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In this weekly Forex forecast, I’m going to show you exactly how I’m trading EURUSD, GBPUSD, USDJPY, EURJPY, and XAUUSD through January 10, 2020.
Watch the video below, and be sure to scroll down for more commentary and annotated charts.
The EURUSD tested a significant resistance area last week.
I first discussed the descending channel resistance at 1.1200 back on September 6th when the pair was about to test the channel bottom near 1.0900.
Based on the price action since early 2019, an eventual retest of the 1.1200 region seemed inevitable.
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As you can see, this 1.1200 area attracted sellers last week.
The pair also fell back below the 1.1175 horizontal level, which means this 1.1175 to 1.1200 area is still intact as resistance.
As for key levels on the way down, I think the confluence of support at 1.1075 is going to be one to watch.
A daily close below that 1.1075 level would hint at weakness.
It would also expose the next key support at 1.0990.
However, euro bears need to proceed with caution as long as the EURUSD is trading within this ascending channel.
The GBPUSD could be carving a lower high.
We saw the pound retest the ascending channel top in mid-December, which triggered a relatively aggressive selloff.
To me, the latest rally that began on December 24th looks like a bull trap.
The potential lower high that formed last week combined with the close back below 1.3160 looks rather bearish.
However, it’s going to take a daily close below 1.2980 to expose downside targets.
Furthermore, I don’t expect to see the GBPUSD move much lower until sellers clear the ascending channel support near 1.2800.
The USDJPY has finally broken free from its range between 108.40 and 109.70.
The pair is also selling off from a trend line that extends from November 2018.
I first mentioned this trend line in the December 21st forecast video.
But the sideways price action has made USDJPY a tricky one to trade.
That’s why we were waiting for a close below 108.40 before entertaining a short opportunity.
Friday’s session has given us just that.
As long as the USDJPY is below 108.40 on a daily closing basis, I have to remain relatively bearish the pair.
Key support for the week comes in at 106.80.
Alternatively, a daily close back above 108.40 would negate the bearish outlook and also re-expose the trend line near 109.50.
The EURJPY retested a significant support level on Friday.
The ascending channel in the chart below has been intact since the 2019 low in September.
We also have a larger descending channel that has been in place since the 2018 high.
A close below the ascending channel support could very well trigger the next leg lower for the EURJPY, perhaps toward the 119.20/30 area.
Just remember that as long as the pair is within this ascending channel, the short-term uptrend is intact.
The XAUUSD (gold) reached our second target on Friday at 1550.
Gold hit our first target at 1515 on December 27th.
If you’ve followed this site for the last couple of weeks, you know that I was bullish XAUUSD given the falling wedge that had developed.
This wedge followed an aggressive 2019 uptrend, which helped support my bullish stance on the metal.
Anyone who caught the December 23rd breakout has made out well here, especially if they held some for the second target at 1550.
For now, though, I’d like to see XAUUSD consolidate before the next leg higher.
We’ve yet to see any meaningful consolidation since the pair broke higher in late December.
And with gold resting just below the 2019 high near 1555, I’d be surprised to see the metal rally further without seeing some profit-taking first.