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In this weekly Forex forecast, I’m going to show you exactly how I’m trading EURUSD, GBPUSD, USDJPY, NZDUSD, and EURJPY through March 13, 2020.
Watch the video below, and be sure to scroll down for more commentary and annotated charts.
The EURUSD confirmed a significant breakout last week.
We have discussed this descending channel that extends from the 2019 high dozens of times since last September.
It’s what caused me to get relatively bullish last October and bearish this past January.
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The bottom of that channel is what led me to look for buying opportunities when the EURUSD was breaking above that 1.0825 level on February 21st.
Of course, I had no idea the rally would play out in such epic fashion.
Since reaching the bottom of that channel less than a month ago, the EURUSD is up over 500 pips as of Friday’s close.
Speaking of Friday’s close, the euro is now above the top of that 2019 channel on a daily and weekly closing basis.
Unless it turns out to be a false break, I favor buying the pair on dips.
Key support for the week ahead comes in between 1.1170 and 1.1210.
Key resistance, on the other hand, is that 1.1450 level I wrote about on March 2nd. It’s also my target for the EURUSD.
Alternatively, a close back inside this channel near 1.1170 would negate the bullish outlook for the pair.
The GBPUSD is a bit of a mess.
That’s especially true when compared to other technically sound currency pairs like the EURUSD, USDJPY, or even NZDUSD.
Despite the levels on your GBPUSD chart, the fact is the pair is sideways.
I realize there is a descending channel that extends from the current 2020 high, but I also can’t ignore the two levels I’ve had on my chart for months.
The first is the bottom of the 2019 channel, and the second is the November 2019 trend line.
Those two levels intersect somewhere around 1.3170.
But to be clear, I have no interest in trading the GBPUSD.
I don’t even have a bias at the moment.
One thing I always tell Daily Price Action members is to focus on what’s working and easy and forget the rest.
Good trading should be effortless.
If you think about it, you’ll quickly realize your best trades were effortless.
That’s the key.
With that in mind, I’m going to give GBPUSD some space to figure out what it wants to do.
A favorable setup will materialize at some point, but we aren’t there yet, in my opinion.
The USDJPY has played out beautifully for us.
And despite what some might say, the technicals are still very much intact here despite the recent increase in volatility.
I wrote about the potential USDJPY false break on February 25th.
The idea was that a daily close below 109.80 would confirm the false break and send the risk-sensitive pair lower.
We got that close on February 27th.
Since that time, the USDJPY has shed 420 pips as of Friday’s close.
Friday’s close is a little tricky, though.
I wrote about the bottom of this multi-year wedge pattern that extends from June 2013 several times.
If you saw those posts, you know that level was near 105.50.
Given how quickly USDJPY reached that support level, the area is now closer to 105.30/40, in my opinion.
Now, notice Friday’s 105.36 close.
Does that mean wedge support is intact or did the pair close below it last week?
We won’t have a clear answer until the first 24 hours of next week is behind us. It’s simply too close to call right now.
However, what I do know is that the US dollar is in trouble, which is why I remain short here and will continue to look for opportunities to add to that position.
The NZDUSD is starting to look attractive.
On Friday, the pair managed a daily and weekly close back above the 0.6325 level.
Notice how 0.6325 has been a factor since last September.
Furthermore, the pair is coming off of a key support area at 0.6200.
That region supported the NZDUSD last October as well.
Last week’s rally also carved a bullish engulfing pattern on the weekly time frame, which could be another sign the pair wants to move higher.
And if all of that wasn’t enough, the NZDUSD just tested multi-year trend line support that extends from the 2000 lows.
All of this comes as the US dollar is selling off aggressively, and just closed below a key level of its own, which I shared in the member’s forums last week.
As long as 0.6325 support is intact on a daily closing basis, I favor a move higher from the New Zealand dollar.
Just remember that there are no guarantees in this business, so it’s best to acknowledge that last week’s move could be a bull trap.
Key resistance for the week ahead comes in at 0.6435 followed closely by 0.6490.
I discussed the EURJPY on Friday.
Given the recent strength from both the euro and the Japanese yen, it’s no surprise to see the EURJPY locked in a stalemate.
However, nothing lasts forever.
The latest round of consolidation between 118.50 support and 121.00 resistance is no exception.
A breakout from this consolidation could offer an opportunity in the coming week.
To be clear, though, I’m only interested in shorts here.
Yes, the euro has been incredibly strong of late, but there’s no denying the fact that the EURJPY has been trending lower since the start of 2018.
Furthermore, we saw the pair break below an ascending channel on January 24th.
That ascending channel represents consolidation within the broader downtrend.
All of this insinuates that the sideways movement between 118.50 and 121.00 could trigger a continuation of the downtrend.
We’ll have to wait and see, but a break below 118.50 would target the 2019 lows near 116.00.