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Weekly Forex Forecast (February 27 – March 3, 2017)

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The EURUSD started last week with a retest of the 1.0635 handle, an area I mentioned a few days prior. This is the location of several weekly closes of late as well as the 38.2% Fibonacci retracement for the current 2017 range and current February range.

I had entered short on Monday’s retest and managed to pull out 85 pips from the position. I decided to book profits due to the pair’s inability to breach support at 1.0520. This was something I mentioned on Tuesday of last week.

Despite a valiant effort from buyers to push the single currency higher, the pair settled the week with a 50 pip loss. Friday’s bearish rejection candle also hints at further losses ahead.

From here the range between 1.0520 support and 1.0635 resistance is still intact. But given the bearish momentum of late, I will only entertain selling opportunities going forward.

A daily close below 1.0520 would expose the multi-year lows near 1.0370. Alternatively, a daily close above 1.0635 would open the door for a move toward the current 2017 high near 1.0800.

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EURUSD range

Not much has changed for the GBPUSD since the January 23rd break above the 1.2400 area. For over a month now, the pair has been range bound between 1.2670 resistance and 1.2400 support.

While there is a possibility that a major bottom has formed at 1.2000, the bullish conviction to sustain such a reversal is lacking. As such, I’ll remain on the sideline and watch for short-term trade opportunities.

Ideally, I would like to see the GBPUSD move out from the middle of this 700 pip range before considering an entry. The lack of momentum and choppy price action since late January makes for unfavorable trading conditions.

A daily close below 1.2400 would expose the key pivot near 1.2200. On the flip side, a daily close above 1.2670 would pave the way for a move toward 1.2770 and possibly 1.2860.

GBPUSD range

The last five weeks of price action on the AUDUSD is the epitome of a stubborn market. Every time it looked like the pair was about to reverse course, buyers would step in and drive prices even higher.

However, the rally hit a roadblock last week. The confluence of resistance between 0.7700 and 0.7760 is constructed from three levels.

  1. Horizontal resistance per the August and November 2016 highs
  2. Trend line resistance from the April 2016 high
  3. Trend line resistance from the May 2015 high

I’ve removed the latter from the chart below for clarity, but the combination of these three levels have made for a tough climb for buyers.

Based on Friday’s close, I’m inclined to think that last week’s high at 0.7740 was a significant one. And perhaps it’s one that will stand for some time.

I remain short here from 0.7730. This was an idea I mentioned in the member’s community last week. And although I intended to exit on Thursday’s close above 0.7700, the profits were a bit thin, so instead, I decided to cover my risk and ride it out.

The next level of support comes in at 0.7608. This level acted as a key pivot between January 24th and February 9th. A daily close below this would expose the 0.7520 handle, an area that has been a factor since October of last year.

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AUDUSD daily chart

Another range bound market is that of the NZDUSD. Like several other majors, the pair has been stuck moving in tight spaces since late January.

Last week resulted in an uninspiring two-pip gain. The 115 pip doji candlestick suggests indecision, particularly considering it was the second week in a row without a hint of conviction from either camp.

A look at the 4-hour chart shows a bearish pin bar that developed at 0.7240, a level we’ve discussed several times in recent weeks. I know a few members caught this trade and are currently up about 40 pips. A tight 13 pip stop makes it an (unrealized) 3R profit, or 6% profit if risking 2%.

For the new week, the same range is expected to play a role. Key resistance remains 0.7240 while support lies 60 pips below Friday’s close at 0.7133. A daily close below 0.7133 would expose the next level of support at 0.7040.

I’m not interested in buying the NZDUSD simply because of the trend line from the 2016 low. This level has been a significant factor over the last thirteen months. As long as price trades below it on a daily closing basis, my bias remains weighted to the downside.

NZDUSD range

On Friday I mentioned the wedge pattern that had formed on the GBPJPY. The formation extends as far back as the December 2016 high at 148.44 (high of the bearish pin bar) but really started coming together earlier this month.

At the time of Friday’s commentary, the pair had not yet broken free. However, just one hour after I published the post, the yen cross slipped below wedge support. Sellers went on to close the day and eventually the week below support near 140.20.

Now that the GBPJPY has broken down, the area between 140.20 and 140.40 will likely serve as resistance if tested. Initial support comes in at 138.90 with a daily close below that exposing the 136.45 handle.

Per last week’s commentary, the (long-term) downside measured objective comes in at 128.60. We get that by measuring the height of the wedge (1,200 pips) and projecting that distance from the breakout point.

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

GBPJPY wedge pattern

Leave a Comment:

8 comments
Brian says

Hey!How do you differentiate a hanging man and pinbar?

Reply
Thomas says

Hi.

I have tried to register for many of your trading courses and other free materials by submitting my email but until now I have never received anything from you.
I am not sure whether my registrations reach you or not.

Kind regards.

Reply
    Justin Bennett says

    Thomas, I’m not sure what to tell you. Everything on my end is working fine.

    Reply
mau says

HI, AS PER YOUR ADVICE AND REVIEW WHAT WILL BE THE BEST PAIR TO TRADE THIS WEEK?

Reply
    Justin Bennett says

    That’s up to you.

    Reply
Marc says

Nice, thanks Justin. I missed out on almost 4% profit on EURUSD coming out just on breakeven with that bearish rejection candle. Had an eye for 1.0400 and just didn’t follow close enough. Better than a loss.

Reply
    Justin Bennett says

    You’re welcome, Marc. It certainly is better than a loss.

    Reply
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