Weekly Forex Forecast (February 6 – 10, 2017)

·    February 5, 2017

·      February 5, 2017

·    February 5, 2017

After beginning last week with a 100 pip slide, the EURUSD bounced back to end the week with a close above the key 1.0715 area.

The single currency has been trending higher since the beginning of the new year. And while the velocity of recent gains hasn’t come close to the two selloffs in November and December, the pair does look relatively bullish for now.

With that said, the EURUSD is approaching a few areas that could give buyers fits. The first being the 1.0860 region, which marks the October 2016 swing low as well as the December 8th swing high. This area is also in the vicinity of ascending channel resistance that extends from the January 5th high.

If buyers manage a close above the 1.0860 region, we could see the pair retest the long-standing trend line from the 2016 high. This level was a key factor in driving the Euro lower during the second half of last year.

All in all, I remain bearish long-term, but I do think we could see further upside in the near-term.

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EURUSD ascending channel

The GBPUSD continued its sideways movement last week, staying neatly between support at 1.2415 and resistance at 1.2670. I pointed out the bearish engulfing candle on Thursday, but as more time passes without a favorable entry, the trade idea becomes less compelling.

At the moment I’m just watching to see how things play out. And unless I can get a favorable buy signal at support or a sell signal at resistance, I won’t be trading the current range.

For the week ahead, key support comes in at 1.2415 while resistance lies at 1.2670. Only a close above the current range high at 1.2774 would indicate the GBPUSD has put in a short-term bottom.

GBPUSD range

Given how the EURUSD has gained back some lost ground so far in 2017, it isn’t surprising that the USDCHF has struggled.

Last week the pair closed below a key level at 0.9950. This area capped three advances last year between May and October. Then on Friday buyers attempted to retake the level on the back of non-farm payroll, but ultimately failed and carved out a bearish rejection candle in the process.

For the week ahead traders can watch for selling opportunities on a retest of the 0.9950 area as resistance. This level also marks a 50% retracement of Friday’s range.

Support levels, on the other hand, are a bit harder to come by. The choppy price action throughout 2016 makes finding obvious levels next to impossible.

However, one level I’m keeping an eye on is the 0.9785 handle. A quick glance back to the period between December 2015 and April of 2016 shows how the level acted as support and resistance on several occasions.

The 0.9785 level is also the 61.8% Fibonacci retracement of the 2016 range between 0.9443 and 1.0343.

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USDCHF bearish rejection

After plummeting more than 600 pips between November and December, the AUDUSD has gone parabolic. At the time of this writing, the Aussie has recovered 515 pips of the 600 pips lost at the end of last year.

In fact, due to the consolidation that took place in late November and early December, the velocity of this rally is even more intense than the 600 pip selloff.

With this in mind, I won’t be interested in shorting the pair anytime soon. But I also don’t want to buy the pair given the proximity to a confluence of resistance at 0.7760.

Another reason to stay patient is Monday’s RBA rate decision at 10:30 pm EST. The event is sure to shake things up and make trading conditions unfavorable.

I’m bullish here in the near-term until the price action suggests otherwise. Key support comes in at 0.7585.

AUDUSD confluence of resistance

Since late January, the price action for the NZDUSD has been downright ugly. The bearish engulfing candle that formed at key resistance on January 26th looked impressive, but it clearly wasn’t enough for buyers to throw in the towel.

Then on January 31st buyers managed a close above the trend line from the 2016 high. But those gains didn’t last long as the pair closed back below the level the very next day.

Whenever a market becomes this indecisive, the best thing to do is to stay on the sideline, at least that’s my approach. Otherwise, you’re likely to get “chopped up” in the back and forth movement.

For buyers to clear the road ahead, we’ll need to see a daily close above the 0.7350 area. Ideally, the pair would also need to clear the trend line from the 2016 low on a daily closing basis.

To expose downside targets, sellers will need to overcome the 0.7240 support level on a daily closing basis. This area has been a key pivot since September of last year and has more recently attracted bids during the past three sessions.

I’m staying neutral at the moment. Perhaps this Wednesday’s RBNZ rate decision at 3 pm EST will push the pair out of its comfort zone.

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NZDUSD consolidation

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  1. Hi and appreciate for sharing very good big picture of market in advance.
    Hope you have a good sleep and energy to inform traders sooner any bad things happen in the market. Again thank you very much and God bless you

  2. Ta, can you see any reason behind the rather large move up on the NZD/JPY , after nz dropped rates and said more doveishness on the cards ? shear market pigheadedness maybe ? cheers MG

  3. Already a member, This was a very good decision, if your thinking about it, You will be glad you did. You have to do the learning, but it is so worth it. Jason is a good teacher.

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