Daily Price Action
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Weekly Forex Forecast (August 5 – 9, 2019)

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Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.

The EURUSD is set to start the week just below a key resistance level.

We’ve been discussing the 1.1110 area for several weeks now.

You can see how it served as support for the euro between April and July before breaking down on July 31st.

Just when it looked like EURUSD might not retest 1.1110 is new resistance, Thursday’s session carved a bullish rejection candle.

That pattern triggered Friday’s retest of 1.1110.

So far, sellers are managing to keep the daily closing price below this level.

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However, I don’t like how quickly the pair rebounded from last week’s low of 1.1026.

It tells me that there is significant demand below the 1.1110 area.

I will continue to monitor the EURUSD for a short opportunity, but as of Friday’s close, I don’t see much to do here.

It will likely take a bearish pin bar from 1.1110 to pique my interest.

Alternatively, a daily close back above 1.1110 would be a bullish sign for the euro and would likely re-expose the 1.1190 region.

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EURUSD key levels

There have been a ton of quality opportunities lately, and GBPUSD is no exception.

The pair was signaling a break lower at the end of July.

Notice the lower highs into that 1.2380 level between July 12th and the 26th.

Anytime you see a market carving lower highs into support, you can start to anticipate a breakdown.

The same goes for a market carving higher lows into resistance as that usually precedes a break higher.

I mentioned the potential for a GBPUSD breakdown in the July 28th weekly forecast.

More specifically, I wrote that  “a daily close below 1.2380 would expose the 1.2100 handle”.

That was my base case. In other words, I was anticipating the breakdown given the lower highs I just mentioned.

Fast forward to today, and you can see that GBPUSD did reach the 1.2100 support level after breaking below 1.2380.

And now that we have more price action to work with, it appears the pound is also carving a descending channel.

Note how this latest decline caught a bid at the 1.2100 horizontal level which intersects with channel support.

So where to from here?

If the recent action within this channel is any indication, the GBPUSD may continue to attract buyers above this 1.2100 support zone.

Buyers may even take the pair back to the confluence of resistance at 1.2380.

But despite the likelihood of a bounce, I don’t want to buy GBPUSD.

The trend is pointed lower here with the daily and weekly time frames still carving lower highs and lower lows.

As such, I only want to watch for selling opportunities from resistance.

We’ll have to wait and see what comes of this channel, but a retest of 1.2380 in the coming days could offer another chance to get short.

Just keep in mind that 1.2100 is a considerable support level that dates back to October 2016.

So as bearish as things look right now, it’s important to stay patient and not oversize any short positions in case 1.2100 triggers a more significant rebound.

GBPUSD descending channel

The AUDUSD has been a great performer in recent weeks.

In fact, since I wrote about a short opportunity here on July 24th, the pair has given us six consecutive down days.

But Friday’s session broke the losing streak.

And it just so happens that AUDUSD bounced from 0.6763, which is 13 pips above the 0.6750 level I mentioned as my target on July 24th and again on August 1st.

I’m by no means bullish AUDUSD just because it reached a support area, though.

That said, I wouldn’t go chasing a short position while the pair is above this 0.6750 area.

I also think that after ten consecutive red days, the AUDUSD needs some healthy consolidation, which likely means a retracement of some sort.

One resistance area to keep an eye on this week is 0.6830.

If we don’t get any bearish price action there, we can look higher toward the 0.6910 region.

Either way, I’m going to need to see bearish price action from resistance before I commit to another short position here.

IMPORTANT: I use New York close charts so that each day closes at 5 pm EST.

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AUDUSD descending channel

USDCAD tested a key resistance level late last week.

It isn’t immediately apparent, but the 1.3250 area is the underside of an ascending channel that dates back to April of last year.

Here’s a view from the weekly time frame:

USDCAD weekly channel

Notice how USDCAD was trending higher within this ascending channel for about fourteen months.

The breakdown in late June meant that any retest of former channel support (new resistance) was likely to encounter selling pressure.

Now, notice Friday’s bearish pin bar on the daily chart below.

That’s the selling pressure we were waiting to see.

This does not mean USDCAD won’t head higher this week. But it does signal an increase in supply around that 1.3250 region.

We can use that information to watch for shorts while below 1.3250 resistance on a daily closing basis.

Support on the way down includes 1.3140 and 1.3020.

USDCAD bearish pin bar

I wrote about EURCHF on Friday.

The stair-step price action since June has produced several selling opportunities.

Friday’s break below 1.0970 could offer another chance to get short for a move to the next key support at 1.0870.

Whether you wait for a price action signal or not is up to you.

I would, however, like to see EURCHF retest 1.0970 as new resistance before I consider an entry.

I also want to see the pair consolidate below this area for a few days.

Notice how the last two selloffs from 1.1160 and 1.1060 occurred following several days of sideways movement.

That’s what I want to see below 1.0970.

On the other hand, a daily close back above 1.0970 would negate the bearish idea.

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EURCHF daily time frame

About the Author Justin Bennett

Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...

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