Daily Price Action

Weekly Forex Forecast (February 22 – 26, 2016)


EURUSD lost significant ground last week. Although the pair finished above the 1.1060 handle, I can’t help but think that the 1.1375 high is important, mostly due to the fact that the level represents former channel support that extends off the 2015 low.

To be frank, my charts don’t typically look as complex as the one shown below. That being said, I feel that omitting any one of these levels would be a mistake as each one has played a significant role in the recent past.

While a move back to the 1.1210 level could offer up a favorable opportunity to get short, the current price structure doesn’t allow for much room to run. So unless something “too good to pass up” comes along, I won’t have much interest in trading the Euro versus the US dollar until it can clear the 2015 low near 1.0500.

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EURUSD key levels on the daily chart

To the surprise of many, GBPUSD made a strong comeback in the final hours of trading on Friday. This came after the pair closed below the 1.4360 area just 24 hours prior.

That being said, the pair has opened the week below the key level, leaving many questioning Friday’s break. Due to the choppy and unpredictable price action of late, I prefer standing aside until a clear opportunity presents itself.

One such opportunity could come on a daily close below the 1.4078 figure. On the other hand, if today’s session manages to rally and close back above 1.4360, we could see a push toward the 1.4670 handle over the coming sessions.

GBPUSD key levels on the daily chart

EURNZD appears to have cleared a key level last week. The trend line that extends off of the December 31, 2015 low was previously respected as support on two separate occasions before sellers managed a close below it on Wednesday.

The final 24 hours of trading last week successfully tested the level as new resistance. While the initial retest may be behind us, any additional attempt to retake the 1.6800 level could present a favorable opportunity to get short, given the right bearish price action, of course.

Alternatively, traders can watch for a close below the 1.6700 handle before looking for a selling opportunity. Such a close would indicate continued weakness and expose the key 1.6520 support area.

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EURNZD key technical break

Similar to EURNZD above, EURCAD appears to have broken down last week. While the pair is still holding above the 1.5130 handle, the close below trend line support on Wednesday signals that the current uptrend is becoming fatigued.

As such, traders can watch for a retest of former trend line support as new resistance. Such a retest combined with the right bearish price action could present a compelling opportunity to get short.

If this plays out accordingly, those traders should keep an eye on the aforementioned 1.5130 level as well as key support at 1.4950 as possible targets.

Alternatively, a close back above former trend line support would negate the bearish bias and turn our attention toward the 1.5800 area.

EURCAD new resistance

The best potential trade setup for 2016, in my opinion, remains the seven-year trend line that extends off the 2009 low of NZDJPY. I mentioned in a previous post how the price action over the last seven years is eerily similar to that of the price action leading up to the 2008 collapse.

Whether it plays out in a similar fashion is yet to be seen, however, the potential is certainly there.

NZDJPY weekly trend line support

The pair traded below trend line support for a brief period on Friday before mounting a slight recovery in the final hours of the session. As such, I remain on the sidelines until a clear opportunity presents itself.

A move back above 76.20 would signal that another recovery is in order before the bears are ready to push prices below the seven-year level. Depending on your broker, the August 2015 low will vary to some degree, however, this general area is sure to attract a bid before an eventual push is made toward the 69 handle.

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NZDJPY daily chart

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