Daily Price Action
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Weekly Forex Forecast (February 5 – 9, 2018)

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Important: I use New York close charts. Click Here to Use My Preferred Broker

The EURUSD tagged the 1.2525 resistance handle for the second time ahead of Friday’s non-farm payrolls. It’s a level I mentioned on January 24 as the single currency was in the process of breaking above the 2008 crisis low at 1.2325.

Although the pair recovered from session lows on Friday, the 1.2525 resistance area is still holding. To the downside, we have the 2008 crisis low at 1.2325 which is now acting as support.

These two areas give us a 200 pip range to keep an eye on. Moreover, a daily close above 1.2525 or below 1.2325 would produce a range break opportunity.

A close above 1.2525 would target the next key resistance area at 1.2670. Alternatively, a daily close below 1.2325 would have us watching for a move lower toward the 1.2160 area.

If the uptrend since the start of 2017 is any indication, we should see buyers extend this rally over the next few weeks. At the time of this writing, I have no reason to believe that U.S. dollar weakness will subside over the longer term. But as always, I’ll let the market do the talking.

The five paragraphs above are what I wrote on Friday. However, after studying my charts over the weekend, I’m no longer (as) convinced that buyers are going to take prices higher without giving up some ground first.

I believe that Euro bulls have gotten ahead of themselves, and a cooldown period is in order. Of course, I could be wrong on that, in which case I’ll look for a daily close (using New York close charts) above the 1.2525 handle.

If we do see the EURUSD weaken first, traders can watch for a daily close below the 2008 crisis low at 1.2325. That would open the door for a move to the January 18 low at 1.2160 and perhaps even 1.2070.

I’m by no means saying the rally is over. There’s no evidence of that just yet. But a rotation lower does seem likely and would give the uptrend fresh legs.

EURUSD key support and resistance on the daily chart

Much like the EURUSD, the GBPUSD has been trading in a range since the January 24 rally. Key resistance comes in at 1.4335 while the 1.4070 handle, which is a level I mentioned last week, is holding as support on a daily closing basis.

The fact that buyers were unable to force a second retest of resistance at 1.4335 last week may suggest a pullback is in order. Still, as long as 1.4070 support holds on a daily closing basis (5 pm EST), shorts should tread carefully.

A close below 1.4070 would pave the way for a move toward the 1.3850 area. A break there would bring prices back to the January 3 high at 1.3610.

Alternatively, a daily close above 1.4335 would turn our attention to the next key resistance at 1.4565. But my base case for the week ahead is a reversion to the mean, particularly that of the weekly chart which currently resides near 1.3610.

GBPUSD support and resistance on the daily chart

The AUDUSD break below ascending channel support last week turned out to be a nice little trade. I mentioned how the pair had reached a key inflection point on Wednesday, and less than 24 hours later we had our break of channel support at 0.8050.

As we begin a new week, I don’t see any signs of sellers letting off the gas. In fact, the final moments of Friday’s session managed to carve a new low for the week.

Any rotation higher will likely encounter selling pressure at the mid to late January lows between 0.7955 and 0.7970. Key support lies just 40 pips below Friday’s close at 0.7880 with a break there exposing the January 10 low at 0.7805.

It’s worth noting that the AUDUSD has been moving in a considerable 700 pip range since the January 2016 low. I have no reason to believe that this structure has broken down, which means 0.7640 or lower is a genuine possibility over the coming weeks.

AUDUSD breakdown from ascending channel

The USDCAD cleared a significant level on Friday. If you recall, the 1.2400 area was our target following the breakdown from range support at 1.2670 back on December 27.

The 1.2400 handle offered support in late July 2017 and more recently attracted a bid between the 5th and 19th of last month.

It makes sense then to assert that Friday’s 1.2425 close places buyers back in control. In fact, you can even see via the 1-hour chart where the USDCAD found selling pressure at 1.2405 before Friday’s close.

That said, I’m always suspicious of Friday breakouts. The lack of volume before the weekend increases the likelihood of false moves.

To avoid getting caught on the wrong side of the market, I’m going to monitor how price reacts to the 1.2400 area on Monday. A bullish price action signal could provide a favorable opportunity to get long.

Key resistance for the week ahead comes in at 1.2565 followed by former range support at 1.2670. Alternatively, a daily close (New York 5 pm EST) back below 1.2400 would negate the bullish outlook and re-expose the 1.2250 area.

USDCAD break of key resistance on daily chart

The AUDJPY was all over the place last week. It seems the market was shying away from buying the yen, hence the lack of direction despite Australian dollar weakness.

On Monday of last week I pointed out the 87.20 level. It attracted buyers on January 10 and has been a critical factor on the weekly and monthly charts going all the way back to the late 1990’s.

While I still believe a daily close at 5 pm EST below 87.20 could open up the 85.40 area, it may not offer the “cleanest” of entries. Just look at how the price action has chopped around this area since August 2017.

However, I like the idea of pitting these two currencies together should the yen catch a safe haven bid over the coming days and weeks.

From a technical perspective, 87.20 is significant, but the confluence of support at 85.40 holds the key to much lower levels in my opinion. If we see the pair test 85.40 and buyers fail to hold prices above it, a 400 pip slide toward 81.50 may be in the cards.

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AUDJPY approaches key support area

Leave a Comment:

38 comments
Sumantra kumar halder says

Thank you very much sir

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MAJID Ali says

Sir I like to open a trade on USD/cad very nice setup .

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    Jaya says

    Thank you sir. Any opinion on EurChf?

    Reply
David Okanlawon says

Hello, for your USDCAD analysis, if 1.2400 resistance is broken, were you trying to say it will expose the 1.2350 price point instead of the 1.2550 you mistakenly wrote down.

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    Justin Bennett says

    There was an error, thanks. But I think you meant to say 1.2400 support instead of resistance.

    Reply
Nini says

Thank you Justin….on point and simplified

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Chris says

Thank you very much . You have completely transformed and changed my understanding in forex trading. I started learning to trade forex way back 2016 but was met innumerable trading strategies and ideas that never worked for me . I even quieted trading because of unmet expectations and strategies keep on failing me.
Fast forward, two months ago I chanced upon your website on Google search and I couldn’t be thankful enough for how generous and honest you are .
Your free price action course is worth more than $1k and that’s what I use as my trading strategy now. Although not not 100% which I agree with youthat “there’s no gaurantee in any forex system” it’s more than a foolproof to me
Thank you .

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    Justin Bennett says

    Great to hear, Chris! Glad I could help.

    Reply
Chris says

Thanks for your insight!

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Mark Bown says

I only found the Daily Price Action website a few weeks ago.
I am very impressed with Justin and love the clarity of his forecasts and also like the “Whats App” alerts if I am away from my desktop.

So much so I joined the ” Community” last week.

Well done Justin

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    Justin Bennett says

    Hey Mark, glad to hear you’re enjoying the content.

    Thanks for sharing. Cheers.

    Reply
    sandile says

    Hi

    Me too Mark,I have gone through all the material on the website and wow my confidence is back.

    Justin,thanks for the valuable information you are sharing with us ….we really appreciate it.

    Price action simplified.

    Thanks
    Sandile ( South Africa )

    Reply
Good job! says

Nice analysis

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Eric says

Great words and numbers of wisdom…

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    Eic says

    Great Bio by the way….

    Reply
Tafadzwa Zivengwa says

Good analysisp

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MARTINS AJAYI says

Good job.Many Thanks Justin.

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Amicable says

Justin you are forex Godfather. Meeting you have change my view for forex after a frequent loss of money in the forex market. But now I am confident to enter the market and recup my losses. Thanks Justin

Reply
    Justin Bennett says

    You’re very welcome. I’m always happy to help.

    Have a good week.

    Reply
Darius says

“Alternatively, a daily close (New York 5 pm EST) back below 1.2400 would negate the bullish outlook and re-expose the 1.2550 area.”

Really?

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    Darius says

    Oh, after submitting my comment – its fixed

    Reply
Markyle says

I’m learning a lot from you, your analysis are very good I must say, Thank you Sir much appreciated, you helping me a lot, May the Lord bless you

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Steve says

Thanks Justin for the heads-up

Steve (Kenya)

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Alex says

Thank you very much Justin.

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Veronica says

Thank you very much for great set ups Sir!

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Ahmed Gofur says

Thank you bro.

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David owino says

Iam a new comer in forex business i want to learn more about it
can you help me please because am so interested in this business

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Darius says

“The lack of volume before the weekend increases the likelihood of false moves.”

My broker shows volume 151392 for usdcad on friday, while on other days: 112038, 135802, 94430

so I would say this time volume was biggest on friday.

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    Justin Bennett says

    That’s one broker out of hundreds, and who knows if their data is even accurate. Volume data provided by a single broker in a decentralized market like FX is meaningless.

    Moreover, you’re looking at retail only, which is a small percentage of total volume. In fact, retail volume is the least telling given that most retail traders get it wrong.

    Reply
Aaisha says

Very helpful 👍

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Samuel Nwofoke says

Thanks so much sir.

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IKE OKEKE says

Justin, you always gonna be a star in FX….Your analysis, honesty and simplicity has redefined the game of forex trading..
Keep it up bro…
Thanks,
Ike.

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Ken says

Thanks Justin

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Phyo Paing says

Thank u sir

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Phyo Paing says

Sir , I will also join u from Whatsapp.

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RS buddy says

Thank you much sir for sending the two strategies, pin bars & new wedge breakout. I’ll practice it on my trades.

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PATRICK says

hellow.whats your view on EUR/AUD?

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Samukelo says

I would like to join

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