Weekly Forex Forecast (August 14 – 18, 2017)

Following a slight pullback into 1.1670 support, the EURUSD was back in rally mode late last week. The gains came after Wednesday’s session formed a bullish pin bar from key support.

For now, the single currency appears to be delaying a larger retracement despite the slightly overextended prices. The 10 and 20 EMAs still lag quite a bit on the weekly chart, but that doesn’t necessarily indicate that a pullback is imminent.

Key resistance lies just 55 pips above Friday’s close at 1.1875. I mentioned this area on July 31st as one that could attract sellers. Looking back, it not only triggered an influx of offers, but it also formed a bearish pin bar on the weekly time frame.

We’ll see if that pattern has any bearing on future price action, but at the moment, the bulls are still in the driver’s seat.

Key support remains 1.1670 for the week ahead followed by 1.1490. Alternatively, a daily close (5 pm EST) above 1.1875 would expose the 2012 low at 1.2040.

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GBPUSD buyers reacted to last week’s retest of 1.2970 support. This was a level I pointed out last weekend as one that could attract a bid.

The area supported prices every day last week except for Monday’s session. Given the way the pair closed on Friday, I wouldn’t be surprised to see some upside early this week, albeit limited.

Should buyers take the pair higher this week, there is a key resistance area between 1.3125 and 1.3160 that could become a factor.

I will continue to stand aside for now and will only act if I see a favorable signal develop at a key area of support or resistance.

I haven’t mentioned the USDCAD for quite some time. In fact, I last time I commented on the pair was during a 4-hour ascending channel in late June. That particular formation triggered an 800 pip selloff.

It seems we have another such pattern developing on the 4-hour chart. However, this particular structure isn’t nearly as well defined as the one we discussed in June.

With this in mind, I’m waiting for the market to confirm my suspicion that the 1.2630/50 area is channel support. If I see bids form in this area, I’ll have the confidence necessary to at least entertain the idea of shorting a close below it.

On the other hand, if we don’t see a bounce this week from 1.2630/50, it’s going to be difficult to identify a favorable point of entry. In other words, this may not be an ascending channel at all, or at least not one I want to use as a sell signal.

Key resistance comes in at 1.2750 while the next support level (below potential channel support) comes in at 1.2430. This is a critical area that dates back to January of 2015.

We’ve discussed the GBPJPY several times in recent weeks. Since the first post on August 8th, my outlook has been relatively bearish, even when the pair was still trading above the confluence of support between 142.80 and 143.00.

Recent strength from the Japanese yen has had its way with several currencies, including the AUDJPY and NZDJPY. And with the GBPJPY closing below a key area last week, I don’t see that theme changing anytime soon.

For the coming week, I’ll be watching for a selling opportunity on a retest of the 143.00 area. Any bearish price action from this zone could offer a favorable opportunity to get short.

Key support comes in at the June swing low near 138.60. Only a daily close (5 pm EST) back above the 143.00 handle would negate the bearish outlook.

On Friday, we discussed how the AUDJPY was bouncing from key support at 85.80. This area was a critical factor in early July and also served as a pivot between February and March.

The area was also on our radar when I first mentioned the selling opportunity in the last weekly forecast.

From here I’ll be watching for an opportunity to sell on a retest of the 87.00 handle as new resistance. It did so back in July and also played a crucial role between December of last year and late January.

As for targets, the 83.85 level is well worn, although there’s also reason to believe that 84.50 will attract buyers. In this case, I would opt for the 84.50 level, but again, I’m not interested in selling without a sell signal of some type from the 87.00 region.

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