Weekly Forex Forecast (Sept 7 – 11, 2015)

EURUSD weakened further last week as the pair moved below yet another key level at 1.1150. A late-week attempt at a push back above the level fell short as buyers failed to overcome recent selling pressure.

At this point it’s safe to say that most of you have read my recent commentary on EURUSD, which included a certain price structure that hints at the possibility of much lower prices over the coming weeks and months.

Based on some of the feedback I received, I want to reiterate that the commentary was not a prediction nor was it an assumption about what will happen. Instead, it was an observation of what will either turn out to be a massive coincidence or something that was altogether telling of future price action.

Either way, there isn’t much for us to do as long as the pair continues to trade within this ascending channel that extends off of the 2015 low. A break below support would certainly pique my interest for a short position while a move back above the recent high at 1.1713 would keep me on the sidelines.

Summary: Wait for a daily close below channel support and then watch for bearish price action on a retest as new resistance. Key support comes in at 1.0820, 1.0658 and 1.0470. Alternatively, a daily close above last Thursday’s high of 1.1240 would turn our attention higher, at least in the short-term.

GBPUSD continues to look weak following the breakdown of a larger technical pattern that occurred on August 26th, a day that marked the end of four key support levels.

Since that time the pair has lost 300 pips without a single bullish day to relieve the selling pressure. If that weren’t enough for the bears, GBPUSD closed below yet another key level at 1.5195 to end last week, which calls for the strong possibility of further losses in the week ahead.

To the downside, there is some support in the 1.5080 region, however the next key support level doesn’t come into play until the highs between March and April at 1.4980. Break that and there isn’t much stopping the pair from retesting the 2015 lows at 1.4580.

Summary: Watch for a selling opportunity on a retest of 1.5195 as new resistance. Support comes in at 1.5080 with key support residing at 1.4980, 1.4830 and 1.4580.

EURJPY is a pair that I have been talking about for several weeks now. In fact I first mentioned the idea that the price structure from mid May had the look of a developing head and shoulders pattern on July 23rd.

Although the pair saw additional upside of 300 pips following that commentary, sellers eventually won out, driving the pair 600 pips lower since the right shoulder was carved out in August.

Last week’s price action passed a significant milestone as the pair confirmed what appears to be a four-month head and shoulders pattern. If this is correct, we should see the 133.10 area act as key resistance in the week ahead.

Based on the measured objective for the pattern, we could see a move down to the 125 area in the days and weeks ahead. Of course a daily close back above 133.10 would call the integrity of the reversal pattern into question and expose support-turned-resistance at 135.50.

Summary: Watch for a selling opportunity on a retest of 133.10 as new resistance. Key support comes in at 131.50 and 129.00 with a measured objective at 125.00. Alternatively, a daily close above 133.10 would negate the bearish pattern and expose the 135.50 resistance level.

GBPJPY played into our hands nicely last week. Although the pair fell short of hitting our key resistance level from Tuesday’s commentary, it only amounted to a 30 pip miss, allowing some members to get short.

The pair lost additional ground shortly following the retest of this area, giving those who managed to get in an unrealized gain of 400 pips going into the weekend.

However the pair may not be done just yet. As a result of Friday’s 260 pip selloff, it closed the week below the 181.60 key level. This area can be seen acting as support and resistance going back to November of last year.

From here traders can watch for a selling opportunity on a retest of the 181.60 area as new resistance. Given the extent to which the pair has declined in recent weeks, I wouldn’t be surprised to see some consolidation below 181.60 before sellers are able to muster enough strength to once again push the pair lower.

Summary: Watch for a selling opportunity on a retest of the 181.60 area as new resistance. Key support comes in at 179.00 and 174.85. Alternatively, a daily close above 181.60 would open the door for a move back to the 185.00 resistance level.

Not much has changed with AUDNZD since I last wrote about the pair on September 2nd. After a 1,400 pip rally off the April lows, the pair has continued to consolidate within what appears to be a bullish wedge or pennant formation.

The pattern is considered bullish in the context of this recent buying pressure. However it’s important to remain patient and wait for the pair to break resistance before any consideration is given to a long position.

A break to the upside would first target the 2015 high at 1.1420. A close above this level would open the door for an additional 300 pips of upside potential, which would satisfy the measured objective at 1.1720.

If the bulls are unable to persevere in the coming days and the pair closes below 1.0900, it would negate the bullish pattern and expose the May 28th low at 1.0580.

Note: Two key catalysts for AUDNZD in the upcoming week include the RBNZ rate statement on September 9th at 5pm EST followed by the release of Australia’s employment figures at 9:30pm EST.

Summary: Watch for a buying opportunity on a daily close above wedge resistance. From there, key resistance comes in at 1.1420 and 1.1720. Alternatively, a daily close below 1.0900 would negate the bullish picture and expose key support at 1.0580.