Weekly Forex Forecast (May 16 – 20, 2016)

by Justin Bennett  · 

May 15, 2016

by Justin Bennett  · 

May 15, 2016

by Justin Bennett  · 

May 15, 2016


EURUSD could finally be on the cusp of a sustained move lower. The single currency has lost nearly 200 pips against the greenback since the May 3rd bearish pin bar and if Friday’s close is any indication, the selling isn’t over just yet.

For those who haven’t read previous iterations of the weekly forecast, the “former channel support” shown in the chart below was a key player during October of last year. As you can see, this level continues to play a vital role in deciding the future direction of the pair.

From here traders can watch for a retest of 1.1357 as new resistance. Key support comes in at the April low of 1.1210 with a break there exposing a confluence of support at 1.1060.

Note that the level which I had previously drawn at 1.1340 is now 1.1357 as I believe it to be a better reflection of where the pair is likely to find selling pressure.

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EURUSD ascending channel showing bearish pin bar

GBPUSD managed to find support at 1.4390 early last week. However, the US dollar was the victor with a late-week surge that left the pound below the key handle on a weekly closing basis.

I’ve become dubious about the trend line that extends from the August 2015 high, hence the reason I’ve removed it from my chart. The close above the level on April 26th is what triggered the retest of the 1.4670 handle in the first week of May, but recent price action has negated its usefulness.

With the pair now below 1.4390, a retest of 1.4275 seems to be the likely path forward. A daily close below this level would expose 1.4050, an area that supported prices on several occasions between March and April.

Considering the uncertainty surrounding Brexit and the indecision from a technical standpoint, I’m not a fan of trading GBPUSD at the moment and probably won’t be for some time.

GBPUSD key support and resistance levels

NZDUSD managed to push a bit higher than expected last week. However, the advance was eventually capped at the 0.6835 handle. I still like the pair lower in the week ahead, namely due to the double top that remains in play.

The initial target for this pattern comes in at 0.6620. That said, I’m for an eventual move toward the 0.6550 key support level, and for good reason.

A look at the daily chart shows how the level carved out by the January highs and February lows intersects with channel support that extends from the 2015 low.

NZDUSD horizontal level and channel support

This area has carved out a favorable target for those with a bearish conviction, myself included.

From here traders can watch for selling opportunities on a move toward 0.6620 and possibly 0.6550 over the coming sessions. I remain short from the 0.6820 region.

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NZDUSD 4-hour double top pattern

In defiance of the overly bearish USDCAD traders out there, the pair managed to find a bid at the 1.2850 support area last week. Of course, this wasn’t surprising for those who read last Wednesday’s commentary.

So where to next?

Should the US dollar pair manage to retake the 1.2960 handle on a daily closing basis, there isn’t much standing in the way of a retest of 1.3260. A move above that would expose the highs from early March at 1.3430.

All things being equal, I like USDCAD higher from here. Not only did the oil-sensitive pair find a substantial bid to end last week, but the advance from May 3rd and 4th doesn’t appear to be corrective and could, therefore, be the start of the first impulsive move we’ve seen since the first half of January.

USDCAD bullish rejection candle on the daily chart

Last but not least is a pair we’ve had our eye on for a couple of weeks nowEURGBP continued its sideways movement last week all the while staying below the 0.7930 handle.

As long as the Euro cross remains below this area, the odds are increasingly favorable that the potential head and shoulders pattern in the chart below will fully materialize.

However, as I mentioned a couple of weeks ago, a close above this level wouldn’t necessarily negate the potential for a reversal. It would, however, make it a much harder task for sellers.

Only a daily close below the neckline that extends from the March 10th low would trigger a short opportunity. Until that time, I will continue to wait patiently to determine whether EURGBP has exhausted its resources or is just consolidating before the next push higher.

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

EURGBP potential head and shoulders reversal


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  1. I consider USDCHF H4 = head & shoulders and already broke above the neck. The price movement between eurusd & usdchf is usually inversely proportional. USDCHF, prices are already above the neck; Is this a sign that eurusd not conduct a retest?

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