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Weekly Forex Forecast (January 26 – 30, 2015)

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Last week gave us some big moves in the Forex market following the ECB’s decision. We’ll see if this coming week brings a similar level of volatility, which is a very possible scenario given the Greek election taking place as I type this.

One of the largest and most impressive moves last week was made by GBPNZD. The pair had recently broken through weekly trend line support from April of 2013. This now looks like a false break, as the pair was able to rally more than 700 pips last week, closing back above this trend line.

GBPNZD weekly chart:

GBPNZD weekly forex chart showing false break

There are two scenarios that could present favorable trade opportunities. The first is to wait for a pullback into the 1.9830 area and watch for bullish price action. The other is to wait for a 4 hour or daily close above 2.0108. This would breach the key horizontal level as well as channel resistance, giving us a potential setup to go long.

Going back to the weekly chart, it does appear that there is a broader inverse head and shoulders pattern that has formed over the last several years. To confirm this pattern, we will need a weekly close above 2.1054. Doing so could set the pair on a multi-year rally up to 2.4460, which also lines up with the 2009 opening range.

GBPNZD weekly chart:

GBPNZD inverse head and shoulders forex weekly chart

Summary: Watch for bullish price action on a pullback to 1.9830. Alternatively, a 4 hour close above 2.0108 could bring a move to 2.1054 and eventually lead to a much broader multi-year rally. Of course a close above 2.1054 is needed to confirm the possibility of an extended move higher.

GBPNZD daily forex chart showing key levels

GBPAUD analysis

GBPAUD 1 hour forex chart

AUDJPY analysis

AUDJPY 4 hour forex chart

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