Daily Price Action

Weekly Forex Forecast (June 19 – 23, 2017)


The EURUSD did little last week to inspire a decision one way or the other. The pair continues to bounce between 1.1100 and the 1.1250 area with no clear indication of future direction.

Technically speaking, the single currency carved a bearish engulfing pattern on the weekly chart. With that said, it wasn’t the most convincing close if you’re a bear given the 50 pip rally just before the weekend.

One thing to note is how the 1.1250 area held as resistance during Wednesday’s session. This is a former resistance level that gave way to buyers on June 2nd and held as support for a brief period. However, the June 8th close negated the bullish breakout to some degree.

From here I suspect any additional retest of the 1.1250 area to attract an influx of offers. Alternatively, a move lower toward 1.1100 would likely encounter buying pressure. Only a close below 1.1100 would challenge the current 2017 rally.

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EURUSD range

Similar to the EURUSD above, the GBPUSD spent last week consolidating below the 1.2775 support area, which is now serving as resistance. The pair closed below the level following the June 9th gap down.

This gap is not visible with all brokers.

The longer the gap remains open, the less of a chance there is that it will close anytime soon. And as long as the 1.2775 area holds as resistance on a daily closing basis, I favor a move back toward 1.2655 and perhaps 1.2560 over the coming weeks.

Although I maintain a bearish outlook, the lack of a proper sell signal has kept me on the sideline. I’m especially cautious with the pound sterling given the volatility we’ve seen lately, a level of activity I suspect will continue for the foreseeable future.

GBPUSD resistance

The price action on the USDJPY over the last few months is an excellent illustration of how indecisive markets have been.

As you may well know, the pair often acts as a proxy for risk assets such as equities, so when the price action becomes choppy and erratic as we’ve seen lately, it suggests a high degree of indecision across markets as a whole.

The May 17th selloff and close back below channel resistance was significant in that it suggested the May 8th (bullish) break was false. After retesting 112.10 on May 24th, the pair spent the next 15 sessions trending lower including last week’s fresh low at 108.81.

However, USDJPY bulls are once again putting pressure on channel resistance near 111.00. Although they failed to close Friday above this area, the bullish push between Thursday and Friday does hint at renewed strength, though limited for now.

For the new week, the pair finds itself trapped between 111.00 resistance and 110.30 support. Both of these areas have been respected on a daily closing basis which means intraday charts are off limits for me at the moment.

A daily close above 111.00 would expose 111.70 followed by 113.25. Alternatively, a daily close below 110.30 would re-expose 108.81 followed by 108.40.

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USDJPY range

We discussed the NZDUSD on both Tuesday and Thursday of last week. The first commentary focused on what appeared to be an exhaustion pattern forming on the NZDUSD 4-hour chart.

After buyers had advanced the pair by another 100 pips, the NZDUSD broke wedge support just before Thursday’s session close.

The idea was to begin watching for selling opportunities near the 0.7240 area. There was a confluence of resistance in the region that made it an area worth watching.

Apparently, buyers had other plans. The 0.7240 handle was taken out on Friday as the US dollar struggled to gain traction. However, there was no sell signal upon retesting 0.7240 and considering there were just hours left in the trading week I decided to stay on the sideline.

If you use the trend line placement from Thursday’s commentary, it looks like the breakdown was a false move. But there is another explanation via the adjusted former support level you see below.

Of course, whether or not the 0.7250 area holds as resistance is yet to be seen. For now, this is just something I’m keeping an eye on. I’m in no hurry to get in here and will need to see sellers hold the line before committing any capital.

Interim support comes in at 0.7185 followed by 0.7125. Alternatively, a close back above former wedge support near 0.7260 would negate the bearish bias.

NZDUSD broken wedge

After a run up of more than 2,000 pips from the current 2017 low, the GBPCAD broke below a key support area last Monday. The 1.7050 region includes former trend line support from the January 16th low and a horizontal level that’s played a role since July of last year.

I didn’t comment on the June 12th break because I wanted to see what the pair did first. With prices now holding below 1.7045, I would expect a retest of the 1.7045 area to attract an increase in selling pressure.

Considering that the Canadian dollar can be difficult to read at times, I’m going to wait for a proper sell signal before considering an entry. If we don’t get one, that’s okay as this trade idea is secondary to the others listed above.

For the week ahead, key resistance comes in at 1.7045 while support can be found at 1.6540. A close below that would target the February lows near 1.6240.

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GBPCAD technical break

Leave a Comment:

MIMI says

Thanks Justin, always looking forward to your weekly forecasts!

    Justin Bennett says

    You’re welcome, Mimi. Glad to help.

Haddon says

Thank You Justin. This is very helpful!

    Justin Bennett says

    You’re welcome. Pleased to hear that.

Atila says

Hi Justin,
AUD/USD had Bearish Pin Bar on Thursday Close. Now is it good to short on 50% Pin Bar entry

halim says

good analysis.

    Justin Bennett says

    Thanks. Glad to help.

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