In this weekly Forex forecast, I’m going to show you exactly how I’m trading EURUSD, GBPUSD, USDJPY, EURGBP, and EURJPY through September 27.
Watch the video below, and be sure to scroll down for more commentary and annotated charts.
Leave me a comment on YouTube or at the end of this post to share your thoughts or ask a question.
The EURUSD has struggled to make headway in September.
Since closing below 1.1070 on August 29, the single currency has traded within a range of fewer than 200 pips.
I’ve discussed this range between 1.0930 and 1.1070 several times in recent weeks.
And as I mentioned in last week’s video, sellers are in control as long as the confluence of resistance near 1.1070 is intact.
However, minor support at 1.0990 isn’t far below Friday’s close.
Key support for EURUSD, in my opinion, is that 1.0930 level where the pair bounced on September 12.
So where is EURUSD likely to go from here?
Notice I added likely to that question.
The fact is that nobody knows where the euro or any other currency is going this week.
The best we can do is determine likely scenarios based on the price action in front of us.
With that said, the plan, at least for me, is to see whether we get a close above channel resistance at 1.1070 first or below 1.0930 support.
If we get the former, the EURUSD could be on its way to 1.1200.
On the other hand, a close below 1.0930 support would signal weakness.
But as I’ve mentioned several times this month, the broader descending channel here may limit the euro’s downside potential.
Be sure to watch the video above to see why.
All in all, though, the immediate path forward for the euro comes down to which end of the current range fails first.
Will it be 1.0930 or 1.1070?
As always, time will tell.
Keep in mind that we have a few events on Thursday that could move the needle for the EURUSD.
The GBPUSD has played out beautifully since September 4.
I wrote about the break above channel resistance that same day.
Our first target following that breakout was 1.2380. The pair reached that level in just three days.
However, the more likely target for GBPUSD was 1.2570.
Here’s what I wrote on the 5th:
All in all, GBPUSD looks like it wants to head higher.
But it’s going to come down to whether or not buyers can keep the price above former channel resistance (new support) on a daily closing basis.
Do that, and 1.2570 is a very real possibility.Quote from September 4
The pound did, in fact, hold above former channel resistance and also reached our 350-pip target last week at 1.2570.
Notice too how GBPUSD sold off on Friday.
That decline was triggered by the 1.2570 region which was a factor between late-May and mid-July.
So what’s next for GBPUSD?
Is the pair on its way to 1.2770 or is a return to 1.2380 more likely?
I need to see more from the pair to answer those questions.
More specifically, the pound needs to clear 1.2570 resistance on a daily closing basis in order to expose the next key resistance at 1.2770.
Remember that I use New York close charts so that each 24-hour session opens and closes at 5 pm EST. These charts are essential for trading price action
As long as it’s intact as resistance, though, it’s going to attract sellers just like it did before the weekend.
Alternatively, a rotation lower into 1.2380 followed by bullish price action would hint at a move higher back into 1.2570 and perhaps 1.2770.
I wrote about USDJPY on Friday.
The close above channel resistance near 108.00 on the 12th appeared to signal that buyers wanted to push the pair higher.
However, I wrote Friday’s post title as a question for a reason.
That reason has to do with the fact that USDJPY retested former channel resistance as new support rather abruptly last week.
Notice how quickly the pair returned to the 107.80 area on Thursday.
That isn’t the type of “rounded retest” I like to see when buying or even selling a breakout.
Furthermore, it was Friday, and I never like to enter a new position just before the weekend.
Look no further than last Monday’s gap down to see why I dislike entering on Fridays.
With all that in mind, I decided to sit on the sideline on Friday to find out where USDJPY would close out the week.
And it’s a good thing I didn’t buy at 107.70.
I even posted in the membership site telling members that I wouldn’t make a decision here until I saw where the pair closed in relation to 107.70.
Friday’s selloff and subsequent close leaves little doubt that this was a failed breakout.
Be sure to watch the video to see the other price action signal that formed last week.
As such, I expect sellers will want to defend the 107.70 area as resistance.
And as I wrote last week, this close back inside the descending channel re-opens the door to the next key support at 106.80.
I wrote about a potential EURGBP topping pattern on August 19.
The bearish engulfing pattern on the weekly time frame is what tipped me off.
Combine that signal with the fourteen weeks of consecutive gains and you have a recipe for a bearish reversal.
Sure enough, EURGBP sold off from the 0.9180 on August 20.
You can see where 0.9180 – 0.9200 was the resistance zone I pointed out in my August 19 post.
Since that time, the euro cross has lost 400 pips.
That’s an impressive move from a currency pair that often moves less than 80 pips in a single day.
However, I think sellers need to be careful here.
Although EURGBP is still holding below the 0.8840 key level, we could see a push higher this week, perhaps into 0.8920.
Notice how the pair has been sliding lower just above channel support.
That’s an indication, at least for me, that EURGBP may need to blow off some steam before the next leg lower can materialize.
We also have a confluence of resistance up near 0.8920.
If I were a seller, I would much rather sell at 0.8920 than try to force something below 0.8840.
The former offers an extra 80 pips of profit potential and has a much greater chance of triggering another leg lower, in my opinion.
So for now, I’m going to sit back and wait.
If EURGBP can force a retest of the confluence of resistance near 0.8920, I will entertain a short position.
Key support on the way down includes 0.8760 followed by 0.8680.
The latter would be my final target if I can secure an entry in the 0.8920 region.
On the other hand, a close above descending channel resistance would negate the idea and expose 0.9015.
The way EURJPY was hovering below channel resistance last week looked relatively constructive for buyers.
I wrote about this and even made a video on the 19th.
But the pair never did close above channel resistance near 119.70.
If you watched last week’s video, you know that was my requirement for EURJPY to stand any chance of seeing 121.00 or higher.
The fact is that this channel top was always serving as resistance, never as support.
That’s evident by Friday’s selloff.
For the week ahead, I’ll be keeping an eye on the 118.30 area.
I pointed out this support level in last week’s post.
You can see how 118.30 served as support in early August and later attracted sellers between the 15th and 22nd of the month.
There is also some support just below 118.30 at 117.80.
If buyers can step in and prop the pair up around 117.80 and 118.30, we could see price revisit channel resistance.
On the other hand, if that support area fails, EURJPY is likely headed back to the 116.00 support region.