Daily Price Action
Shares

Weekly Forex Forecast (July 27 – 31, 2015)

Shares

EURUSD continues to be a direct reflection of the uncertainty in global markets, namely the situation surrounding Greece and now concerns about the slowdown in China. Just as the future of these themes remains elusive, so too does the future direction of the Euro versus the US dollar.

The recent selloff from the June high has been altogether unconvincing in terms of sentiment. To illustrate my meaning, compare the recent bearish move to the decline from the May high and you will quickly notice that this recent decline lacks conviction.

Like all FOMC meetings, Wednesday’s event is sure to trigger an increase in volatility for the US dollar. In fact given the timing of this meeting with the potential for a rate hike later this year, I believe this meeting will create more of a stir than most have in recent past.

Combine the potential for increased volatility, global uncertainty and the lack of a favorable technical pattern and you get unfavorable trading conditions. That said, I do like the Euro against other weaker currencies such as the Australian dollar and Canadian dollar. More on this later.

Summary: On the sidelines for now. Key support comes in at 1.0925 and 1.0820 while key resistance can be found at 1.1050 and 1.1150.

EURUSD key levels in focus on the daily time frame

Since breaking channel support on July 7th, GBPUSD has been caught in a 320 pip range without much conviction one way or the other. This lack of direction and limited potential for follow-through has kept me on the sidelines since mid June.

That said, Tuesday’s UK GDP release may be the catalyst needed to see the pair break this range. Of course that release will likely need to be either extremely bullish or extremely bearish in order to push the market out of its comfort zone.

Until that time comes I have no desire to trade this pair as there are other, more favorable market conditions at our disposal.

Summary: On the sidelines for now. Key support comes in at 1.5500 and 1.5355 while key resistance can be found at 1.5680 and 1.5814.

GBPUSD support and resistance levels

USDCAD remains as a top trade idea going into the last week of July. We have talked at length about this pair over the last few weeks as the bulls managed to put together two impressive breakouts, one on June 30th and the second on July 15th.

During Friday’s session it looked as though we would get a break of the six-year high at 1.3063. However the selling pressure proved too great as the pair sold off late in the session to end the week 23 pips below the key level.

This late-session decline looked more like traders booking profit going into the weekend rather than a material weakness in the uptrend, which remains healthy as long as former channel resistance holds as support on a closing basis.

These areas provide us with a nice range to watch in the upcoming week. A return to support could trigger a new buying opportunity with a daily close above 1.3063 doing the same. That said, I wouldn’t be surprised to see some sideways consolidation going into Wednesday’s FOMC meeting followed by Thursday’s GDP reading.

Summary: Watch for bullish price action on a retest of resistance-turned-support. A daily close above 1.3063 would have us watching for a retest of the level as new support, a move that would likely see resistance at 1.3260 and 1.3470. Alternatively, a daily close back below former channel resistance would have us looking lower.

USDCAD key levels in focus on the daily time frame

EURCAD has enjoyed a three-month rally since putting in a multi-year low in April. In the beginning this rally was due in large part to Euro strength, however in recent weeks these gains can be attributed to a breakdown in the Canadian dollar.

I do expect the current strength in the pair to continue in the short-term, ultimately satisfying the measured objective at 1.4490. This measured objective is the product of the larger inverse head and shoulders pattern that formed between March and early June.

From here traders can watch for a pullback to key support at 1.4212. If on the other hand the bulls decide to push this market higher early in the week, we can wait for a daily close above 1.4340 and then watch for a buying opportunity on a retest as new support.

It should be noted that the measured objective at 1.4490 does not necessarily mean that the rally will end there as it could very well continue higher. However we should expect this area to trigger an increase in supply which could drive the market lower in the short-term.

Summary: Watch for a buying opportunity on a retest of 1.4212 or on a daily close above 1.4340. Key resistance and measured objective comes in at 1.4490. Alternatively, a daily close below the 1.4212 support level would challenge the strength of the current rally.

EURCAD measured objective from the inverse head and shoulders

EURAUD was a big mover for us last week, rallying more than 300 pips after breaking free from a bull pennant formation on the 4 hour chart. The pair ran into some resistance at 1.50 as expected, but managed to end the week 67 pips higher.

This leaves us waiting for a retest of the 1.50 area as new support. Last week’s bullish pattern gives us a measured objective of 1.5330. This level also coincides with a very pronounced high from December of 2014.

In addition to 1.5330, the 1.5120 area may also give the bulls some trouble based on the intraday price action from December of last year. This area can be seen acting as both support and resistance on several occasions.

Summary: Watch for a buying opportunity on a retest of the 1.50 area as new support. Key resistance comes in at 1.5120 with a measured objective at 1.5330.

EURAUD break of resistance and measured objective

Leave a Comment: