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Weekly Forex Forecast (October 31 – November 4, 2016)

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It wasn’t until the last few hours of Friday’s session that EURUSD bulls managed to push prices higher by a considerable margin. Before that, all they could do was drive the pair sideways below the 1.0950 handle.

Friday’s late session surge puts the pair back above the July lows. However, former wedge support that extends from the March 10th ECB low is just above current prices at 1.1020. It would take a daily close above this area to negate the bearish bias.

To the downside, we have the 1.0950 area which acted as resistance on Wednesday and Thursday of last week followed by the March lows at 1.0820.

Two pieces of event risk that could decide the pair’s fate are this Wednesday’s Fed rate decision and statement at 2 pm EST along with Friday’s non-farm payroll report at 8:30 am EST.

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

eurusd-resistance-level

There isn’t much to say (or do) concerning the GBPUSD. The pair continues to consolidate below the 1.2330 handle following the October 7th flash crash.

A daily close above this area would expose 1.2500 followed by the post-Brexit low near 1.2790.

With that said, the fact that buyers have only managed to push prices sideways following the early October selloff indicates that further weakness is the more likely scenario.

A move lower from current levels would encounter support at 1.2000 followed by 1.1880.

gbpusd-range

AUDUSD is one of my favorite currency pairs at the moment. To the naked eye, the last few months of price action might look chaotic at best, but the wedge pattern that has formed has the potential to trigger one of the more profitable setups we’ve seen this year.

I’ve taken a couple of swing trades in recent months, both of which were short positions from wedge resistance near the 0.7700 region. However, the greater opportunity has yet to materialize in my opinion.

The AUDUSD will remain at the top of my watch list with the idea being that a daily close below wedge support would put an end to the ten-month consolidation. It would also open the door for a retest of the September lows at 0.7440.

We could see volatility pick up this week with the RBA rate statement on Monday at 11:30 pm EST followed by Wednesday’s Fed rate decision at 2 pm EST.

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

audusd-wedge-pattern

Just like the AUDUSD above, the AUDJPY has some great technicals. The risk-sensitive pair has been relatively choppy and directionless throughout 2016. However, last week’s retest of a two-year level could spark an opportunity in the week ahead.

For a look at the big picture be sure to check out the October 26th commentary.

From here traders can watch for this 4-hour ascending channel to breakdown, which could ultimately expose the 76.15 handle. The 79.00 and 78.00 areas could also give sellers fits on the way down.

At the moment the two-year resistance level comes in just above 80.00. I’ll remain bearish as long as the pair remains below 80.20 on a daily closing basis.

audjpy-4-hour-channel

I’m always on the lookout for consolidation patterns that form after impulsive moves and the price action on GBPCAD since mid-October appears to fit that description.

We’ve traded the pound cross a few times in 2016 with the most notable being the opportunity that surfaced back in June. This trade idea materialized before the seventeen-month head and shoulders pattern confirmed via the June 24th Brexit.

See the link above for more details on the 2,800 pip reversal pattern.

That structure is important because although the GBPCAD has plummeted 2,200 pips since breaking below the pattern’s neckline in June, the measured objective at 1.5250 is still in play.

In fact, not only is it still in play, it’s a sizable 1,000 pips from current levels. But to confirm that the bearish momentum is likely to continue it’s important to wait for a close below channel support in the chart below.

For the week ahead there’s a confluence of resistance that comes in near 1.6520 via the trend line that extends from the September 15th swing high. A close below support would expose recent lows near 1.5940.

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

gbpcad-ascending-channel

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