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Weekly Forex Forecast (November 14 – 18, 2016)

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EURUSD suffered one if its biggest losses of the year last week. The pair ended Friday 200 pips below the week’s open and a massive 440 pips below the weekly high.

The Trump-inspired surge followed by a sharp selloff led to a weekly candle that engulfed the last eight weeks of price action.

This drop combined with my bearish long-term outlook for the pair leaves me watching for selling opportunities going forward.

However, due to the velocity of the recent move, the Euro finds itself a bit overextended against the USD. As such, it may be prudent to wait for a pullback to the 1.0950 area before considering an entry.

Key support comes in at the March 10th ECB low of 1.0820 followed by 1.0710.

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

eurusd-key-levels

GBPUSD showed resilience last week in the face of a strengthening US dollar. In fact, the British pound is the only major currency that appreciated against the greenback.

But given the 3,000 pip landslide since the June 24th Brexit, sellers were bound to get squeezed eventually.

My view for the pair hasn’t changed much from last week. A retest of the 1.2790 handle could present a compelling opportunity to get short.

With that said, I’m in no hurry to risk capital here. It’ll take a bearish pin bar on a retest of the 1.2790 area to pique my interest. Until that happens I’ll remain on the sideline.

gbpusd-resistance

After months of consolidating and several weeks of false breaks, the AUDUSD (finally) broke down last week. The trend line support from the 2016 low came under fire on five separate occasions before eventually failing during Friday’s session.

What’s perhaps more impressive than the break below support is the weekly bearish engulfing pattern at a swing high. I pointed out on Friday how this combination hasn’t been kind to the pair since June of 2014.

From here traders can watch for a retest of the 0.7600 area as new resistance. While there are a few levels of support just below current prices, the next key area of value comes in at the September low of 0.7440 followed by 0.7330.

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

audusd-technical-break

The NZDUSD has been quite choppy for most of 2016, making it a difficult pair to trade.  However, things are starting to come together that could make for one of the best opportunities of the year.

We have two major technical patterns in play. The first is the ascending channel that extends from the current 2016 low at 0.6346.

The second is a possible topping pattern in the form of a head and shoulders. I mentioned the possibility of this happening on November 2nd when the pair was trading near 0.7285.

Because of where neckline support lies, sellers will need to break channel support first before we get a confirmed head and shoulders reversal.

As such, there are two ways to approach the NZDUSD going forward. The first is to trade a break of channel support while the second is to wait for a confirmed head and shoulders.

The one you choose will depend on your style of trading as well as your outlook for the pair.

nzdusd-ascending-channel

Given what we just saw on the NZDUSD, it’s probably no coincidence that the AUDNZD is carving out the opposite pattern. After all, the two tend to move in opposite directions.

Here’s how things look from the daily time frame:

audnzd-inverse-head-and-shoulders

I mentioned the potential for an inverse head and shoulders last Tuesday ahead of the U.S. election and RBNZ rate statement. While the two events created a temporary setback for the bulls, the pair finished the day and eventually the week higher.

I should also point out that although a reversal looks promising, the pattern above is far from confirmed. A daily close above the 1.0765 handle is needed for that.

For those interested in a more immediate opportunity, the 4-hour chart is carving out a descending channel. The pair finished Friday’s session just below resistance and looked poised to make an early move this week.

A close above the 1.0600 area would expose the inverse head and shoulders neckline at 1.0765. A daily close above that would open the door for a move toward the measured objective at 1.1295.

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

audnzd-4-hour-channel

Leave a Comment:

4 comments
piet says

goodmorning about indicators do u use them in ur trading if so pls take me through that jungle to many of them and i found thay dont work HELP

Reply
    Justin Bennett says

    I use the 10 and 20 EMAs, that’s it. You can find lessons on how to use them by searching this site.

    Reply
Nadeem Anwar says

I am regular reader of your comments. recently i am trading on CADJYP. Please write some on the pair.

Reply
    Justin Bennett says

    Nadeem, due to the sheer number of monthly visitors this site gets I don’t take requests. I only comment on the pairs that I feel could offer the best opportunity. Cheers.

    Reply
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