Daily Price Action
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Weekly Forex Forecast (March 12 – 16, 2018)

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On Monday of last week I wrote that the next move from the EURUSD hinged on 1.2355. It’s the 50% retracement from last week’s range and the location of several sessions highs between the 21st and 26th of February.

However, buyers had other plans. The 1.2355 area held as resistance on Monday, but Tuesday’s 1.2403 close signaled that Euro bulls weren’t quite ready to capitulate.

Much like the GBPUSD, the price action last week suggests consolidation. In fact, most of the movement so far in 2018 has been limited between 1.2160 and 1.2520.

That isn’t too surprising given that the EURUSD is approaching the last few weeks of a broad terminal pattern. At some point soon, market participants will be forced to decide between a break of the April 2017 trend line or trend line resistance from the 2008 high.

In the near-term, I believe the 1.2355 area will do its best to cap any advance this week. As such, I will be on the lookout for a selling opportunity should we get a retest of 1.2355 as new resistance.

The next key support below 1.2355 comes in at 1.2160. It also appears that the April 2017 trend line will intersect very near the 1.2160 handle, making a retest here much more significant as it relates to the broader trend.

EURUSD two trend lines on the daily time frame

Last week’s GBPUSD price action was all consolidation. That isn’t surprising given the 200 pip drop the week before.

The retest of descending channel resistance on February 26 offered a short setup that we took full advantage of. Even the subsequent close below ascending channel support on the 27th provided yet another opportunity to get short.

As long as the GBPUSD trades within this descending channel, I will favor a move to 1.3600. This is the area that, if tested as new support, could trigger the next leg higher for the pair.

If the final 48 hours of trade last week is any indication, we should see sellers come out to defend the 1.3860 area early this week. As long as that remains the case on a daily closing basis (using a New York close chart), a move lower is likely.

Key support comes in at 1.3600. However, the March 1 low at 1.3711 will no doubt attract a few bids on the way down.

GBPUSD descending and ascending channels

The GBPJPY fell short of overtaking the 147.90 resistance level on Friday. Despite the intraday surge to 148.54, buyers were unable to hold onto the gains into the close.

147.90 is a level I mentioned on March 1 shortly after the pair broke below trend line support that extends from the 2016 low. That break, in my opinion, is much more significant than any horizontal level we will discuss today.

With that in mind, I will be on the lookout for selling opportunities this week. However, seeing as how I don’t like to trade in the first 24 hours of the week, I will have to wait.

I’m okay with that because although the GBPJPY formed a 4-hour bearish pin bar on Friday, it isn’t quite enough to get me interested. I’d rather see bearish price action develop on the daily time frame, and preferably at or near former trend line support.

For that to occur, the GBPJPY would need to retest the 149.40 area. We’ll have to wait and see what this week delivers, but if we do get a 149.40 print, I will be watching for a bearish signal to get short.

Based on Friday’s close, key support for the week comes in at 145.85 followed by 144.00. If the pair closes back above 147.90, this area will likely attract a few bids on the way down.

GBPJPY trend lines on the daily time frame

The EURNZD has taken its time at trend line support. Since February 20, buyers have had to work hard to keep their heads above water. Thanks to trend line support from the 2017 lows, they’ve been able to do just that.

However, things took a turn for the worse last week. Thursday’s candle engulfed the previous three sessions and triggered yet another retest of the 2017 trend line.

Whenever a market begins to lean on a trend line like this, it’s a sign that a breakout is just around the corner. I don’t believe this to be an exception.

From here I’ll be waiting for a daily close (using New York close charts) below trend line support near 1.6870. Such a breakdown would expose downside targets including 1.6800, 1.6640 and 1.6450.

My target following a daily close below the 1.6870 area will be 1.6140. I’ve had my eye on this level for a couple of months now. It’s a key pivot on the weekly time frame and the 161.8% Fibonacci extension from the January 11 low to the March 8 high.

EURNZD trend line support

On Wednesday I discussed a pending short idea on the GBPNZD. Since February 22 the pound cross has been skipping along trend line support from the August 2017 low. However, buyers have failed to produce any meaningful gains.

I commented on Wednesday that this type of price action suggests that a breakdown is imminent. Thursday’s 1.8994 close appears to have done just that.

As further evidence that buyers have lost trend line support, Friday’s high appears to have retested the former support level as new resistance. As long as 1.9020/70 resistance holds on a daily closing basis (New York 5 pm EST), downside targets remain exposed.

The first level of interest is 1.8810 followed by 1.8610 and 1.8345. However, if history is any indication, we could see the GBPNZD return to the 2016 trend line shown in the chart below. That would represent an 800 pip drop from current levels.

As a side note, a drop of that magnitude compliments what we just reviewed on the EURNZD. That makes sense given that the two move in tandem more often than not. As always, time will tell.

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GBPNZD breakdown from trend line support

Leave a Comment:

31 comments
David says

Thank you for your advace

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Gerhard says

thanks Justin, my eyes are on the gbpnzd.

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Brighton says

Thank you Justin,am seriously looking at the eurusd

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Victor Edet says

what a great weekly forecast. Thanks man

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Augustine says

Your ‘re just the best, JB.

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Mimi says

Much appreciated as always Justin!

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Emuobo says

Thanks.

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Azad says

Good Thank you for your advace

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Vickshard says

the review is immensely insightful. happy pipful week ahead.

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Yjay says

Great Analysis, many thanks.
we could keep our eyes on EurCad also.

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Ahamefula says

Thanks so much on that forecast. I’m beginning to build more confidence after much loss.

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Lawrence says

Thank you Justin for your continued devotion upon helping traders .Viva Justin!!!!!

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Darius says

wow. One of my gbpjpy already got stopped out at 148,48 on friday. And other couple SL is at 148,923. It is already far higher than ema 20. And you are watching for 149.40 . So that means I should move SL up? Or you should never move SL up. I usually never move SL up but if like now I know it is my mistake, better to move up instead of making usless loss?

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    Darius says

    With current SL at least even if it gets stopped out, I will be still in plus, because I sold higher.

    Reply
    azlan says

    hye there,,, i wud rather it hit the stop loss,,, and review my previous entry for improvement

    Reply
      Darius says

      Hi, ok, maybe I will do this with hope that they will not hit. So that means even if there is so strong resistance levels, I need to make room for price move even more. I really thoughtat that if those resiscace levels are broken, then I should be out. They are not yet broken both, but spikes intraday happen. Now it is monday evening and it is attacking 147.9 again for long time. Maybe will close below, still few hours. At least today did not hit friday high.

      Reply
Abdallah says

So great analysis, I am looking forward to start trading soon

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Steve says

Thanks Justin for the heads up, appreciate the good work.

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FELIX GREAT says

Thanks so much Justin. Glad I found you. Beginning to understand price action.

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kolapo62 says

Why the disappointing MUTED response to the NFP on Friday?That was a serious anti-climax despite the better than expected NFP result.

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Rasik says

liveaccount

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Abdul Qayum Sabbah says

hi sir,
what moving average do you use your charts

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    ANETOR IBIKUNLE says

    He Uses The 10 And 20 EMA On His Charts. Cheers!!

    Reply
scheun says

Any comments on AUSUSD

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Sadiqullah says

If you have a Dubai branch, you can

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lebakeng says

Thank you Justin

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Samuel says

Hello my teacher! i must appreciate your work. Thank you.

Pls on the GBPUSD analysys, i think am seeing a trend line from November 2nd 2017, which i think its break might still be a stronger move. pls i await correction if am wrong.

Thanks!

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Akinbola Sunday says

Thanks for your analysis on eurnzd and gbpnzd. I am on the lookout for sell signal

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Latoya says

Thank you Justin

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Sumantra Kumar halder says

I’m impressed for your analysis. Thank you so much.

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Nguyu1ec5n+Ngu1ecdc+Tuu1ea5n says

Rất chính xác. 👍👍👍

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