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Weekly Forex Forecast (February 26 – March 2, 2018)

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In what feels like a repeat of the February 2 selloff, EURUSD bulls gave up ground last to the tune of 115 pips. The weakness ensued following the February 16 bearish pattern at the 2008 trend line shown below.

Speaking of the chart below, if it looks messy it’s because it is. In fact, several U.S. dollar pairs are at or are fast approaching key inflection points.

As for the EURUSD, that inflection point is the intersection of 2008 trend line resistance and trend line support from the April 2017 low. Even if the single currency holds out until the very end, the terminal nature of this structure places a breakout by no later than mid-April.

And make no mistake, a daily close below trend line support or above resistance would have a lasting impact. It could quite easily kick off a new multi-month downtrend or be the starting point for the next significant leg higher.

In the near-term, however, the 1.2330 area could continue to attract selling pressure on retests. To the downside, we have a smaller trend line from the January 18 low followed by horizontal levels at 1.2160 and 1.2080.

I suspect the EURUSD will remain congested and relatively difficult to trade until one of those longer-term trend lines breaks. Until that occurs, the story will continue to be a lot of back and forth price action.

EURUSD trend lines on the daily chart

On Monday of last week, we looked at a way to capitalize on pound strength or weakness. The smaller 4-hour ascending channel within a larger descending one provided a way for us to go long or short depending on which structure gave way first.

While the GBPUSD is still consolidating within the smaller ascending channel, Thursday’s price action is quite useful.

I often talk about the idea of not just watching for buy or sell signals, but monitoring a market’s movement to help confirm key levels. Thursday’s bounce from the 1.3875 area is a prime example.

I was fairly confident about the ascending channel last Monday, but the bid that formed at 1.3875 during Thursday’s session confirms my suspicion. It will also help with the conviction of any short entry should the pair close below channel support over the coming sessions.

Of course, there’s always a chance that the GBPUSD will close above descending channel resistance first. In which case we can begin watching for bullish price action on a retest of the level as new support.

For now, last week’s analysis remains unchanged. But I am more confident that a close below channel support which is now closer to the 1.3920 handle, would trigger a move lower toward 1.3600.

Alternatively, a close above descending channel resistance would take us back to the current 2018 high near 1.4335. Because this is a terminal pattern, it isn’t a question of if the pair will break, but when?

I’ll be sure to provide an update when that time comes.

GBPUSD ascending and descending channels

AUDUSD bulls put in one heck of a run starting December 11, 2017. The pair managed to gain 630 pips in just 32 trading days. What’s more impressive is that of those 32 days, only 9 were losing sessions.

We were able to capitalize on the first part of that rally following the December 14 close above the 0.7635 area.

However, it all unraveled relatively quickly starting on January 29. What took buyers 20 days to accomplish was erased in half that time.

Since the February 9 low at 0.7760, the AUDUSD has consolidated within a 230 pip range. But Wednesday’s session tested a level that could help us determine where the Australian dollar will go next.

The trend line that extends from the December 8, 2017 low is well organized. We can see how the pair retested the level on Wednesday and subsequently bounced from it on Thursday and again on Friday.

As such, we could see further upside at the start of the week, but keep an eye on the 0.7875 handle. It has served as a pivot of sorts since the beginning of 2015.

That said, I’ll need to see a daily close (New York 5 pm EST) below trend line support near 0.7820 before considering a short entry. In my opinion, the 0.7875 horizontal level is too close to trend line support to consider selling on a retest.

Below the December 2017 trend line we have the February 9 low at 0.7760 with a daily close below that exposing 0.7635. Depending on if and when all of this plays out, a move lower toward 0.7635 could coincide with a retest of the January 2016 trend line.

AUDUSD trend line on the daily chart

The NZDUSD has a similar structure to that of the AUDUSD. No surprise there considering the vast commonalities between the New Zealand dollar and Australian dollar.

Note that the pair features a similar trend line that extends from the December 8, 2017 low. The NZDUSD also broke below a key horizontal level late last week at 0.7315

I’ve received several questions about a possible double top given the highs on January 24 and February 16.

It could very well be a topping pattern, but confirmation of such won’t come until we get a daily close (using New York close charts) below the February 8 low at 0.7175.

That doesn’t mean you can’t short a daily close below trend line support. But a daily close below 0.7175 is needed to validate any notion of a double top pattern.

As for a bullish scenario, buyers will need to secure a daily close back above 0.7315 to keep the rally alive. The longer it takes for that to occur, the more likely a break lower becomes.

Either way, the pair is running out of real estate. A decision one way or the other is only days away.

NZDUSD trend line on the daily chart

The USDCAD worked out quite well for us after rebounding from 1.2250 support. The February 2 close above the 1.2400 area provided an opportunity to get long, which I mentioned in the February 4 weekly forecast. Price reached our target at 1.2565 within 48 hours.

That 1.2565 level then served as support between the 8th and 13th. However, buyers lost the handle on February 14 only to gain it back four days later.

Now, last Wednesday’s close above 1.2670 was a significant break. It put the pair back inside the range that had held prices in check between late October and December of last year.

I didn’t consider going long as the pair had become quite overextended by the middle of last week. At the time, the 10 and 20 EMAs were lagging below price by approximately 150 pips on the daily time frame.

It’s a good thing I held off given that buyers lost the 1.2670 handle during Friday’s session.

The big question now is whether or not we get a repeat of the February 14 candle whereby the pair loses critical support only to gain it back in a matter of days.

Of course, nobody knows the answer. I will, however, be keeping a close eye on how the pair responds to 1.2670 should it come under pressure this week as new resistance.

There’s also a chance that the pair catches a bid at 1.2620. It’s an area that has played a critical role, particularly as the December 5, 2017 low as well as the more recent February 12 and 13 highs.

In situations like this, I find it best to wait it out. I’ll be sure to provide an update during the week should something catch my attention.

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USDCAD key support and resistance on the daily chart

Leave a Comment:

42 comments
med says

thank you for your analysis. i’m learning with you lot of thing… keep going thank you again!

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    Justin Bennett says

    You’re welcome. Glad to hear that!

    Reply
      Mareo says

      Justin what is your analysis on AUDJPY?

      Reply
    Justin Shin says

    Thank you always ,

    Reply
Gerhard says

Thanks 🙂

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Francis says

Thanks for your analysis Mr Justin. It been a great honor learning from you this while.

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Andrzej says

Witam! Uczę się z tobą ,bardzo pouczające materiały!Pozdrawiam

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    hamid says

    are you from turkey? is forex is working in turkey?

    Reply
azlan says

thanks justin… indeed we dont need fancy indicator

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Augustine says

Great analysis boss

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Chucks says

on the daily set of February 7 208 on EURUSD, you resistance of 1.2325 and today you talk about 1.2330 which is very close to 1.2325 (5 pips difference). So which one is more accurate or does it change with market movement?

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    Justin Bennett says

    I always treat support/resistance as areas rather than specific prices.

    Reply
russy says

great work justin

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Joshua Ogola says

Thanks a lot Mr. Justin. Its been really great learning from you. Looking forward to joining your member area shortly.

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Lekhema says

Thank you Justin you always keep things simple and thank you again on NZDUSD I am really close to what you just posted.

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Mimi says

Much appreciated as always Justin.

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Steve says

Thanks Justin for the heads up

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Akal says

Justin…you know what??? you are surely transforming me into a professional trader…. the only thing left at this point is how to handle the trading psychology

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Mark+Bown says

Thank you for this. I am looking forward to another weeks trading. I will have more time to look at the charts if we really do get the heavy snowfall forecast in the east of England. Stay safe everyone!

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Mun says

thank you Mr Justin……

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Muhammad Arbaz says

Thank you Justin a lot how you explain is just great.its really easy to understand.
Bless you

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Vasco says

Thanks Justin.am learning alot from ur analysis. Si helpful

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Evans says

I’m really very impress by what I’m seeing. At first when I saw your post on Youtube, I taught it was some of those traders that uses all kinds of indicators and the like to trade thereby putting someone in a confused state but when I decided to watch your recording I discovered how you put things very simple that even a blind man can see how simple your chart looks. I want to say you have boost my moral about trading forex. Continue your good works Mr. Justn, looking forward to being your loyal student soon. Thank and God bless you Sir.

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    Roy says

    I’m a member and i can say, the community is great here. We learn a lot from each other too.

    Reply
Muhammad Naseem says

Hello Sir! Im going to trade with 10k$. Any advice will u give me? I need ur advice thanks.

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Nadzuah says

Thank you justin.

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Deon says

Awesome stuff thank you

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LWANGA AGGREY IAN says

i really love the way how u annalyse the market…..precise and simple…….have learnt alot from you……

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Alex+andalibfard says

Dear Justin what you say about EURNZD , and USDJPY for this coming week.

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Nina says

You’re great !

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Winston says

Thanks for this Justin…What are your thoughts on EUR NZD and USD JPY at the moment

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natisirgue says

terima kasih master

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Milan basnet says

Thankyou for analysis

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derrick says

am real in love with this analysis

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jama says

Oky i

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Alex says

Quite impressive,. Thanks.

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TEJIRI says

thanks, last week I trade the pair you posted ,it I made profits. Well my issues now is how to use the ascending and descending channel, to be honest have never use that tool.

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Chucks says

Your analysis GBPUSD is playing out perfectly as you predicted it. I so much appreciate it

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Majid ali says

I like usdcad to enter a short

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Sumantra+Kumar+halder says

Thank you very much.

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Dlovan says

Thanks plenty

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David says

Thank you. For.your support how mach can I start tread with

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