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Weekly Forex Forecast (November 16 – 20, 2015)

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EURUSD continues to look weak after failing to climb above the 1.0820 handle following Thursday’s rally. This level can be seen acting as support in both May and July of this year and has now started to act as resistance.

I mentioned last week that the bearish bias is intact while the pair remains below 1.0820 on a closing basis; not much has changed since that commentary.

While the single currency did mange to carve out a bullish engulfing pattern on Thursday, Friday’s price action all but nullified the signal.

We will have to wait and see what we get this week, but any bearish price action from 1.0820 could offer a favorable opportunity to get short. Alternatively, if the bulls manage to push the pair back above the key level, we could see a retest of the next resistance level at 1.1010.

That said, any short-term gains would still be up against a longer-term bearish bias that is starting to carry more weight with each passing week.

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EURUSD break of channel support

GBPUSD ran into a brick wall last week at a confluent resistance level. The area at 1.5240 is not only marked by two prominent October lows, it’s also former channel support that extends off of the 2015 low.

Although the pair found resistance here between Thursday and Friday of last week, there isn’t a clear signal to go short, at least not yet. Whether or not that signal materializes this week will depend how the market reacts over the next few sessions.

Any close above the 1.5240 area would negate the bearish bias in the short-term and expose the 1.5345 handle. On the flip side, a push lower would open up the potential for a retest of the next key support level at 1.4980.

GBPUSD retest of former channel support

NZDUSD spent last week consolidating below its newly found resistance level that extends off of the July 10th high. The pair had previously found a bid at this level on four separate occasions before closing below it on November 6th.

While last week’s price action didn’t give us much to work with, sellers did manage to keep prices below the new resistance level on a closing basis. This keeps our bearish bias intact for now.

Looking lower, the first support level comes in at the September high of 0.6455. A break below that would expose the 2015 lows near 0.6240.

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NZDUSD retest of new resistance

GBPJPY continues to remain capped below the 187.25 handle, a level that has been in place as resistance since the pair broke below it on August 24th.

On Thursday, the pair formed a bearish pin bar after being rejected from 187.25 for the fourth time in twelve weeks. I highlighted this setup last week, noting that a break below the thirteen-month trend line may present an even greater opportunity to go short.

That said, last week’s pin bar is well-formed and appears to have some room to run. We will have to see if the sellers can regroup this week after the bulls managed to push the pair 40 pips higher to close out Friday’s session.

My longer-term bearish bias remains intact and I will continue to be bearish in the short-term as long as the pair remains below 187.25 on a closing basis. A close above the level would expose the next resistance level at 189.50 while a push lower would meet the next support level at 184.20.

GBPJPY bearish pin bar at resistance

Last but not least is CADJPY, a pair that I have been watching for several weeks now. While this is the last pair on our list for today, it is certainly not last on my list in terms of potential.

But before we get into the recent consolidation pattern, let’s review the much larger pattern that has been unfolding on the weekly chart.

CADJPY head and shoulders reversal pattern

The head and shoulders pattern above took 32 months to fully materialize with the break below the neckline on August 21st confirming the pattern. This is a level that has now held as new resistance on two separate occasions.

At the risk of stating the obvious, the multi-year reversal pattern above has huge implications if the bears can get behind the idea.

The more immediate focus, however, is the wedge that has been forming off of the August 24th low at 87.33. This pattern has the potential to give us a favorable setup over the next few days.

We can also see that last Monday’s bearish pin bar triggered quite the selloff toward the end of the week, which could be a sign of things to come for CADJPY. My bearish bias will remain intact while below the neckline on a closing basis.

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CADJPY wedge on the daily chart

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3 comments
Shaon says

I am planing of short at GBPUSD tomorrow, hoping we would get a closing reaction today, so far it did not break high but made low and hovering below recent’s minor support 1.5242 and channel . This is the most attractive pair to me this week.
Holding Short at NZDJPY today, It has perfect double reaction from major support (july 08,16). TP 78.90 110+ pip

I will wait for NZDUSD if its break .6420 level. It would also confirm of breaking high of Sep 03, 09 18 and channel and fibbo 61.2 . TP would be .6250, There would be 150+pip it everything goes well which is very rare in FX market 🙂

Wish you a great FX week my friend.

Reply
    Justin Bennett says

    Shaon, sounds like a plan. Hope all is well.

    Reply
Justin Bennett says

Tomej, I use the 10 and 20 EMAs.

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