The forex market is alive and well, with both long and short opportunities materializing with last week’s close.
EURUSD will start this week in a precarious spot, sitting on multi-decade support, while GBPUSD is coming into some key support of its own.
USDJPY and AUDUSD appear to be setting up short and long opportunities, respectively, and Friday’s XAUUSD breakout played out perfectly per last week’s commentary.
I’ll show you exactly how I’m trading each market in today’s forecast. Be sure to watch the video and check out the written explanation and charts below.
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EURUSD Technicals
EURUSD had a relatively ugly close last week, for lack of a better word.
The euro broke back below the descending trend line from the 2008 high, and is currently resting on channel support from 2000.
Although the chart is technically at support, I don’t love the fact that buyers couldn’t defend the 2008 trend line near 1.10.
Therefore, it will take a close back above 1.10 next week to reclaim that level and signal bullish intent from the EURUSD. Until then, I’d be careful with the euro.
I’m not interested in shorting this market right now because it is at multi-decade support. But I’m also not buying given Friday’s weak close.
It’s a situation where I’ll either wait for a confirmed break of support and rounded test to short or a reclaim above the 1.10 area.
GBPUSD Technicals
I wrote about GBPUSD last week on the 4th. In that post, I commented on the macro (big picture) channel that has directed the price action for the last few years.
However, the more immediate opportunity from the pound will likely stem from the descending channel on the daily time frame.
Between that support near 1.29 and the 1.316 horizontal level, GBPUSD is approaching two key levels that make shorting it unfavorable, in my opinion.
At the same time, longing GBPUSD isn’t appealing to me right now, considering the bearish momentum.
For those reasons, I’m standing aside for now. If we get bullish price action from 1.316 this week, I may look for a quick long.
But I think the better risk to reward here would materialize with a retest of channel support near 1.29 to 1.295. Time will tell if we get it or not.
GBPUSD would need to close above channel resistance at around 1.355 to break the downtrend.
USDJPY Technicals
The USDJPY has been in an uptrend for the last 14 months. However, the market recently failed to get above the 116 region and could be in trouble this week based on Friday’s close.
As mentioned in today’s video, the pair appears to have closed last week below the September trend line. That resistance level comes in around 115.
That means USDJPY needs to stay below that area on the 4-hour and daily time frames to remain intact as resistance.
As long as it does, USDJPY could be on its way to the 113.50 area this week.
Just keep in mind that this is a more speculative play. It’s against the broader trend, and Friday breaks are often less convincing due to lower volume.
AUDUSD Technicals
AUDUSD appears to have broken out on Friday. The close above the 0.73 area should flip that to support in the coming week.
I like the Australian dollar higher as long as that 0.73 region holds on a daily closing basis.
As for resistance, the top of the descending channel from late February 2021 will likely be a factor. That level comes in near 0.744.
If the AUDUSD can get above that channel resistance in the coming weeks, 0.755 would be next.
Alternatively, a daily close back below 0.73 would be bearish and expose some of the recent lows just above 0.71.
XAUUSD Technicals
XAUUSD (gold) stole the spotlight last week with an aggressive rally out of a symmetrical triangle that broke on Thursday.
The breakout occurred just a few hours after I wrote about the bullish potential from XAUUSD.
Many Daily Price Action members managed to catch the move for a nice gain into the weekend. And I think there’s more in store this week.
Friday’s close above 1960 flips that area to support. Of course, it depends on how next week opens, but I do expect a strong bullish reaction in that region.
As mentioned last week, the objective of Friday’s break is 2015, which is also a key price action level. Above that is the 20175 all-time high.
Given the macro structure of the gold chart and the current fundamental climate, I do expect to see new all-time highs from gold this year.
