In this weekly Forex forecast, I’m going to show you exactly how I’m trading EURUSD, GBPUSD, USDJPY, GBPNZD, and XAUUSD through December 18, 2020.
Watch the video below, and be sure to scroll down to see the charts and key levels for the week ahead.
The EURUSD started the week with a pullback after testing the 1.2150 resistance area.
As Daily Price Action members know, I entered a long position on November 27th before the pair broke out from 1.20.
The consolidation that developed last week below 1.2150 took on the shape of a 4-hour bull flag pattern.
EURUSD broke out from that intraday pattern on Thursday but failed to hold above it before the weekend.
It seems 1.2150 resistance was too strong for euro bulls.
That gives us a range-bound market to start the new week.
If EURUSD buyers can get above 1.2150 on a daily closing basis (using a New York close chart), it would open the door to 1.2330.
Alternatively, a close below 1.2070 would expose 1.2000 support.
Disclosure: I hold a EURUSD long position.
GBPUSD looked ready for higher ground last week after breaking above a multi-year falling wedge.
I’ve discussed that pattern a few times in recent weeks.
However, Brexit concerns had traders on edge before the weekend, which led to a GBPUSD close below the 1.3270 to 1.3320 area.
We’ll see if that close sends the pair lower this week or not.
I’m not ready to write-off the GBPUSD bullish scenario quite yet as the pair needs to climb above that 2007 trend line on a monthly closing basis.
Just because it hasn’t done it yet doesn’t mean it can’t or won’t.
The May trend line is key support for the week ahead.
That level comes in near 1.3070.
I wrote about this USDJPY 2012 trend line on Wednesday.
It isn’t the most established level, but I think it’s significant based on how the market has reacted to it in recent weeks.
If sellers can close USDJPY below the 103.70 area on a weekly closing basis, it would open the door to 101.00 support.
That’s my base case as long as USDJPY is carving lower highs on the daily chart.
I’ve discussed the GBPNZD short opportunity for months.
We first looked at the lower highs that were forming on October 26th.
I also took a short position in late October based on those lower highs and a weekly bearish pin bar that had developed.
I shared that entry with Daily Price Action members.
We also looked at the latest breakdown from a multi-year ascending channel in the last two weekly forecasts.
The 1.9100 resistance area did its job and sent GBPNZD 370 pips lower last week.
If you saw Thursday’s GBPNZD post, you know about the 1.8620 level.
Here’s what I wrote last week:
Keep in mind that GBPNZD could find support near 1.8620 on the way down.
Sure enough, the pair caught a bid at 1.8620 on Friday.
That area is support for the week ahead. It’s going to take a daily close below it to expose my final target at 1.8280.
Key resistance remains 1.8890.
Disclosure: I hold a GBPNZD short position.
Gold (XAUUSD) faltered last week after closing above $1,850 on Monday.
As I mentioned in a members-only video a couple of weeks ago, I think gold is starting to lose some of its luster next to Bitcoin.
JPMorgan said something similar last week.
I first discussed Bitcoin on this site on May 5th when the price was below $9,000.
I told DPA members I was buying BTC in April when the price was just above $7,000.
The Bitcoin price is over $18,000 today.
I think XAUUSD will eventually get its act together and move higher in 2021, but cryptocurrencies could serve as a headwind.
While I’m still bullish on gold over the next few years, I think cryptocurrencies like Bitcoin and Ethereum will far outpace the yellow metal.
For the week ahead, XAUUSD needs to climb back above $1,850 to expose $1,900.
Key support remains $1,790.