Weekly Forex Forecast (March 20 – 24, 2017)

The EURUSD had another relatively strong week, making it the third straight positive week since the March 3rd low at 1.0497. Buyers also managed a close above the 1.0712 handle, a level that has served as a pivot since early December of last year.

But despite recent strength, Euro bulls have yet to make any real progress. Price continues to swing back and forth within this 500 pip range, and the confluence of resistance at 1.0800 still stands.

I mentioned the importance of this area on Friday. To recap, the trend line from the December 8th high comes in near 1.0790. And just above that is the 1.0825 handle, a level that dates all the way back to 1999.

The 1.0825 level is also the 38.2% Fibonacci retracement when measuring from the 2016 high at 1.1615 to the current 2017 low at 1.0340.

While we could see some additional upside from the single currency, it won’t be my preferred outlet for selling the U.S. dollar. There’s far too much overhead resistance to consider going long at or near current levels.

It’s going to take a daily close above the 1.0800/25 area to convince me that buyers can sustain this rally. Otherwise, a daily close back below 1.0712 would re-expose the 1.0635 support area.

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Last week saw the GBPUSD gain nearly 300 pips from Tuesday’s low at 1.2108. However, the pair finished Friday’s session just below key resistance in the 1.2400 region.

This area has acted as a pivot since November 22nd and will likely attract sellers in the coming week.

With that said, buyers managed to carve out a weekly bullish engulfing candle. This alone hints at a level of strength that I don’t want to step in front of, at least not right now.

So while bearish price action could form near 1.2400, I’ll likely pass on any short setup for now as I don’t want to fight a bullish pattern on a higher time frame.

At the moment, key support comes in at 1.2215 while resistance remains 1.2400/10. A daily close above this area would expose the recent high at 1.2568 and possibly the current 2017 high near 1.2670.

The USDJPY bulls failed to hold prices above the 113.25 handle on Friday. I mentioned this level on Thursday as one that stood in the way of downside targets.

With the pair now well below this mark on a weekly closing basis, any retest of 113.25 will likely encounter selling pressure. I wouldn’t be surprised to see a reversion to this level given the fact the pair is now more than 100 pips below the mean as measured by the 10 and 20 EMAs.

The February double bottom at 111.70 outlines key support for the week ahead. This is a must hold level for buyers as a daily close below it would pave the way for a move toward the 110.00 area.

For now, I’ll remain on the sideline to watch what transpires if and when 113.25 gets challenged as new resistance.

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The NZDUSD could offer a range break opportunity this week. Despite gaining 125 pips following a more dovish than expected Fed, the pair fell short of overtaking the 0.7040 handle.

Buyers also just barely missed out on a weekly bullish engulfing pattern. But despite the near miss, the rally that started on Wednesday may not be done just yet.

In fact, given the technicals over the last few months, I’m favoring a break to the upside. However, I won’t enter until I see a daily close above 0.7040. Until that time comes, I’ll remain on the sideline.

If we do get a bullish break from this range, a move toward resistance at 0.7133 would be the likely outcome. This level served as support twice last month as well as the first day of March.

Key support for the week ahead comes in at Thursday’s low near 0.6970. This area served as a pivot in early January and is also the November 2016 low.

I mentioned the EURAUD last Monday after buyers failed to hold new support at 1.4090. By the time the session closed, the pair had also carved out a bearish engulfing day.

An engulfing pattern coupled with a break of a key level is precisely what I look for when evaluating this type of setup. I entered short at 1.4097 and booked profit on Wednesday at 1.3907 after a successful retest of channel support.

Shortly after booking profits I mentioned that I’d entertain another entry on a close below channel support. It seems Friday may have given us that break.

However, the horizontal support at 1.3893 is one to keep an eye on this week. Also, Friday breakouts can sometimes be tricky as volume tends to taper off in the final hours of the session.

We should know whether this was a valid break in the first 24 hours of the new week. From here traders can look for selling opportunities near former channel support or wait for a break below the 1.3890 area.

A move below this area would expose the February lows near 1.3670, which is also the 2015 low.

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