/usd is also having a head and shoulders pattern on weekly timeframe right shoulder is a little smaller though,What do you say about it?

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Jenerali says

the analysis on GBPAUD was on point with regards to yesterday’s move higher

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Emmanuel Adetunji says

Which time frame do you prefer?

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paul says

looking at your good analysis which pair do you strongly recomend for tomorrow?

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