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EURUSD stayed below former channel support last week.
The pair even carved a bearish pin bar on Thursday.
However, Wednesday’s rally was more aggressive than I’d like to see if I was thinking of shorting the euro.
You can even see how Wednesday’s range was quite a bit larger than the range of Thursday’s pin bar.
That’s always a concern.
You never want the range of the day before a signal to be larger than the signal itself. At least not when you’re dealing with a potential reversal pattern.
With that in mind, it wasn’t surprising to see EURUSD rally again on Friday.
I still think the 1.1280 is going to attract sellers this week, but I need to see more from bears if I’m going to consider selling EURUSD.
Key support for the week ahead remains 1.1110.
GBPUSD closed below the 1.2480 level on Tuesday.
This is a level I’ve mentioned several times in recent weeks.
But as always, it’s essential to watch to see how the market reacts to that 1.2480 area as new resistance.
And as you can see, by Wednesday’s close the market was already signaling it wanted to head higher again.
That puts GBPUSD back in a familiar range for the week ahead.
As long as the 1.2500 handle is intact as support, sellers need to be extra cautious here, in my opinion.
That said, I’m not buying the pound.
Despite closing back above the 1.2500 area last week, the GBPUSD still looks bearish overall.
That means I only want to short pops into resistance.
In the case of GBPUSD, that means watching for bearish price action around 1.2600 as well as 1.2760.
Alternatively, a close above 1.2760 would expose 1.2870.
The EURJPY has been range-bound for the better part of two months.
As you can see, the pair has encountered buyers just below 121.00 while sellers have camped out near 123.30.
All of this has occurred following the breakdown I wrote about in early May.
Ranges like this can offer short-term trading opportunities. However, they can also present more substantial breakout opportunities.
In the case of EURJPY, I like the idea of shorting the pair following a daily close below range support at 120.90.
The reason for this is two-fold.
On the one hand, the EURJPY has been trending lower since February of last year. As such, I favor selling the pair until the trend changes.
And on the other, EURJPY appears to have failed to rally off of the current July low. You can even see how Friday’s candle engulfed the previous day’s range.
A close below range support would expose the 119 region. Keep in mind that area could be as low as 118.30.
Alternatively, a close above the range top at 123.30 would expose higher levels, including the May 3rd gap at 124.47.
That isn’t my base case scenario, though.
I wrote about EURCAD on July 10th.
Given the break below the 1.4750 key area, we were watching for bearish price action following a retest of the area as new resistance.
We got that signal on the 10th.
It wasn’t the best looking bearish candle, but it did signal that sellers were camped out around that 1.4750 region.
From here, I still favor shorting EURCAD while below the 1.4750 area.
However, it’s going to be essential to see the pair carve a lower low this week, which means taking out last week’s low at 1.4636.
If we see EURCAD start to creep back up to 1.4750 this week, I will have to reconsider my outlook here.
WTI crude oil is still respecting key levels relatively well.
I wrote about the 60.30 resistance level in last week’s forecast.
You can see how this level has served as a pivot for the market since March.
So far, WTI is holding above this 60.30 level on a daily closing basis. It happened on Thursday and again on Friday.
As long as buyers keep crude oil above 60.30, that next resistance at 63.60 is exposed.
On the flip side, a daily close below 60.30 would negate that outlook. It would also re-expose the 58.00 handle.
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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