Daily Price Action
Shares

Weekly Forex Forecast (May 28 – June 1, 2018)

Shares

Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

Click here to get access to the same style charts I use on this website.

I wanted to show a “zoomed out” view of the EURUSD today to appreciate just how far sellers have taken the single currency in recent weeks.

You may recall my commentary from April 20. That was the day that Euro bears began to take back control by closing the pair below the April 2017 trend line. We had discussed this level at length for the better part of 2018.

Since April 20, the EURUSD has lost more than 600 pips. That’s impressive considering the breakdown occurred just five weeks ago. And based on Friday’s close, I see no reason to change my bearish stance on this one.

Last Wednesday’s close below 1.1720 and retest of the area as new resistance on Thursday produced yet another opportunity to get short.

I mentioned this 1.1710/20 area in last Sunday’s forecast. In that commentary, I wrote that it would take a close below 1.1710/20 to force a retest of the next key support at 1.1570/80.

That brings us to this week’s price action. So long as the EURUSD trades below 1.1720 on a daily closing basis (using a New York close chart), I’ll continue to favor shorts.

Key support for the week comes in at 1.1575. This area was responsible for attracting buyers last November.

EURUSD horizontal levels on the daily time frame

When I commented on the GBPUSD last Sunday, the pair was still trading within the 140 pip range between 1.3460 and 1.3600.

On Sunday I quoted what I wrote on May 13, and I’m going to do so again today just to show you how simple (yet powerful) price action trading can be.

Here’s what I wrote on May 13:

Those two levels, 1.3460 and 1.3600 give us a range to keep a close eye on for the week ahead. While I’m not interested in trading the range, I am awaiting a daily close (New York 5 pm EST) below 1.3460 or above 1.3600.

If I were forced to choose the one that’s more likely, I’d have to go with a break lower given the recent selloffs. But as always, it’s best to let the market make the first move.

A daily close below 1.3460 would expose the next key support at 1.3300. Alternatively, a close above 1.3600 would target the February and March lows at 1.3760.

So let’s break last week’s price action down step by step.

On Monday, the pair closed the day (New York 5 pm EST) below the 1.3460 support. That close represented a range break but left us waiting for a sell signal. By the way, I also commented on this breakdown as it was unfolding on Monday.

The very next day on Tuesday, the GBPUSD formed a bearish pin bar. Notice the length of the upper wick which signaled an increase in selling pressure above former support at 1.3460. That pin bar was the sell signal.

On May 20 and again on the 21st I pointed out the next key support at 1.3300. Sellers reached that area during Wednesday’s session, just 24 hours after the bearish pin bar had formed. The 1.3300 area was our target.

Now, I’m not writing this to imply that this was an incredibly profitable trade. The truth is, it would have barely qualified as a 2R (two to one reward to risk ratio) setup. However, the way it unfolded was precisely what you should be scanning for as a price action trader.

As for the 2R bit above, I suspect that those who are still short will be able to squeeze more out of the GBPUSD. Just like the EURUSD above, I don’t see any reason to reverse my bearish outlook so long as 1.3460 holds as new resistance.

GBPUSD key horizontal levels

On Wednesday I discussed a 4-hour ascending channel on the USDJPY. The pair had just broken below channel support and was in the process of retesting the 110.30 area as new resistance.

Within the next few hours, the USDJPY plunged 100 pips. Buyers attempted to push prices higher on Friday but ultimately failed to gain any meaningful ground.

My outlook for the risk-sensitive pair hasn’t changed. As long as prices remain below the 110.00 resistance area on a daily closing basis (New York 5 pm EST), I’ll stay bearish.

Key support for the week ahead comes in at 108.60 followed by the support zone that stretches from 107.40 to 107.70.

Want to Learn How to Swing Trade?

Click Here to Get The Ultimate Forex Swing Trading Cheat Sheet

USDJPY ascending channel break

Last week was a big one for the GBPJPY. On Wednesday, the pair broke from a long-standing ascending channel. I mentioned this pattern on May 4 and again in the May 13 weekly forecast.

A couple of weeks ago we had a healthy debate about whether this was a bullish or bearish structure in the member’s area. I maintained the stance that the price action since the 2017 low was merely consolidation in the form of an ascending channel.

That consolidation, by the way, began following the massive 7,000 pip decline that started in mid-2015.

I wrote a Q&A post on this very topic which I just published yesterday. For now, though, I’d like to focus on where I believe the GBPJPY may be headed.

I’ve had my eye on the June and August 2017 lows near 139.50 for quite some time. It’s near the 50% retracement when measuring from the 2016 low to the current 2018 high.

Furthermore, the 139.50 area represents the closing price of the June 24, 2016 Brexit selloff. The following session gapped down, and although it was filled within the next few weeks, gaps like that tend to act as price magnets.

Now, if we take a step back and also draw a descending channel starting from the current 2018 high and connect it to the April swing high and the March swing low, we get a chart like the one below.

I wrote a lesson a while back about how to use channels to identify profit targets. Although the channel below isn’t fully formed just yet, given that support lines up nicely with that 139.50 area, it could be a clue.

It may suggest that the GBPJPY has another 500 or more pips of downside left before buyers come to the rescue. However, don’t take that to mean that there won’t be bounces along the way.

There’s bound to be some turbulence for sellers. Just look at Friday’s session which was positive by 60 pips at one point and then closed down 70 pips.

As for what to watch this week, I’d say that any retest of 147.00 is a chance to scan for selling opportunities. Whether or not such a retest materializes is anyone’s guess, but you certainly don’t want to chase here.

Key support comes in at 144.00 with a minor area near the 145.00 lows. I don’t see much below 144.00 to prevent a move to the final target just below the 140.00 handle.

GBPJPY break from channel support

I pointed out this GBPNZD rising wedge during Wednesday’s session. The title of that post mentioned that a breakdown was imminent.

That may sound presumptuous of me, but the recent lower high in mid-May and failure to retest wedge resistance was a red flag for buyers. It signaled that a breakdown wasn’t far away.

By Wednesday’s close, the GBPNZD had broken below support on a daily closing basis. Remember, I use New York close charts so that each 24-hour period closes at 5 pm EST. You can get access to the same charts I use by clicking here.

Thursday’s session rallied, but buyers failed to close the pair back above wedge support. For the price action trader, this is exactly what you want to see.

Thursday’s movement gives credence to the idea that intraday price action is just noise. If you’re an end of day trader like me, that spike to 1.9394 was inconsequential. What matters is where the market closes at 5 pm EST.

Speaking of Thursday’s close, you’ll notice that it formed a bearish pin bar. It’s an indication that sellers remain in control following Wednesday’s breakdown.

Now, Friday’s close is a bit harder to read. The market closed right in that 1.9210/20 support area, so it’s likely going to take the next 24 to 48 hours to determine whether the area will serve as support or resistance going forward.

Below the 1.9210/20 area, we have 1.8900 followed by the inception point of this rising wedge at 1.8620.

Click Here to Get The Ultimate Forex Swing Trading Cheat Sheet

GBPNZD break from rising wedge pattern

Leave a Comment:

45 comments
vhutshilo says

Lets be honest Justin deserves the trophy…..

Reply
    28 says

    He’s great i say…

    Reply
28 says

Thanks for the excellent forecasting, You really changed the way i view the FX market Mr. Bennett, in a very positive way for that matter. I apply most of your interpretation of price action to shorter time frames and it works just fine.
i’d like to know your take on VOLUMES in FX, and well as the Dollar index – do you consider them when doing your analysis?

Reply
    Justin Bennett says

    You’re welcome. No, I don’t consider volume. Because the currency market is decentralized, any volume data provided by your broker will be incomplete and quite vague.

    Even if it were available, I still wouldn’t use it. I’d rather have the extra real estate on my charts.

    Reply
Mattilight says

Thks so much, your analysis always comes out perfectly

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Obi says

Hi Justin
Thanks bro, made good levels last week.
Can you maybe shed some light on your analysis on the usdcad please.
Have looked at it on my end and just requesting some verification on your end if you could

Reply
    Justin Bennett says

    You’re welcome. I’ll comment on it if I see something interesting. Right now I think there are better opportunities elsewhere in my opinion.

    Reply
Ian says

Great insight. Thank you

Reply
    Justin Bennett says

    My pleasure.

    Reply
Riscy87 says

Hello Justin! does that mean all GBP are going to continue selling next week? What about GBPAUD?

Reply
    Justin Bennett says

    No, that isn’t what I wrote.

    Reply
Victor Ojo says

Justin, for me you are the best price action trader I have ever met

Reply
    Justin Bennett says

    Cheers, Victor. Much appreciated!

    Reply
Vk says

Thanks Justin for your consistency and apt PA analysis, my trading has improved from intraday to daily TF.

Reply
Augustus says

I am new on here and came across
this medium by coincidence,but i must say i am perplexed by how accurate you get how the market will move.I would love to learn from you and if its possible you mentor me i would be very grateful.Kindle get back to me how i can get in-touch with you privately.Thanks

Reply
Dorcas Achieng says

Not now

Reply
Rawlings MD says

Thanks for your good works. Analysis and forecast are amazing.
Appreciation all the way from Nigeria

Reply
massimiliano says

sempre perfetto grazie justin

Reply
di Antonio Lista says

BRAVISSIMO JUSTIN N 1 !!!!!!!!!

Reply
Amy says

Justin you are really the best

Reply
Lynette Silver says

Thanks Justin for your accurate, easy-to-follow commentaries and trading info.

Reply
Jumbo omeraam says

Wow amazing

Reply
rishab18 says

excellent analysis.

one suggestion needed pls: I am having few GBPUSD long and I am planning to close them on Loss, so should I close them today when the market opens? or Monday?

TY

Reply
Jerry+The+Trader says

Why 144 is support on GBPJPY?

Reply
Israel says

Thank you Justin, outstanding analysis l have been following it and very respected when ever price approaches such levels as shown above and helping me to make a decision accordingly. Great mentor sir

Reply
Peter promise says

Amazing boss…you are giving me great insight to price action… Thanks Justin

Reply
Nyala Yasin says

Thx sir it’s very helpful for me.

Reply
Pascal says

Thank u so much Justin. God bless u

Reply
Affan says

Nice Work Bro.Really Appreciate Your Work.

Kindly Update On USDCAD & AUDUSD

Reply
Ferdinand Abia says

Good analysis

Reply
victor rametse says

i am already short on this one and i am not closing it

Reply
Tshunku Serage says

After spending a lot of money on different courses from different institutions and also blowing a lot of accounts I just could not see light at the end of the tunnel with regards to forex but after I bought your swing trading course things began to look completely different in a positive way, I realy appreciate your skills transfer. I am soon coming for the price action course. Please help me with a trading plan here to prepare my self from 09h00-17:00 to a full time trader or making living from trading. For me to achieve a profit of $1000 dollars monthly, how much must my account balance be? What must my risk be per trade? How many trades must I take at a time?

Reply
jenerali says

excellent insight

Reply
Ian says

Hi Justin. Any thoughts on EURCAD? I feel the CAD is too sensitive to oil price volatility at times but it does go on nice runs from time to time. Thanks in advance.

Reply
derrick says

thanks so much though this week has begun with good signals as we await for selling opportunities on yen pairs

Reply
Peter says

Thanks so much for the insight..Great job

Reply
Phanuel says

Very good price action it helps me a lot

Reply
Emmanuel Jaja says

Wanted to ask how many days do u hold a position. I

Reply
Kunle says

Your analysis are always simple and straight to the points. I enjoy following them each time I’m notified. I will like to know the settings of moving average you use. Thanks

Reply
shah says

anyone there to tell me that where the next support can come?

Reply
    shah says

    of course, in GBPUSD.
    thanks

    Reply
Chandra lim says

Hi justin. Your review is usefull. Im windering if you would like to add xauusd to your review. Cause we are here trade xau alot. Thanks

Reply
tamie says

hi my leader can you please give us more clarity on levels….i mean support and resistance….eish im not getting it like u man

Reply
Lawrence says

I also anticipate that the indicision that took more than 10 days and FINALY broke the support 13460 could mean further sell of other pair

Reply
Add Your Reply