Weekly Forex Forecast for GBPUSD, USDCAD, GBPJPY, XAUUSD (06-11 December 2020)
Hey everyone! Welcome to this week's forex forecast for the week ending December 11th, 2020. I'm TraderBart with A1 Trading, and this week I'll be looking at GBPUSD, USDCAD, GBPJPY & XAUUSD.
I've been pointing out this long-term ascending channel that's been formed since the Covid-19 crash back in March which inside the channel has formed a rising wedge pattern. Looking at price action, Friday closed off with a shooting star candle suggesting a possible bearish move ahead as bulls were not able to push and hold price above the previous higher high in the channel. Switching to the H4 timeframe, since October price has been consolidating and breaking through key levels in the market. For example, notice how 1.315 was a resistance level, then once it was broken and price retested it, it became new support. The same principle happened with 1.328, it was seen as clear resistance; however, once it was broken, it was treated as further support. And now finally we've got the same thing going on with resistance at 1.34 where it was seen as clear resistance however we saw price break this level last week and is also now pretty much retesting this level. I'm hoping we can see price reject this level in the week ahead and confirm it as new support, pushing price higher in this ascending channel.
We've just seen price break through a major support in this descending triangle pattern at 1.30. Price has also closed off for the week at a higher low of the ascending channel seen here. I think it's likely we could see price break through every support level that was formed from the channel. Looking at the economies of both currencies, we all know the Dollar is very weak at the moment, primarily due to the continued uproar in Coronavirus cases in the US now approaching 15M cases and 300K deaths. The Canadian Dollar on the other hand is looking a lot better, GDP for the third quarter printed at 8.9% and 40.5% annualised. Though it was a big improvement from the second quarter's GDP, it still missed expectations with market consensus at 47.6% and a minimum expectation of 43.1%. I'm looking for a bearish move on this pair, as oil prices are expected to increase in the next couple of months and unless we see a major breakthrough in the US risk outlook, weakness should continue to push the dollar lower.
Similarly to GU, price is also travelling in this ascending channel since the Covid crash and we've got this ascending triangle pattern formed. Price broke out of the 137.6 resistance, retested and is now consolidating at the 139.7 resistance formed after the breakout. I'm still looking for this chart pattern to make a full move to the upside and also make the next swing in the channel. Looking at fundamentals now, due to the likely Brexit-deal agreement, we should see the Pound gaining heaps of strength, and this will especially happen against overvalued and low-yielding currencies. The coronavirus and global economic outlook will remain heavily influential on the Yen, with the currency likely to once again see a renewed bid from the rising number of second waves and their implications for the global economy. As a whole the Yen so far is doing good to recover however I think we could only see price make the full move once we see the UK/EU Brexit talks conclude a deal agreement.
We've got this clean descending channel and price is now approaching the previous support at 1855 in the descending triangle pattern here after touching the channel's support and reversing to the upside. I think as of right now, it's very unclear as to what could happen next; we must wait to see how price reacts to this level, whether we see a clear rejection of this level this could suggest a bearish move however if we see a break of this level, then confirmed new support, we could see a bullish movement to the upside again and touch the channel's top. In addition to this though, when placing the Fib retracement level, seeing as this is a bullish flag pattern, we've had the third touch at the 78.6% level, so I'm expecting this pattern to be completed. Not only this, however, but we've also seen over the past year that every time price has approached or touched the 200MA, we've had a bullish move to the upside. In addition to this, as the dollar is weakening due to all the examples mentioned in the USDCAD fundamental explanation, and gold being a safe haven, is expected to rise in value, most probably pushing this pair more to the upside.
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