Weekly Forex Forecast (June 6 – 10, 2016)

by Justin Bennett  · 

June 5, 2016

by Justin Bennett  · 

June 5, 2016

by Justin Bennett  · 

June 5, 2016

EURUSD finished the week in epic fashion with the help of a surprisingly weak non-farm payroll. It was the pair’s largest single-session rally since the March 10th ECB decision.

While the single currency appears to have managed a close above the 1.1360 area, I’m always wary of breaks that develop as the result of a highly volatile NFP Friday.

The reason for this is mostly due to the lack of volume that contributes to the break. A lack of participation can easily translate into a lack of conviction.

Either way, the 1.1217 handle should now act as support if tested. Any confirmed break above 1.1360 would expose the current 2016 high at 1.1615.

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EURUSD support and resistance levels

GBPUSD also found a bid during the second half of Friday’s session, although the move was muted compared to that of EURUSD.

As I type this, the pair is testing critical support at 1.4347. A close below this level would expose the March and April lows at 1.4050.

There is also a minor trend line that extends from the current 2016 low that intersects with the 1.4347 area, which would add to the degree of conviction should sellers manage such a break.

GBPUSD range in play

AUDUSD certainly took advantage of the USD weakness that took center stage during Friday’s session. The pair managed to rally 150 pips from session lows, placing the Aussie just 15 pips below key resistance at 0.7380.

This level acted as resistance in October and December of last year and subsequently capped last month’s advance on May 11th.

Whether or not the pair has what it takes to get back above the level on a daily closing basis is yet to be seen. But one thing I can say, at least for myself, is that I won’t be entertaining any long positions until it manages to do so.

A close above 0.7380 would expose the next resistance level at 0.7490 while a retracement toward 0.7225 would likely attract a strong bid.

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AUDUSD new range

AUDJPY, like most yen pairs of late, has been relatively choppy. But with the right amount of patience, this type of price action can occasionally present an opportunity to trade a breakout.

The 78.30 handle appears to be the level to break before sellers can continue the downtrend that began in November of 2014. A daily close below it combined with a retest of the level as new resistance could offer a favorable opportunity to get short.

One reason this trade idea is intriguing is that the next key support level doesn’t come in until 74.40. This offers any short position a profit potential of nearly 400 pips.

That support level, by the way, is further defined by a well-established trend line that extends from the December 2015 high as well as the 61.8 Fibonacci retracement when measuring from the 2008 low to the 2013 high.

AUDJPY key support

GBPCAD remains my top trade idea for the new week. I mentioned this opportunity a couple of times last week; the first was before the pair managed to break below 1.8825 and the second was following Friday’s intraday break.

The 1.8825 handle is important for several reasons. It played a critical role as support and resistance throughout March, it’s a 38.2 Fibonacci retracement level and is also the intersection of a distinct trend line from the April 21st low. See last Wednesday’s commentary for more on this.

From here traders can watch for a retest of the 1.8825 area as new resistance. However, if bearish pressure doesn’t allow for such a retest, a close below 1.8825 would expose the current 2016 low at 1.8110.

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

GBPCAD key technical break of support

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  1. Hey Justin,

    Thank you for the analysis. i would like to confirm if the pattern at the top of the GBPCAD 4 hour chart can be considered as a Head and Shoulders pattern. Thank you.

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