In this weekly Forex forecast, I’m going to show you exactly how I’m trading EURUSD, GBPUSD, USDJPY, GBPCAD, and CADJPY through February 21, 2020.
Watch the video below, and be sure to scroll down for more commentary and annotated charts.
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EURUSD Forecast
The EURUSD continued its descent last week after breaking below ascending channel support on January 23rd.
So far, the euro has hit our targets at 1.0990 as well as 1.0900.
You can also see where the 1.0825 support level came into play on Friday.
Although it didn’t last long, the EURUSD did bounce from 1.0825 early in Friday’s session, which supports the idea that it is a significant level.
For the week ahead, I’ll be keeping an eye on 1.0825 as well as 1.0900.
Any rotation into that 1.0900 area would likely attract sellers, which could produce a price action sell signal.
Alternatively, a daily close below 1.0825 would expose the descending channel support that I’ve discussed for several months.
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GBPUSD Forecast
The GBPUSD was a frustrating pair for many last week, including me.
Although I managed to get out of my position with a minimal loss, the short idea failed to play out as anticipated.
But that’s how trading goes sometimes.
As I say every week, there are no guarantees in this business, and even the best setups and ideas can fall apart.
The way we deal with that inherent randomness is to stay flexible and practice proper risk management.
That’s the only way to survive and eventually thrive in this business.
With that said, the future direction of the GBPUSD hinges on that confluence of resistance at 1.3050/70, in my opinion.
That doesn’t mean I’m rushing off to sell the pound, though.
It’s going to depend on what type of price action we get around that 1.3050 to 1.3070 range this week.
If we see bearish price action develop in this area, it would be a sign of weakness and would also expose 1.2980.
On the other hand, a daily close above 1.3070 (could be as high as 1.3080) would signal strength and open the door to 1.3170 resistance.
The bottom line is that the GBPUSD is a waiting game, at least for me.
USDJPY Forecast
The USDJPY isn’t doing much these days.
However, I wanted to provide a follow-up on the pair as many of you have been asking about it.
In my opinion, until USDJPY breaks free from the ascending channel below, the pair will lack follow-through from either side.
At the same time, this channel could produce opportunities along the way.
Any retest of the 110.80 resistance area could trigger another rotation lower, while a test of the 108.50 region would likely attract buyers.
Just keep in mind that ascending channels like this one tend to break lower more often than not.
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GBPCAD Forecast
I’m still monitoring GBPCAD following my February 7th commentary.
The rising broadening wedge you see below hints at exhaustion from buyers.
But if you read my February 7th post on GBPCAD, you know that a close below wedge support is needed to confirm the idea.
That hasn’t happened yet.
Notice how GBPCAD bounced from that trend line just above 1.7100 on February 10th.
The pair even rallied on Thursday and showed some strength once again before the weekend.
Until we get that daily close below wedge support, the uptrend is intact, which means trying to sell GBPCAD is a risky endeavor.
All that said, this one is still near the top of my watch list given the massive potential should sellers regain control.
CADJPY Forecast
I wrote about this CADJPY inverse head and shoulders on February 12th.
I also mentioned it in the member’s area the night before when the pair was trading near the neckline at 82.70.
If you read that post, you know that the next key resistance area was between 83.00 and 83.10.
This area served as support in late 2019 and early 2020 and was also the location of the open gap from the January 24th close.
Notice how that gap was filled on February 12th.
And so far, the CADJPY hasn’t been able to close above that 83.10 resistance level.
At the same time, the pair is holding above neckline support, which is now closer to 82.50.
That means the future direction for CADJPY depends on whether buyers clear 83.10 or sellers break 82.50.
A close above 83.10 would open the door to the measured objective near 84.00.
Alternatively, a close below the neckline would negate the bullish idea.
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