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Weekly Forex Forecast (Aug 10 – 14, 2015)

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EURUSD made a major recovery during Friday’s session. The release of the US non-farm payroll data sent the pair into a free-fall that resulted in a loss of more than 100 pips in less than an hour.

However that weakness was short-lived as the bulls organized an afternoon rally that saw EURUSD swing 100 pips the other way. The buying pressure left the pair above the 1.0925 key level on the day and also formed a bullish engulfing bar on the daily time frame.

The coming week could see a continuation of Friday’s strength, however the sideways and choppy price action that has persisted since June has me looking to other pairs for follow-through. More on this later.

Summary: Friday’s bullish engulfing bar could trigger additional buying, pushing the pair toward the 1.1050 level in the week ahead. A break there would expose 1.1150. Alternatively, a daily close back below 1.0925 would open up the door for a retest of 1.0820. On the sidelines for now.

EURUSD bullish engulfing bar on the daily time frame

Just when it looked like GBPUSD would break free from this congestion, the pair found buyers at range support ahead of last week’s close.

The pound dipped to its lowest level since July 10th on the back of Friday’s NFPs, however trend line support from the May 5th low combined with horizontal support at 1.5465 proved strong enough to keep the pair afloat for one more day.

The pair’s failure to breakout leaves me on the sidelines as I don’t want to get caught on the wrong side of an attempted range trade. And while support is holding for now, the climate here has turned slightly bearish as the pair continues to look heavy at these levels.

As such I would prefer to see a daily close below the support area illustrated in the chart below. A break here would give the bears something to sink their teeth into while a break of resistance at 1.5680 may struggle to find follow-through.

Summary: Wait for a daily close below the support area at 1.5465 and then watch for a selling opportunity on a retest as new resistance. Key levels to keep an eye on to the downside include 1.5335 and 1.5195.

GBPUSD key support area on the daily chart

After losing 80 pips following Friday’s NFP release, EURCAD mounted an aggressive comeback during the second half of the session, gaining 150 pips before the close.

The aggressive buying left the pair at wedge resistance for the week and also formed a bullish engulfing bar on the daily time frame. This could be a sign that the trend is likely to continue, however we still need to see a 4 hour close above resistance as confirmation.

EURCAD has given us a few good looks over the past two months, including the wedge pattern that broke free on July 21st. The ensuing rally fulfilled the measured objective from the larger inverse head and shoulders pattern, leaving us with a 330 pip gain.

Only time will tell if the pair intends to maintain the broader rally that began in April. As such it’s important to remain patient and wait for the break before further consideration. Also be aware that the 1.4490 level will likely act as strong resistance, so be sure to stay vigilant even if wedge resistance falls this week.

Summary: Wait for a 4 hour close above wedge resistance and then watch for a buying opportunity. Key resistance comes in at 1.4490, 1.4610 and 1.4730. Alternatively, a close below wedge support would negate the bullish bias and would have us looking lower.

EURCAD bullish wedge on the 4 hour chart

Could the massive 4,700 pip rally be coming to an end for GBPNZD? It’s possible, however I’m not quite ready to commit to a bearish stance here just yet.

Two weeks ago the pair gave us a nice bull flag on the 4 hour time frame. Upon breaching resistance, the pair ran for 540 pips before finding selling pressure at the multi-year high at 2.4025.

This failure to break resistance brings us to the current potential setup. I want to emphasize the fact that the double top pattern shown below is not yet an active setup as the neckline at 2.3155 remains in tact. Only a close below this level would confirm the topping pattern and open up the potential for a larger move to the downside.

As for potential targets below the neckline, we have the June 25th and July 10th low at 2.2700 as well as the measured objective at 2.2260. A look at the weekly chart illustrates how this level lines up with the August 2010 high as well as several other highs and lows between 2009 and 2010.

Summary: Wait for a close below 2.3155 and then watch for a selling opportunity on a retest as new resistance. Key levels to the downside include 2.2700 and 2.2260.

GBPNZD double top on the 4 hour

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