February 13, 2017

First, a few words about the forecast for the previous week, which proved almost 100% accurate:

  • As it often happens, the medium-term forecast jumps ahead of the short-term one. Thus, in the case of EUR/USD, we saw the breakdown of the January uptrend’ lower boundary somewhat earlier than the experts had expected. However, the bears’ victory was predicted by experts with absolute precision - traders who had opened positions to sell received serious profits, as the pair lost almost 200 points during the week and designated a local bottom at 1.0607,  the area of a very strong support / resistance level, which existed since November 2016;
  • With regard to the forecast for GBP/USD, the majority of analysts, with the support of indicators and graphical analysis on H4, expected it to continue the sideways trend of the last two weeks. This forecast proved to be 100% correct. The speculation that the bears would have a certain advantage turned out to be true as well, it was under their pressure that the pair managed to break the very important support level of 1.2410, however briefly, and as a result, finished the week exactly where it started - in the 1.2485 zone;
  • Expert opinion regarding the future of USD/JPY implied a short-term decline of the pair, after which it was supposed to turn around and conquer the peaks of the north. The heights of 113.45 and 113.95 were named as those peaks. Everything happened exactly according to the forecast: in the beginning of the week, the pair dropped slightly, and then rushed upwards, reaching the height of 113.85 on Friday (short of the second of these goals by just a meagre 10 points);
  • The forecast for USD/CHF came true with an accuracy close to 100%. The vast majority of experts, along with graphical analysis on H4, were confident that, rebounding off from the 0.9870-0.9900 support area, the pair would go up and return to the milestone of 1.0000. All of this happened, and as a result the pair ended the week’s session at the level of 1.0020.

 

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:

  • Predicting the future of EUR / USD, only 20% of experts, graphical analysis on D1, and a third of oscillators point to it being oversold, supporting the growth of the pair to the height of 1.0850-1.0870. 60% of analysts and most indicators are confident in the continuation of the downwards trend and decline of the pair to the 1.0500 zone. However, the remaining 20% of experts believe that for some time the pair may move in a sideways channel in the 1.0590-1.0715 range. It should be noted that certain adjustments in the formation of the trend could be made after the ECB meeting on Wednesday February 15 and the summit of EU leaders on February 17;  
  • A similar pattern is observed for GBP/USD. Here 60% of analysts, graphical analysis, and 80% of indicators are on the side of the bears. According to their forecast, the pair must first go down to the level of 1.2410 and then to 1.2350. The next support zone will be at 1.2200. At the same time, a third of experts and graphical analysis on H4 do not exclude that, reaching the bottom at the level of 1.2350, the pair will then proceed to a sideways movement in the 1.2350-1.2550 range;
  • Opinions of both analysts and technical analysis on the future of USD/JPY are very vague. The experts are divided into two almost equal camps: 50% support the growth of the pair and 50% foresee a fall. Graphical analysis on D1 draws a sideways trend in the rather wide range of 111.65-114.00. Meanwhile, in the medium term almost 70% of analysts expect the strengthening of the dollar. In their opinion, the pair is sure to rise above the 115.00 horizon;

  • As for the last pair of our review, USD/CHF, 100% of experts, graphical analysis, and the absolute majority of indicators look northwards, pointing to 1.0100 as the main target. There is some concern here, however, which is caused by the readings of just one third of oscillators: they signal that this pair is overbought and can possibly return to the 0.9960 support level.

 

Roman Butko, NordFX


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