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Weekly Forex Forecast (August 7 – 11, 2017)

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The EURUSD has been trending higher since the start of 2017. However, last Monday we discussed how the pair was approaching a key resistance area at 1.1875.

What stood out at the time was how the single currency was trading approximately 180 pips above the 10 and 20 EMAs on the daily chart. And on the weekly time frame, that number increased to more than 400 pips. In other words, prices were overextended to the upside.

As such, I decided to stay away from buying the pair. In fact, I was more interested in shorting the EURUSD near the 1.1875 handle than I was in buying.

Based on Friday’s rejection from this area, it looks as though we’ll see a retest of the 1.1670 support level in the coming week. However, the bearish pin bar that has formed on the weekly time frame will once again prevent me from considering buying the pair near 1.1670.

As I mentioned on July 31st, I’m more interested in what happens at the 1.1490 support level as well as the confluence of support at 1.1300. But that doesn’t mean I won’t entertain the idea of adding to a short position in the coming week.

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EURUSD daily chart

The GBPUSD is another pair that played out according to last week’s forecast. Buyers did manage to take out the 1.3160 handle early last week, but the next key resistance level I had marked in the July 30th forecast was 1.3250.

Last week’s high was carved out on Thursday just above the 1.3250 resistance level. That retest led to a 240 pip sell-off that didn’t taper much ahead of the weekend.

Just like the EURUSD above, the GBPUSD formed a bearish rejection candle on the weekly time frame. With this in mind, a push lower into 1.2970 support seems to be the likely outcome. However, there is a short-term trend line from the June low that could offer some support early this week.

A key resistance area at 1.3120/60 lies 100 pips above Friday’s close. Any rotation higher this week could provide a favorable opportunity to sell from that area. Alternatively, a daily close (5 pm EST) below 1.2970 would expose the next key support level at 1.2775.

GBPUSD daily chart

The GBPJPY has spent the entire year carving a wedge pattern. The formation became evident with the July high near 147.80. The lower level is just as defined and extends from the 2016 low.

GBPJPY daily chart

It’s unclear at this time whether the wedge signals exhaustion for buyers or sellers. As with any terminal pattern, it’s important to wait for the market to show its hand before considering an entry.

Bullish price action from the 143.00 support area could offer a buying opportunity for a move back to the 147.50 handle. Alternatively, a daily close below 142.80 would expose 138.70 and perhaps 135.60.

Similarly, a daily close above wedge resistance near 147.50 would signal a continuation of the rally that began last November. Additional resistance levels will be discussed if and when that happens.

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GBPJPY daily chart

AUDJPY presented us with two opportunities last week. The first was the August 1st retest of former channel support. I mentioned this structure on July 28th.

The second opportunity was last Thursday’s close below the short-term trend line that extends from the July 18th low. We discussed the possibility of a second chance opportunity on August 1st.

With the pair respecting former support as new resistance, it seems the likely path forward is a retest of the 86.85 area. This was a key pivot for the pair between the 3rd and 13th of July.

A close below 86.85 would pave the way for a retest of the next support level at 85.80. As long as the new resistance area between 87.90 and 88.00 holds on a daily closing basis, I’ll continue to watch for selling opportunities.

AUDJPY daily chart

We discussed how the NZDJPY was on the verge of breaking down last Wednesday. The range between 82.00 and 83.80 came up for discussion in my July 24th commentary, but we weren’t presented with an opportunity until the August 3rd session.

Buyers made their best effort on Friday to reclaim the 82.00 handle, but the selling pressure proved too strong. The rejection illustrates the influx of offers in the region.

As long as the pair remains below 82.00 on a daily closing basis, the bearish scenario will continue to be the likely outcome. Key support for the week ahead comes in at 80.70 followed by 79.50.

Alternatively, a daily close back above 82.00 would negate the bearish outlook and re-expose the 83.20 handle.

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NZDJPY daily chart

Leave a Comment:

8 comments
Sherman Niamehr says

I actually disagree with you on the bearish pin bar for the w/eurusd chart. I am looking for the pair to break the 1.18 level gain due to some heavy reselling for the dxy. So I am looking for more of a USD selling rather than euro buying positions to be taken. You can go to forexfactor.com to check out one of my live accounts I have posted. It’s under the name ‘sherman’. Take care.
Btw I do check out your trades pretty often. Good job

Reply
    Mimi says

    Sherman, it sure looks like a shooting star to me on the weekly for a sell.

    Reply
    Justin Bennett says

    Sherman, disagreements make a market, so I’m okay with that. 🙂

    However, I will say that the Euro also broke below intraday channel support. I might post about it on Monday.

    Cheers.

    Reply
David says

Hi Justin, can you please elaborate further on how you got 1.1875 as the resistance level for EUR/USD? I’ve zoomed it out to the weekly charts and i dont see any obvious price actions at that level. It would help if you can provide a screenshot of what you actually see. Thank you

Reply
june says

Thank you Justin

Reply
    Justin Bennett says

    You’re very welcome.

    Reply
Craig says

NJpy and AJpy setups adding more conviction that we are very near a top in American Stock Indicies.

Reply
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