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In this weekly Forex forecast, I’m going to show you exactly how I’m trading EURUSD, GBPUSD, USDJPY, XAUUSD, and VETUSD through August 7, 2020.
Watch the video below, and be sure to scroll down to see the charts and key levels for the week ahead.
EURUSD trended higher again last week but lost some momentum in the final hours.
This entire second leg materialized in early July following the close above a bull flag pattern.
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I also announced to DPA members that I was long EURUSD back when the pair was trading below 1.1300.
That long position from 1.1299 remains open today.
Despite Friday’s pullback, I think the highlight of last week’s move was the July close above 1.1650.
That’s the top of the multi-year wedge pattern that I’ve discussed for months.
July marks the first monthly close beyond that structure.
If you missed this latest rally, though, it might be best to wait for a pullback.
I think EURUSD has become a bit overextended, and if the 1.1770/80 support area fails, we could see a retest of 1.1600/50.
That 1.1600/50 region is a must-hold region for buyers.
Key resistance comes in at 1.1900, followed by 1.2090.
Disclaimer: I hold a long position in EURUSD.
GBPUSD played out beautifully for those who caught the idea I posted last week.
In fact, I’ve been talking about the potential for a higher GBPUSD for the last two weekends.
In last week’s forecast, I discussed how a close above 1.2815 would target 1.3000.
Buyers secured a close above 1.2815 last Monday and reached the 1.3000 target by Wednesday.
But they didn’t stop there.
As you can see, GBPUSD reached a high of 1.3169 last week.
However, Friday’s bearish pin bar hints at a possible turn lower this week.
We’ll see if the pound pulls back aggressively to the 1.2800 area, or decides to take a shallower path toward 1.2970.
Either way, I think GBPUSD needs to cool off before it can move higher again.
Did USDJPY close below this multi-year pattern last week?
I’ve been discussing this wedge pattern for months.
However, USDJPY wasn’t respecting either level on a daily or weekly closing basis.
That left me waiting for a monthly close beyond the structure.
A word of caution here, though.
Although July did close below 106.00, it was marginal.
That leaves me questioning the validity of the breakdown.
Still, if we see sellers come out to defend that 106.00 area this week, that will indicate that USDJPY is headed lower.
As I mentioned last weekend, 101.00 is support.
XAUUSD (gold) continues to perform exceptionally well.
And I don’t see that changing anytime soon.
Will we have pullbacks?
But I’ve maintained for months now that I’m a fan of buying pullbacks into support or bullish breakouts.
That hasn’t changed, and probably won’t for the next few years.
With XAUUSD now above its all-time high just above 1900, it’s all about the 2000 handle, in my opinion.
I talked about that last week.
Above 2000, it gets tricky since XAUUSD has never been this high.
It may just be a matter of using 2100, 2200, etc.
Unless, of course, we get a structure that provides us with a measured objective such as a wedge or bull flag.
But until then, I’ll use 2000 as resistance followed by 2100.
Key support is the previous all-time high between 1900 and 1915.
VeChain (VETUSD) looks ready to break out again.
If you were here several weeks ago, you’d remember the 150% rally that ensued following the last breakout.
That was more than just a rally, though.
It represented a multi-year break above $0.01, which is just hours away from confirming on a monthly closing basis.
Note too how volume has increased in July.
That’s a positive sign for bulls as it shows an increase in market participation during the breakout.
Turning out attention to the daily time frame below, you can see how VETUSD has spent the last three weeks consolidating below $0.02.
And just like the monthly time frame above, volume is increasing as VET tests the top of the bull flag pattern.
What’s interesting here is the measured objective.
If I take the distance of the last rally of $0.0138 and plot it against the recent consolidation low at $0.0142, I get an objective of $0.028 on the dot.
It’s interesting because $0.028 is VET’s all-time high.
It indicates, at least to me, that a daily close above this channel is likely to expose $0.028, which would be a 60% move from today’s price.
However, as I’ve stated since June, VeChain is a long-term investment, so I’m not trading it.
That should tell you a lot about how bullish I am on VeChain, given that I’m up 90% at the time of this writing.
I think levels like $0.02 and $0.028 will serve as temporary hurdles on the path to much higher prices.
That’s just my opinion, as always.
Last but certainly not least, don’t underestimate the potential for a weekly rally from VETUSD.
The largest two-day move following the last breakout occurred between Saturday and Sunday with VET gaining over 60% just in those two days.
I’m not saying that will happen again, but ruling it out would be a mistake.
Disclaimer: I hold a position in VeChain as part of a multi-year investment portfolio.