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Weekly Forex Forecast (June 5 – 9, 2017)

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The EURUSD continued its rally last week after a brief pause below the 1.1250 area. The pair carved fresh highs for the year despite still trading below the November 9th spike high from 2016.

A look at the 4-hour chart shows the recent consolidation in the form of a bull flag, though it wasn’t a very substantial pattern in relation to the 430 pip rally from the May low at 1.0838.

From here there doesn’t appear to be much standing in the way of a run toward the next key resistance level at 1.1355. In fact, I wouldn’t be surprised to see the pair trading at 1.1450/60 in the coming weeks.

With that said, if the Euro does reach the 1.1450/60 area, it could signal the beginning of a moderate pullback. More on this in the days and weeks to come.

For now, the 1.1250 handle remains key support while a retest of 1.1355 would likely encounter selling pressure. Only a daily close back below 1.1250 would challenge the bullish bias.

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EURUSD channel

The GBPUSD is in some ways the inverse of its EURUSD counterpart. While the single currency recently carved out a bullish flag, the British pound has formed an upward sloping flag which suggests exhaustion from buyers.

But despite the exhaustion pattern, GBPUSD bulls managed to carry prices higher last week and even close the pair back above 1.2860. However, I’m far from bullish here given the way prices have drifted higher following the May 26th plunge.

As long as the 1.2940 area remains intact as resistance, I’ll maintain my bearish stance. Key support for the week ahead comes in at 1.2860 followed by last week’s low near 1.2770.

GBPUSD upward sloping flag

The USDJPY has been relatively uneventful in recent weeks. In fact, last week’s close was just 36 pips below the May 17th close. In other words, the pair has gone nowhere in the last two weeks.

But despite the lack of direction, the USDJPY has been respecting the technicals in a manner that deserves attention.

On May 24th I pointed out how the pair was retesting channel resistance at 112.10. This was an area that had previously capped advances since March 10th but had fallen to buyers on May 8th.

Then came the 230 pip single session selloff on May 17th. The close back below the upper boundary of the channel had us questioning which was false – the May 8th bullish breakout or the May 17th selloff?

At this point, it seems we have our answer. The May 8th break above channel resistance appears to have been a false breakout. This idea is backed by the May 24th selloff from 112.10 and Friday’s rejection from 111.70, a level we’ve been watching for some time now.

For the week ahead, key support comes in between 110.10 and 110.25. A close below that would expose the current 2017 low near 108.40. Alternatively, a push higher this week would likely encounter selling pressure near 111.50/70.

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USDJPY daily chart

GBPJPY found resistance right where we’d expect last week at the May 17th and 23rd lows near 143.70. This was an area I pointed out last weekend that was likely to serve as new resistance moving forward.

Although buyers managed a 143.93 print on Friday, the sharp selloff into the weekend is a sign that sellers maintain control.

What isn’t clear just yet is whether the pair broke support in the 142.40 area. Friday’s close at 142.37 is too close to make that decision just yet.

In times like this, I like to let the next 24 hours of trade do the talking. If the GBPJPY closes Monday well below the 142.40 area, we can begin watching for selling opportunities on a retest of the level as new resistance.

On the flip side, if Monday closes above the 142.40 area, that’s our sign to stay on the sideline and wait for a decisive selling opportunity. But as long as 143.70 holds as resistance on a daily closing basis, my bearish bias will remain intact.

GBPJPY range

On May 31st, the AUDJPY confirmed what I had suspected might happen since the May 17th selloff. On that day sellers once again pressured a trend line that extends from the 2016 low.

The aggressiveness of the May 17th move prompted me to begin watching for a breakdown of trend line support. By May 26th a breakdown seemed imminent given the lower highs into key support. I previously wrote about this type of “heavy” price action in this post.

We had to wait two weeks to get it, but sellers eventually came through.

With the pair trending lower last week and maintaining sub 83.00 levels, traders can watch for selling opportunities on rotations back to resistance. However, such a rotation may not occur until the current 2017 low at 81.50 comes under fire which could happen in the coming week.

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AUDJPY trend line

Leave a Comment:

8 comments
Harry says

Hi Justin, regarding AUDJPY, what did you mean by selling opportunites on rotation back to resistance. Thanks.

Reply
    Justin Bennett says

    I mean to watch for sell signals on a retest of the 83.00 area.

    Reply
Za says

I just want to say that I love your weekly forecasts – I’ve been reading them consistently for months and your bigger picture perspective is always helpful.

Thanks alot!

Reply
    Justin Bennett says

    You’re welcome. Cheers.

    Reply
ADE CANDRA SANTOSA says

Thanks a lot for share Mr. Justin Bennett

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Indra says

Minimal injec berapa?

Reply
uffan says

Thanks justin, easy to be understand

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