Weekly Forex Forecast (June 12 – 16, 2017)

by Justin Bennett  · 

June 11, 2017

by Justin Bennett  · 

June 11, 2017

by Justin Bennett  · 

June 11, 2017

After holding above the 1.1250 handle for three days, the EURUSD gave up the level on Thursday of last week. Friday’s price action didn’t do much to rechallenge the 1.1250 area, but buyers did at least step in to stop the bleeding to some degree.

It’s no secret that the single currency has outperformed the greenback throughout 2017. The series of higher highs and higher lows during the first quarter gave way to a more aggressive rally that began following the first round of the French election on April 23rd.

With that said, the Euro has looked a bit tired in recent weeks starting with the first test of 1.1250 on May 22nd. Since that time the pair has been limited by a range of just 175 pips.

Last Thursday’s breakdown suggests we could see a return to support at 1.1100. This was the May 18th close and was also responsible for attracting a bid on May 30th.

The rally is still intact at this stage, but it would appear that a pullback is likely given last week’s price action. If the pair does retest 1.1100 and subsequently closes below it, we could see a larger correction develop which would expose the 1.0950 area.

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EURUSD range

The release of the exit poll following Thursday’s UK election triggered a 250 pip selloff in the GBPUSD. The drop wasn’t too surprising given the bearish pattern that had developed in recent weeks.

One thing I mentioned on Friday was the possibility of a sub 1.2770 close on the daily and weekly charts. Despite their best effort, buyers were unable to overcome this hurdle before the weekend, suggesting that additional losses are likely.

From here traders can watch for selling opportunities on a retest of the 1.2770 area as new resistance. Key support comes in at 1.2670 which lines up with highs from January and February. It also attracted some buying pressure during Friday’s selloff.

A close below 1.2670 would expose the highs from February to mid-April at 1.2560. Given the channel that has formed over the last six months, an eventual move toward the 1.2400 area should not be ruled out.

GBPUSD daily chart

I don’t often talk about the USDCAD, but a trend line has emerged that caught my attention. The level that extends from the February 16th low is well worn at this point and came under fire once again at the end of last week.

In fact, Friday’s price action engulfed the previous four sessions, suggesting that sellers may be about to drive prices lower.

Speaking of which, a close below the 1.3450 area would expose 1.3285. This area has been a factor since late September of last year and also attracted buyers during the second half of March.

A word of caution though. One reason I haven’t covered the USDCAD recently is due to the choppy and somewhat erratic movement of late. One could argue that since the May 2016 low, the price action has been relatively difficult to read.

Of course, that doesn’t mean things won’t change or that a close below this ascending trend line won’t offer a favorable setup. It’s just something to keep in mind should you decide to trade this pair.

Want to see how we are trading these setups? Click here to get lifetime access.

USDCAD trend line

On June 5th we looked at how the EURJPY had stalled below the 125.80 area. In that commentary, I mentioned that a close below the confluence of support at 123.60 would expose 122.60.

Less than 48 hours later the pair plunged below the 123.60 handle. Then on June 7th, less than 24 hours after the sub 123.60 close, the pair carved a session low of 122.62 before bouncing to end the session higher.

So far, the technical landscape appears to be directing price on a daily closing basis. And as long as the 123.60/80 area continues to hold as resistance, there’s a good chance that 122.60 will come under fire yet again.

Whether Tuesday’s breakdown is the start of a larger bear move or just a correction is yet to be seen. One thing we can extract from last week’s price action is that buyers aren’t willing to let prices slide lower just yet.

I’ll continue to monitor the pair for selling opportunities from the 123.60/80 area. Key support comes in at 122.60 followed by 121.70.

EURJPY resistance area

The AUDJPY is acting stubborn yet again in the sense that the yen cross has essentially gone nowhere since April despite the 300 pip range.

But more than that, buyers have taken prices right back to former trend line support following the breakdown on May 31st. We saw this retest take shape between Wednesday and Friday of last week.

However, Friday’s session slammed into a confluence of resistance that wasn’t a factor on Wednesday or Friday. As you can see from the chart below, the 83.10/20 area is the intersection of the trend line from the 2016 low as well as a trend line from the March 2017 high.

Will this area continue to thwart buyers as it did on Friday?

We’ll have to wait and see. As long as the 83.10/20 area holds as resistance on a daily closing basis, the odds of a return to the 81.50/80 area remains high.

I’m short from 83.30 which I also mentioned inside the member’s area. The factors that led me to the decision included the recent bearish trend, the confluence of resistance at 83.10/20 and an overextension of the average daily range during Friday’s session.

Want to see how we are trading these setups? Click here to get lifetime access.

AUDJPY confluence of resistance

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