Daily Price Action
Shares

Weekly Forex Forecast (September 19 – 23, 2016)

Shares

EURUSD fell off a cliff on Friday, breaking below a confluence of support at 1.1200. I mentioned this move on Friday before the session closed, which was confirmed five hours later when the trading week came to an end.

From here I’d expect to see offers build in this area if tested over the coming sessions. The pair is likely to encounter support at 1.1060 followed by the July low at 1.0950.

My long-term view for the EURUSD remains bearish as it has for more than a year now. I see the sideways price action that began in March of 2015 as corrective in preparation for what will likely be another substantial move lower.

With that said, trying to time such a move to parity or lower is the real challenge and one that is prone to error given the two years of directionless price action. Therefore, until sellers can clear the multi-year lows at 1.0460, trading the short-term ranges will likely be the better play here.

Keep in mind that the FOMC is scheduled to deliver a critical rate decision this Wednesday at 2 pm EST.

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

eurusd-new-resistance

GBPUSD also had a rough end to the week, closing well below the trend line that extends from the June 29th high at 1.3532. This was a level that gave way to bullish momentum on September 1st. However, the bulls were unable to capitalize on the break which ultimately signals the potential for future weakness.

The pound also closed the week below the 1.3060 handle which should act as resistance if tested over the coming sessions. Key support remains the trend line that extends from the multi-year low at 1.2790 with a break there exposing 1.2500.

Given the twenty-six-month downtrend along with recent technical developments, my outlook for the British pound remains weighted to the downside.

gbpusd-wedge

AUDUSD continues to be one of my top trade ideas. I mentioned the initial setup on September 8th which consisted of a bearish pin bar (also an engulfing pattern) from three-year channel resistance that extends from April of 2013.

But as profitable as this setup has been thus far, the greater opportunity has yet to materialize in my opinion.

A break below ascending channel support that extends from the current 2016 low would signal a change in behavior for the Aussie and could very well trigger a much larger decline for the pair.

However, if you don’t yet have exposure here, it may be prudent to wait for a daily close below channel support before considering a position.

I remain short from 0.7648 and will reassess the associated risk before this Wednesday’s FOMC.

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

audusd-channel

EURJPY has seen twenty months of declines and from a technical standpoint, I see no reason to question the potential for further losses.

However, this week’s BoJ announcement will undoubtedly impact the future direction of the pair. As such, I won’t be making any decisions until the dust has settled and Wednesday’s session is behind us.

A session close below 113.90 would expose downside levels at 112.35 and 110.80. Alternatively, a close above trend line resistance that extends from the July high at 118.45 would negate the bearish bias and turn our attention higher.

eurjpy-wedge

NZDJPY is in the same boat as EURJPY. The yen cross is hovering just above critical support as we head into a crucial week for the Japanese yen.

I first mentioned the breakdown in the pair on September 9th. Since that time NZDJPY has lost 115 pips but was unable to break below the 74.30 handle last week on a daily closing basis.

A move below the level would expose 73.46 followed by 72.20. Alternatively, a daily close back above 75.00 would open the door for a retest of trend line resistance that extends from the March high.

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

nzdjpy-key-levels

Leave a Comment:

1 comment
Sal says

Hi Justin…..question to run by you…..I know that you are a close follower of H&S patterns….if you don’t mind me asking your opinion of a pair you haven’t listed above I have been meaning to write and ask you if you see a possible inverse H&S pattern on the weekly charts for NZD/CAD? Specifically with peaks at 9/14 – 8/15 – 4/16………thank you……Sal

Reply
Add Your Reply