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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 bounced aggressively from multi-year support last week.
I wrote about the 1.1110 area in last Sunday’s forecast. It supported the pair on April 26th and did so again last Thursday.
As of today, the daily chart is starting to look like a double bottom.
I mentioned this possibility on Thursday when the EURUSD was in the midst of its single session 80 pip rally.
Friday’s session picked up right where Thursday’s left off, contributing another 25 pips of gains.
In my opinion, Friday’s low of 1.1171 needs to hold this week to keep the bullish momentum intact.
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This area attracted a bid in early May. It’s also near that March low at 1.1176.
However, I do think 1.1185 level is the one that could offer a buying opportunity this week.
Notice how 1.1185 capped both advances on the 23rd and 25th of May.
It’s also the region that attracted a bid in March and early April.
The first key test for buyers will be 1.1260. The pair hasn’t been above this level since mid-April, and it’s also the breakout point for the potential double bottom.
A close above that 1.1260 area would open the door to the next key resistance at 1.1410.
In summary, I like EURUSD higher toward 1.1260 as long as the 1.1170/85 support area holds on a daily closing basis.
Like the euro, GBPUSD is also attempting to bottom.
However, the price action here isn’t nearly as convincing as its EURUSD counterpart.
The pound also has a lot of overhead resistance to deal with this week.
Former descending channel support near 1.2740 will likely attract an influx of selling pressure.
And even if buyers make it past 1.2740, that 1.2800 handle is lurking just above.
That said, I don’t like the idea of selling GBPUSD here.
I often discuss the idea that downward breaks of descending levels are considered “weak” breakouts.
In other words, they aren’t convincing.
The same goes for an upward break of an ascending level or pattern.
With that in mind, I wouldn’t be surprised to see GBPUSD break back above that 1.2740 area this week.
But it’s going to take a daily close back above it to turn the tide in favor of buyers.
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All in all, though, I’m not a fan of trading GBPUSD at the moment.
I don’t see a clear opportunity with a favorable risk to reward ratio. I also believe there are better setups out there.
We’ve been tracking this NZDUSD descending channel since May 2nd.
The pair attempted a breakout earlier this month, but buyers failed to get behind it.
That all changed on Friday.
With NZDUSD now above former channel resistance (new support) on a daily and weekly closing basis, I have to favor buyers here.
There are also a lot of shorts that will have to cover if bids continue to come in this week.
But as I mentioned on Friday, NZDUSD bulls need to secure a daily close above 0.6590 to garner more attention from would-be buyers.
If they succeed, there isn’t much to stop a run at the 0.6720 region.
That area has played a huge role so far this year. It’s also very near the 50% retracement of the year-to-date range.
Key support for the week ahead comes in between 0.6525 and 0.6535.
Looking higher, buyers will face their next key test at 0.6590 with a close above that exposing the 0.6720 area.
On May 20th I wrote about an 800 pip range on EURNZD.
The idea was to watch for a breakdown below the 1.7000 handle, which was represented by a key support level from the year-to-date low.
That idea never materialized, though.
But that’s okay. It meant there was no opportunity here and suggested that we should stay flat for a while longer.
However, Friday’s breakdown makes the EURNZD a little more interesting.
That 1.7120 price was the level I pointed out as resistance in the May 20th post.
As you can see, EURNZD closed above it on the 21st and tried to hold above it on the 23rd but failed the very next day.
Friday’s sub 1.7120 close means the area will likely serve as resistance this week.
As such, any rejection from 1.7120 resistance could offer a chance to get short.
Just keep in mind that sellers need to clear that year-to-date channel support near 1.7050 if they intend to push their agenda.
If sellers can get the job done, there isn’t much to stop a run at the 1.6730 region.
That’s 370 pips from Friday’s close which makes EURNZD one to watch this week.
WTI crude oil has been carving some killer support and resistance levels.
I wrote about the false break of this rising wedge back on April 30th.
The sell signal that formed that same day took WTI from 63.50 to 60.10 in just four trading days.
That 60.10/30 area was the key support I wrote about on the 30th.
Crude oil washed out last week following a brief surge back to 63.60 with sellers taking out 60.10/30 support in the process.
Also note how WTI bounced perfectly from our next key support at 58.20.
Again, this market is respecting support and resistance incredibly well.
For the week ahead, I would watch for a retest of that 60.10/30 region as new resistance.
Those who sold on the way down will likely look to take profit which could trigger a bit of a squeeze this week.
But as long as 60.10/30 holds as resistance on a daily closing basis, I favor selling WTI crude toward 58.20.
A close below 58.20 would open the door to the next key area at 55.40.
Alternatively, a daily close back above 60.30 would re-expose that 63.60 area.
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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