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Weekly Forex Forecast (September 5 – 9, 2016)

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Ahead of Friday’s non-farm payroll report, the EURUSD was on track to end the week higher and also close back above the 1.1200 handle.

However, a change in sentiment following the NFP figure knocked the pair 100 pips lower where it would eventually close safely below the critical level.

Judging by how the pair closed the week, there’s a high likelihood that we’ll see a retest of 1.1060 in the coming sessions.

But for now, I’ll be content trading other currency pairs given how directionless EURUSD has been over the better part of 2016.

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EURUSD key levels

GBPUSD showed signs of life last week as the pair closed above what appears to be wedge resistance that extends from the June 29th high. This was the first significant move from buyers since well before the June 24th Brexit.

With that said, there isn’t a lot to get excited about from a technical standpoint. Yes, the pair may see higher prices in the near-term, but the bearish trend is still very much intact, which taints any thought of going long from current prices.

In the week ahead, if the pair can muster a close above last week’s high at 1.3351, there isn’t much standing in the way of a retest of the wedge top at 1.3532.

GBPUSD new support

USDJPY finished the week strong, closing above channel resistance that extends from the 2016 high at 121.68. I mentioned this pattern last week along with the potential turning point for the US dollar.

After an initial negative reaction to Friday’s non-farm payroll, the USDJPY managed to rally and close the day 120 pips above the session low.

However, as impressive as Friday’s rally was, buyers failed to close the week above the key 104 handle. This level was included in last week’s commentary as one to watch given the successive lows between mid-June and late July.

I maintain the idea that a daily close above 104 is needed to push prices higher toward the July high at 107.50.

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USDJPY channel break

Despite rallying 92 pips on Friday – most of which followed the non-farm payroll report – NZDUSD finished the day higher by a mere 11 pips.

Sellers came out in force near the 0.7330 area, just 30 pips above the 0.7300 handle that I mentioned last Tuesday.

Although a bit of an atypical trade being that it was NFP Friday, I went short at 0.7327 with a stop above the session high. At a potential 9R (if targeting the wedge bottom), the risk to reward was more than favorable.

We’ll see if the new week offers follow through or if the New Zealand dollar bulls continue to defend these elevated prices. Either way, Tuesday’s GDT figure will be a key factor in determining the future direction of the pair.

For a full view of the rising wedge pattern below, see the commentary from August 25th.

NZDUSD 4-hour close below support

I mentioned EURCAD on Thursday just 24 hours before Friday’s non-farm payroll. The pair had recently broken to the upside of a wedge pattern that dates back to April, suggesting that the upcoming NFP report would trigger a push higher.

However, not only did the pair fail to hold former wedge resistance as new support, it carved out its largest (bearish) daily range since the June 24th Brexit.

EURCAD wedge

Luckily, the upcoming volatility from non-farm payrolls along with key trade and labor productivity data out of Canada kept us on the sidelines.

Not only did a little patience protect our capital, but it also allowed for a new opportunity to emerge for the week ahead. After the false break to the upside, EURCAD plummetted 200 pips and took out trend line support from the July 15th low.

This break exposes wedge support that extends from the December 2015 low at 1.4023. However, it may be prudent to wait for a retest of former trend line support as new resistance to secure a more favorable risk to reward ratio.

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EURCAD false break

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1 comment
Shaon Bhuiyan says

Great Plans. But I put SL of NZDUSD a bit higher at .7395 . There is a nice channel at Monthly Candle (spinning top) that might be forming.

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