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The EURUSD looks poised for another run at 1.1110 support this week.
Last week’s 100 pip selloff puts the single currency less than 50 pips above the multi-year low from late April.
That selloff, by the way, began with a bearish pin bar from key resistance at 1.1260.
Although I have that 1.1260 area marked as key resistance, the 1.1170 level is the more immediate resistance level for the week ahead.
Any retest of that area will likely encounter an influx of selling pressure.
On the flip side, the 1.1110 level will most certainly attract buyers on a retest this week.
It’s going to take a daily close below 1.1110 to expose the next key support near 1.1030.
Only a close above 1.1260 would negate my bearish outlook for EURUSD.
The GBPUSD has been down nine out of the last ten trading days.
And as of Friday’s close, sellers are showing no signs of slowing down.
The pair ran into a confluence of support on Thursday at 1.2800. I wrote about this area on May 16th.
However, I wasn’t interested in buying the pound given the bearish momentum that’s been in place since May 6th.
As you can see, the pair didn’t pay much attention to 1.2800.
That’s a sign of just how weak this pair is even after dropping 450 pips in 10 days.
For the week ahead, I would keep an eye on that 1.2800 region to serve as new resistance.
I’d also watch to see how GBPUSD reacts to the 1.2700 support handle.
That 1.2700 area served as a pivot for the pair between December and January. It’s also the October 2018 swing low.
Below that we have a few multi-year lows near 1.2480.
Only a daily close back above the 1.2800 area would negate my bearish outlook for GBPUSD.
As long as 1.2800 holds as new resistance, I will continue to favor shorts.
I wrote about EURJPY in last week’s forecast.
The pair had just cleared a key trend line that extends from the January 4th low.
EURJPY also failed to close the weekend gap at 124.47.
But despite the recent weakness, buyers managed to keep the pair above the 122.60 support area last week.
I pointed this level out as support last weekend.
At the moment, this is a stalemate between buyers and sellers.
As long as 122.60 is intact as support, the EURJPY is prone to intraday bounces.
But this isn’t something I would buy. A look at the daily or weekly time frame shows how EURJPY has been trending lower since the start of 2018.
As such, I continue to favor selling strength into key resistance levels.
We’ll see if the EURJPY can make it back to close that gap in the 124.50 region this week. That would pique my interest for a short position.
Alternatively, I will watch for a daily close below the January 3rd closing price at 122.60 which would open the door to the 119.00 handle.
Last Tuesday I wrote about the potential for GBPNZD to weaken further below 1.9660.
The pair was about to close the day below rising wedge resistance.
It was significant given how GBPNZD had broken to the upside of this level back on May 1st.
As I’ve written many times on this site, topside breaks of ascending levels rarely last for very long.
As you can see, the GBPNZD was no exception.
I was even alerting members to my plan to short the pair as soon as it broke higher earlier this month.
Here’s my comment to members on May 7th:
Since last Tuesday’s post, GBPNZD is down just over 100 pips.
That isn’t much for this cross, but the market is still holding below wedge resistance which is now just below the 1.9700 handle.
I’m still short GBPNZD, but I won’t add to the position again until I see a daily close below wedge support near 1.9470.
That would open the door to the next key support at 1.9050.
And if this wedge plays out like most, we could see a run at the 1.8650 region.
Keep in mind, however, that a move of that magnitude would likely take weeks to play out.
But the pair is going to get pressured to make a decision this week.
The terminal nature of this wedge is only going to allow GBPNZD another week or two at most to make a decision.
Last week’s false move from gold seems to point to a push lower this week.
I wrote about this terminal pattern on April 25th.
At the time, the market was coming off trend line support. A few weeks later, the market tested trend line resistance at 1290.
Monday’s close above resistance suggested a move higher was in the cards.
However, Thursday’s selloff was less than convincing. It illustrated just how much supply was available below 1300.
A pullback that aggressive is not what you want to see if you’re thinking of buying a market.
Sure enough, gold closed back inside this terminal pattern on Friday.
That false break is enough to convince me that a move lower is likely.
But sellers still need to clear trend line support at 1270/5 if they intend to push prices lower.
As long as that level is intact on a daily closing basis, gold is prone to intraday rallies.
Alternatively, a daily close below 1270/5 would expose the next key support down near 1240.
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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