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Weekly Forex Forecast (August 29 – September 2, 2016)

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EURUSD sold off heavily following a brief rally that kicked off Janet Yellen’s speech last Friday. By the time the dust settled, the single currency had lost 160 pips against the USD and also broken below the 1.1200 handle.

Not only was this level a key pivot in May and June, but it’s also channel resistance that extends from the current 2016 high at 1.1615.

In the week ahead, the pair is likely to encounter offers in the 1.1200 region while bids may form near the August low at 1.1060.

Be sure to account for this Friday’s non-farm payroll if you take on US dollar exposure ahead of the event.

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EURUSD resistance

GBPUSD rallied at the onset of Friday’s economic policy conference in Jackson Hole but soon encountered sellers at trend line resistance that extends from the June 29th high. This level has now capped every advance since the post-Brexit selloff in late June.

Wedge support is outlined by a trend line that extends from the multi-year low at 1.2790. However, there is a horizontal level at 1.3050 that could give sellers trouble in the near-term.

All in all, Friday’s bearish engulfing day at resistance is likely to trigger additional selling to start the week. And if the 1.3050 level falls on a daily closing basis we could see a retest of the lower boundary of the wedge near 1.2900.

GBPUSD wedge

NZDUSD broke down following remarks from Janet Yellen in Jackson Hole on Friday. I mentioned the four-week rising wedge pattern just 24 hours before the event, noting that a close below support would expose the 0.7110 handle.

With the pair now firmly below this level on a daily and weekly closing basis, traders can begin watching for selling opportunities for a move toward support at 0.7110.

In many cases, a confirmed rising wedge will eventually retest the base of the pattern. As for NZDUSD, that level is 0.6967, an area that has received a significant amount of attention since mid-June.

Just like the other USD pairings, this Friday’s non-farm payroll will undoubtedly shake things up for the greenback, so be sure to manage any such exposure accordingly.

Want to see how we are trading these setups? Click here to get lifetime access.

NZDUSD technical break

Since the April high at 1.5028, EURCAD has been carving out a massive 850 pip wedge on the daily time frame.

This pattern follows a series of lower highs since February, indicating that this formation may offer a breakout in the direction of the prevailing downtrend. However, like any terminal pattern, it’s important to stay patient and let the market make the first move before committing to a position.

A break of support would target the December 2015 low at 1.4023 while a move above wedge resistance would expose the key 1.50 handle for the fifth time this year.

EURCAD wedge

Although GBPCAD managed to breach the resistance area between 1.7010 and 1.7043 last week, the pair made a significant break ahead of Friday’s event risk.

I mentioned this ascending channel last Monday, noting that a close below support would re-expose the multi-year lows at 1.6600. Remember that this pattern formed after coming off the August high at 1.7545, suggesting that a break lower would reignite selling pressure.

However, there is one level preventing sellers from taking control at the moment. That level is 1.70, and without a clear breach of this region, it remains unclear whether the last 48 hours of trade signal a resumption of the eight-month downtrend or an attempt at a second relief rally.

As always, a little patience should reveal the market’s intentions.

Want to see how we are trading these setups? Click here to get lifetime access.

GBPCAD channel break

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2 comments
Siyabonga Mkhize says

Thank you for helping us boss, I wish to analiyze the market as you do

Reply
    Justin Bennett says

    Siyabonga, you’re welcome. Let me know if you have any questions.

    Reply
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