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Weekly Forex Forecast (October 23 – 27, 2017)

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There’s no shortage of recent EURUSD commentary on this site. Just last Friday we discussed the importance of the 1.1875 resistance level. We also reviewed what could be a three-month head and shoulders pattern forming on the daily time frame.

If you missed these recent posts, I suggest you review the commentary from the 3rd of October. It sums up why I turned relatively bearish here in mid-September.

As long as 1.1875 resistance holds on a daily closing basis (5 pm EST), I will maintain a (slightly) bearish bias. Only a daily close above this level would negate the bearish outlook.

I do anticipate an influx of buying pressure if the pair moves to retest 1.1670 support. But if sellers manage a daily close below 1.1670, it would open up a whole new list of downside targets.

The first on that list is 1.1490. A close below 1.1670 would also open up the measured objective just below the 1.1300 handle. That’s a sizeable 480 pips from Friday’s close.

All of that sounds promising for bears, but keep in mind that nothing is confirmed just yet. A market is range bound until it isn’t. So until the EURUSD closes above 1.1875 or below 1.1670, I expect more range bound price action.

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EURUSD new range on the daily chart

The GBPUSD inched closer to a key inflection point last week. Although the pair is still range bound between 1.3020/50 support and 1.3250/90 resistance, participants will be forced to commit one way or the other in the coming weeks.

The broader picture shows how sellers are defending a multi-year trend line that extends from the 2014 high. On the other end, we have buyers stepping up near the 1.3020 handle.

Those two levels intersect at some point in late November, perhaps even December. So, sometime between now and then, the pair has a big decision to make. Either break above the 2014 trend line or below ascending channel support from the March low.

Either way, the outcome could offer one of the best opportunities of 2017. In fact, a breakout from the terminal pattern will likely have repercussions that extend well into 2018.

In the short-term, however, the GBPUSD is range bound between 1.3020/50 support and 1.3250/90 resistance. We can use these areas to watch for price action signals until the pair reaches the termination point.

GBPUSD trend line and ascending channel

We discussed the USDJPY on Wednesday of last week. At the time the pair was still trading below key resistance at 113.15, but bulls were starting to pick up the pace.

In that commentary, I mentioned that a daily close (5 pm EST) above 113.15 would expose 114.35. And that’s precisely where Friday’s price action leaves us.

The daily close above the 113.15 horizontal level is the first since July 13. It’s an area that has capped five separate advances between the 27th of September and the 19th of October.

That said, Friday’s close puts the pair approximately 100 pips above the 10 and 20 EMAs on the daily time frame. The overshoot suggests that some consolidation is likely before the next leg higher begins.

I’m going to stand aside for now. Bullish price action at 113.15 could make for an attractive opportunity for a move toward the May and July highs at 114.35. A close above that would expose 115.40.

Alternatively, a daily close back below 113.15 would negate the bullish outlook and turn our attention to key support at 111.60.

USDJPY break of key resistance on the daily chart

USDCHF bulls have done it. Friday’s close puts the pair above the trend line that extends from the current 2017 high.

We first looked at the 0.9800 area on September 28. At the time the pair was trading at 0.9718 and was in the process of rebounding from the multi-year range support at 0.9435.

Since that time I’ve been relatively bullish the USDCHF. However, without a daily close above the confluence of resistance near 0.9800, there wasn’t much to do. Friday’s close changes that.

Last week is also the first weekly close above the 0.9770 area. The last time the USDCHF was above it on a weekly closing basis was in early May. Note that 0.9770 is also the 38.2% Fibonacci retracement when measuring from the December 2016 high to the currency 2017 low.

With all of these factors in mind, Friday’s breakout takes on a whole new meaning. As such, I’ll be interested in buying the pair but only after a successful retest of the 0.9800/10 (new) support area.

Key resistance for the pair comes in at 1.0100. Only a daily close (5 pm EST) back below the 0.9800 area would negate the bullish outlook.

USDCHF breakout from resistance area

One of the last times we discussed the AUDUSD was when the pair was trading at 0.7932. Sellers had just taken out trend line support, and so we were left targeting the next key support at 0.7820.

Fast forward several weeks later, and we find ourselves in a similar situation. Although the pair has bounced around some, it hasn’t made any real progress since reaching the 0.7820 handle on September 28.

Prices closed below 0.7820 on the 5th of October. That paved the way for a move toward the next support level at 0.7730. We’ve had both of these levels on our radar for several months now.

Buyers managed a close back above 0.7820, turning the level back into support for the pair. The area held for a few days until Friday’s selloff concluded with a 0.7811 close.

That close turns my attention back to the sell side. I want to see price action confirm that 0.7820 is once again serving as resistance, but at the moment I’m more interested in selling the AUDUSD than anything else.

Key support comes in at 0.7730 followed by 0.7635. On the flip side, a daily close (5 pm EST) above 0.7820 would negate any potential opportunity to get short. It would also turn our attention back to the October 13 high at 0.7897.

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AUDUSD break below key support

Leave a Comment:

10 comments
Ikechukwu Anunobi says

Thanks a lot Coach, i must say your top-down analysis is really superb..but i have a question please can you show me how to adjust my MT4 screen resolution and reduce the Font size? i need an assistance

Reply
    Justin Bennett says

    You’re welcome. As for MT4, you should contact your broker. They’re offering the MT4 platform, so they should also be able to answer questions like yours. Make them earn some of that commission you pay. 🙂

    If nothing else, questions like that are a good test for any broker. If they can’t or won’t help, you should start looking for a new broker. Just my opinion, of course.

    Reply
      Ichechime Ogbonna says

      How can my lifetime payment benefit of benefit to me

      Reply
KnightHawk says

Thanks Justin, Always helpful and insightful, enjoy a great week!!!

Reply
    Justin Bennett says

    You’re welcome. Glad to hear that, and same to you.

    Reply
young pip'er says

Your analysis is really helpful to a new trader like myself. Not only do u give me heads up for the pairs I’ve also learnt to analyse for myself.
Thank You

Reply
John says

Big thanks Justin, for all these wonderful insights.Every time I always learn the more on your patience in taking trades. Just a line to ask of your opinion or take on the last week breakouts on all the NZD pairs NZDUSD inclusive? Thanks

Reply
Darius says

AudUSd worked really well, thank was quick and easy money 🙂 I like those which quickly move after forecast 🙂

Reply
Darius says

EURUSd falled. Will it fall without even a retest? Will we miss oportunitity while waiting?

Reply
raju says

thanku sar vary vary mach

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