January 15, 2017

First, a review of last week’s forecast:

  • The behaviour of the EUR/USD pair did not deliver any surprises in the first half of the week. First, as predicted by graphical analysis, it attempted to climb to the height of 1.0650. Having almost reached the intended target (1.0627), the pair reversed and, following the forecast of most analysts, it began to descend to the 1.0350-1.0525 zone. The trend was then altered by the ECB meeting, the press conference by Donald Trump, and the speech of the Governor of the Bank of England M. Carney. Those events led the pair to return to the level of 1.0625 and then rise another 50 points to the height of 1.0685, once it had kicked off from the level of 1.0453;
  • GBP/USD. Regarding the behaviour of this pair both experts and indicators were divided into three roughly equal groups: one third of them believed it would fall, one third believed it would grow, and the remainder believed the pair would move eastwards. The pair ended up fulfilling all these wishes: first it went down to the level of 1.2035, and then, reacting to the events listed above, it rose to the height of 1.2316 and eventually finished the week midway between these two values - in the area that has been acting as a support level during the first two weeks of January;
  • In the case of the USD/JPY, analysts just shrugged their shoulders, anticipating the release of news from the US. As for graphical analysis, following the readings on H4, the pair fell to the lows of the previous week in the 115.05-115.20 area. After a short respite it rushed further down, which had been predicted by graphical analysis on D1. It reached a local bottom at 113.75;
  • Recall that the opinions of experts and technical analysis on the behaviour of the USD/CHF pair were geometrically opposed. The former predicted its growth to the values of 1.0200-1.0300, and the pair went up exactly to the middle of this zone: 1.0247. The latter were, for the most part, inclined to sell it, and by the end of the week the pair fell to a level that was approximately 100 points lower than where it was at the start.

 

Forecast for the coming week:

Summarizing the views of a number of analysts from leading banks and brokerage firms, as well as the forecasts made on the basis of a wide variety of technical and graphical analysis methods, we can say the following:

  • Regarding the near future of EUR/USD, 60% of analysts, supported by indicators on H4, believe that the pair may rise to the 1.0700-1.0800 area. An alternative view is represented by 40% of experts, graphical analysis on W1 and 90% of oscillators. According to them, the pair will strive towards the support in the area of 1.0480-1.0510, and then even further to the December lows at 1.0350–1.0370. Meanwhile, graphical analysis on D1 does not exclude the possibility that before going down, the pair may once again try to climb to the height of 1.0650, which would happen at the start of the week.
  • As for the behaviour of the GBP/USD pair, experts still cannot come to an agreement. About half of them are backing the bulls, believing that the pair will move to northwards. Graphical analysis agrees with this view of events as well, with H4 drawing the corridor of 1.2100-1.2315 for the pair. D1 sets targets that are even more ambitious, being in the area of 1.2400-1.2500. The remaining 50% of experts, as well as trend indicators and oscillators, disagree with such a forecast, believing that the pair should test the second support zone of 1.2000-1.2035;
  • USD/JPY. When it comes to forecasting the next few days, the majority of experts and indicators on H4 and D1 believe that the pair has not yet reached the local minimum in the area of 113.00. In the medium term, the picture is quite different - about 70% of analysts, graphical analysis on D1 and indicators on W1 vote for the strengthening of the dollar and the rise of the pair to the resistance at 118.65. In the case of a breakthrough through this resistance, they believe the pair will rise even higher to the 121.00 level;

  • We can observe a pattern similar to the one for USD/JPY with USD/CHF. 65% of experts, trend indicators and graphical analysis on H4, as well as oscillators on H4 and D1 strongly advise to sell the pair, believing that it will reach the 0.9950-1.0000 area. As for the medium term, the forecast remains the same: the vast majority of experts (75%), with the full support of technical and graphical analysis, are convinced that the pair will eventually rise again to the 1.0200-1.0300 area or even higher: to the December highs at 1.0340.

 

Roman Butko, NordFX


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