Weekly Forex Forecast (July 18 – 22, 2016) Click Here

EURUSD:

After carving out a 150 pip range last week, EURUSD closed just 20 pips below the opening price. However, despite the lack of direction, the pressure remains weighted to the downside following the Brexit-inspired break of channel support on June 24th.

What’s interesting about last week’s price action is that the pair respected the 1.1060 handle on a weekly closing basis. Friday’s selloff put the pair back below this level, which was broken one week prior on July 8th.
The pair’s inability to hold above the 1.1060 level on the weekly chart suggests that sellers remain in control. And although last week did form a bearish pin bar, its development within a sideways market makes it an unfavorable pattern to trade in my opinion.
That said, I continue to watch for selling opportunities while below the former channel support that extends from the December 2015 low. Only a close back above this level would negate the bearish bias.
Looking lower, the first level of support comes in near the Brexit low at 1.0940. A close below that would expose the March 10th ECB low at 1.0820.

GBPUSD:

GBPUSD managed to reclaim some of the post-Brexit losses last week. However, the rally ended on a sour note as Friday’s session gave back 140 of the 195 pips gained on Thursday.
The late-week selloff could be a sign of things to come in the week ahead. Then again, the post-Brexit volatility and uncertainty that has been swirling for weeks now have made it difficult to get a read on the pair with any degree of confidence.
For this reason alone, I’ll continue to avoid trading GBPUSD as I feel there are better, less volatile opportunities available.
For those who insist on trading the British pound against the US dollar, key resistance can be found at the 1.3500 handle while support comes in at 1.30.

 NZDUSD:

Similar to AUDUSD, the NZDUSD broke a significant level going into the weekend. The channel support that extends from the May low was tested previously on two separate occasions before the 4-hour break you see below.
I mentioned this pattern on Thursday as one to watch. What was particularly interesting was how the pair had tested support several times yet failed to challenge the upper boundary of the channel since the pre-Brexit highs on June 24th.
When a market begins to lean against support or resistance in this fashion, it’s often an early warning sign that a breakout is imminent. Although Friday’s price action stayed true to this idea, it’ll be important to see follow through in the week ahead to help confirm that buyers have indeed capitulated.
I’m short from 0.7180 and will watch to see how the pair reacts at 0.7080 if tested. Below that, the next level of support comes in at the June lows at 0.6986. A break below that could trigger a much larger decline toward 0.6900 and possibly the May low at 0.6675.
As for event risk, the NZD isn’t wasting any time getting started with the Q2 CPI reading on tap today at 6:45 pm EST.

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Weekly Forex Forecast (July 11 – 15, 2016) Click Here

EURUSD lost additional ground last week following the July 5th retest of former channel support as new resistance. I mentioned the retest of this key inflection point on July 5th shortly before the pair lost an additional 40 pips.

With Friday’s close below the 1.1060 handle, traders can begin watching for selling opportunities for a move toward the next support at 1.0940. This level is close to the post-Brexit lows and is also the 61.8% Fibonacci level from the December 2015 low of 1.0515 to the 2016 high of 1.1615.
The calendar is relatively light this week for both the Euro and US dollar. However, as I mentioned last week, it seems that these days the unscheduled events, as well as comments from policy planners, can often move the needle more than the scheduled event risk. With this in mind, strict discipline and patience need to remain our top priority.
In summary, I continue to favor selling weakness as long as the pair remains below 1.1200 on a daily closing basis. The post-Brexit close below channel support seems to have opened the door for an extended move lower toward the current 2016 low of 1.0710 and possibly the 2015 lows near 1.0515.

Not surprisingly, the British pound continued its slide against the US dollar last week. That makes three consecutive losing weeks for the GBPUSD and a total of 2,000 pips lost since the pre-Brexit high of 1.5016.
With last Wednesday’s close below the 1.30 handle, there isn’t much standing in the way of a move toward the 1.2500 support level.
Aside from the 1985 low of 1.0530, identifying support levels going forward could become more challenging than usual. The reason is that the GBPUSD is now visiting prices last seen more than 30 years ago. And depending on your broker, the precision of that pricing data could be spotty at best.
For this reason, it may be preferable to play any further weakness in the British pound via its currency crosses where key levels are easier to spot.

USDCHF tested the upper boundary of a pattern I mentioned in last week’s forecast. Last Friday’s rejection from this area confirms that the price structure you see below is accurate. It also means that a close above it could lead to a favorable buying opportunity.
In the week ahead, traders can watch for a close above channel resistance as a sign of continued strength. Such a close would first target parity with a break above that exposing the multi-year high at 1.0330.
All in all, I like USDCHF higher as long as buyers can muster a daily close above channel resistance that extends from the current 2016 high at 1.0225.

Like all other currencies against the Japanese yen, EURJPY has lost considerable ground over the last year or more. The pair is off its June 2015 high by a substantial 3,000 pips and off its December 2014 high by an even greater 3,800 pips.
Most recently I commented on the USDJPY, which by Friday’s close had triggered a potential selling opportunity of its own. However, I’m bearish the Euro versus the US dollar and at the same time bullish the Japanese yen.
So while a USDJPY short could still be a profitable endeavor, a quick study of relative strength and weakness indicates that EURJPY could be the more logical candidate for those looking to take advantage of continued yen strength.
A big picture view of EURJPY reveals what could be an early indication of where the yen cross is heading over the next few weeks and months.

A close below the highs from 2011 and 2012 at 111.40 could spark enough interest from sellers to eventually push the pair toward the 100 handle and possibly as low as 96.50. Of course, a move of this size would likely take several months to play out.
In the near-term, traders can watch for a selling opportunity as long as the pair remains below the 111.40 handle on a daily closing basis. Immediate support comes in at the post-Brexit low of 109.22.

A daily close below the level that extends from the 2012 lows would open the door for a move toward the 1.4385 support handle with a break below that exposing the 2015 lows near 1.3740.
On the other hand, the more conservative trader could forgo the close below wedge support and wait for a break below the 1.4385 horizontal level before considering an entry. Either way, this Euro cross could be gearing up for a significant drop unless buyers come out in force this week.
The most notable event this week that will affect the EURAUD are the Australia employment figures on July 13th at 9:30 pm EST.

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EURNZD Crashes to New Thirteen-Month Low, Exposes 1.50 >Click Here

Recent global events continue to put pressure on the Euro while currencies like the New Zealand dollar have been surprisingly resilient. This imbalance puts EURNZD back in the spotlight, a pair that has now lost 1,600 pips over the last two months and looks to continue that trend with yesterday’s close.

I mentioned the Euro cross on June 27th as it was treading water below the 1.5840 handle. One of the targets for that setup was 1.5400, which was reached and then some during yesterday’s session.
From here, traders can watch for a retest of this level as new resistance. As long as it holds on a daily closing basis, the bias will remain weighted to the downside. The next critical support doesn’t come in until 1.50, giving traders 400 pips of real estate.
Aside from it being a psychological number, the 1.50 area is the 2012 low. It also served as support for a brief period in May of 2015, giving rise to a 3,600 pip rally that ended with last August’s infamous volatility.
As mentioned in my earlier commentary on EURUSD, tomorrow is NFP Friday with the event kicking off at its usual time of 8:30 am EST, so do expect an increase in volatility. Of course, a currency cross like EURNZD is relatively insulated from US-based events, even one as impactful as non-farm payrolls.

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EURUSD Bearish Pressure Remains Despite Recent Bids. Click Here>

On Tuesday I mentioned the key inflection point on EURUSD near the 1.1200 handle. Shortly after that commentary, the single currency sold off against the US dollar, closing the day in the red by 78 pips and engulfing the previous two sessions in the process.

However, Tuesday’s session closed just 14 pips above the 1.1060 level, an area that was likely to act as support. The proximity to 1.1060 rendered any attempt at a short position unfavorable.
The question now becomes – is the bearish engulfing candle a sign of what’s to come or will buyers at 1.1060 overcome its technical implications?
While it’s too soon to make that call with any degree of confidence, my bias remains weighted to the downside.
My reason for this is simple. The post-Brexit close below channel support that extends from December of last year casts a bearish shadow over the pair. As long as former support holds as new resistance on a daily closing basis, this bias will remain.

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USDCAD Clears Channel Resistance, Targets 1.3120. Click Here.

Yesterday marked the largest single-session gain for USDCAD since the June 24th Brexit-inspired rally, which set a multi-year record for the pair.

Not only did USDCAD manage to gain 130 pips on the day, but it also began the ascent from a familiar level. The 1.2840/50 area has played a critical role in directing price action since early May and is also the opening price for the June 20th gap.
For those who missed yesterday’s bounce from this area, the 4-hour chart may offer a favorable second chance opportunity. For starters, the 1-hour chart below shows the bearish pin bar that formed at the upper boundary of this pattern during yesterday’s session.


You may notice that before yesterday’s retest of this level, there were no prior touches from resistance besides the June 28th high. However, we did have a clear descending trend line from which to draw the upper boundary. You may recall this concept from a recent lesson I wrote on equidistant channels.
The price action on USDCAD is a perfect example of how the technique can be used to identify breakout opportunities at the onset.
With the pair now firmly above channel resistance, traders can begin watching for a buying opportunity for a move back to the June highs near 1.3120.
Do keep in mind, however, that the 1.30 handle is expected to attract selling pressure on the way up. The flip side is that it could also serve as support with the right close above the area.
A daily close above 1.3120 would target the 1.3270 handle, which is the measured objective of the current price structure if viewed as a bull flag, which now appears to be the case.

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EURUSD Reaches Key Inflection Point .Click Here.

EURUSD is in the process of retesting the area I mentioned over the weekend. The 1.1200 region includes a key pivot that dates back to early 2015 as well as former channel support that extends from the December 2015 low.

Additionally, the level is the 38.2% Fibonacci retracement when measuring from the December 2015 low at 1.0515 to the 2016 high at 1.1615.
Ideally, I’d like to see a clear rejection of the former support area as new resistance on a daily closing basis. Alternatively, a break below the intraday channel that has formed could be a sign that the relief rally has exhausted its resources.
Either scenario would indicate a shift in sentiment that could send EURUSD lower in the coming sessions.
The first stop on a move lower would be 1.1060 followed by post-Brexit lows near 1.0940. But regardless of the bids that develop at these levels, I remain quite bearish here and think that the 2015 lows near 1.0515 will come under fire again before year end.
As for upcoming event risk that could affect the EURUSD, Mario Draghi speaks tomorrow at 4 am EST and US non-farm payrolls (NFP) are scheduled for release this Friday at 8:30 am EST.
Both events could trigger an increase in volatility for the pair, especially the always dependable NFP, which never seems to disappoint when it comes to shaking things up for US dollar pairings.

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Weekly Forex Forecast (July 4 – 8, 2016) Click here

Weekly Forex Forecast:

EURUSD has jumped to the top of my watch list this week. After plunging 520 pips following the June 24th Brexit vote, the pair has now managed to retrace 50% of that move. It’s also no secret that the recent relief rally appears corrective in relation to the late June selloff.

As for technical levels, the June 24th close placed the single currency below channel support that extends from the December 2015 low on a daily closing basis. And with the pair now reaching toward former support as new resistance, we could see a favorable short opportunity develop in the week ahead.
But as always, I will wait for a clear price action signal before committing to a position, which could very well materialize near the 1.1200 handle. Immediate support comes in at 1.1060. Fore more Click Here

GBPUSD remained under pressure last week giving up an additional 250 pips from the highs, so no surprise there. The pair continues to struggle at the 1.3500 handle, which is a level that I mentioned in the previous forecast.
The post-Brexit woes are expected to keep prices suppressed for some time, but the volatility and overextension of late have kept me on the sidelines. It will probably be some time before I feel comfortable taking a position in the British pound given how unstable the price action has become.
In the week ahead, the 1.3500 area should continue to serve as resistance while a bid could develop near last week’s lows of 1.3120. However, the next critical level of support doesn’t come in until 1.30. fore more Click Here

 

USDCHF is a pair I haven’t mentioned for some time as it’s one that I rarely trade. However, the descending channel that has directed price action thus far in 2016 has started to catch my attention in recent weeks.
One reason I’m partial to the pattern is that it’s in line with my bullish bias from January, a bias which has no doubt taken its time in coming to fruition.
Any further weakness from current levels is likely to find a supportive bid near 0.9660. With that said, I won’t consider trading USDCHF until we see a close above channel resistance near 0.9820.
While the structure still needs some time to develop before it can be regarded as tradable, it’s certainly one to keep an eye on in the weeks and months ahead. For more Click Here

NZDUSD bulls have their work cut out for them this week. Despite last week’s gain of 180 pips, the pair failed to close above the confluence of resistance near 0.7200 on a daily closing basis.
I’ve mentioned this area several times in recent weeks as it’s the intersection of channel resistance from October of 2015, lows from February and March of last year as well as the 38.2% Fibonacci retracement from the 2014 high to the 2015 low.
But that doesn’t mean this is a selling opportunity, at least not yet. The pair is still carving out higher highs and higher lows on the intraday charts and hasn’t shown any signs of stopping just yet.
Speaking of signs, a pattern has emerged on the 1-hour chart that could act as an early warning sign should buyers begin to capitulate. Fore more Click Here

I mentioned EURJPY on Friday, noting that a confluence of resistance lies just above current prices at 115.50. This is both the 61.8% Fibonacci retracement from the 2012 low to the 2014 high as well as trend line resistance that extends from the February 2014 low.
Whether the pair manages to rally 130 pips this week to retest the 115.50 handle as new resistance is anyone’s guess. But we may not need to wait that long to find a material weakness in the yen cross.
Much like the NZDUSD channel we just discussed, the ascending price structure on EURJPY has been in place since the June 27th low. And although Friday’s price action started to look a bit “heavy”, channel support managed to hold its ground into the close.
In the week ahead, traders can watch for a close below the lower boundary of the channel which would open the door for a retest of the 111.35 support level followed by the post-Brexit low of 109.20. Fore more Click here

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