February 26, 2017

First, a review of last week’s forecast:

  • Recall that, when giving the medium-term forecast more than 70% of analysts voted for the strengthening of the dollar and the fall of EUR/USD. They were actively supported by trend indicators and oscillators on D1. As for the weekly forecast, according to graphical analysis, the pair was expected to once again test the minimum at the level of 1.0500, and then turn around and start a sharp ascent. Those traders who made use of these findings were able to get a good profit. Exactly by the middle of the week the pair found the local bottom at 1.0493, which was followed by its northwards rebound.  However, the pair did not reach the expected horizon of 1.0850, but those 125 points, for which it went up, managed to deliver the bulls a significant profit;
  • The forecast for GBP/USD warned that if the pair failed to overcome the support at the centre line of the large-scale side corridor, where it had been residing since October 2016, its rebound to the resistance at 1.2550 was possible. Things played out exactly like that: after failing in several attempts to break the level of 1.2400, the pair rose and spent the first half of Friday in the 1.2540-1.2565 area, before retreating to the Pivot Point of the last three weeks in the area of 1.2450;
  • The opinions of analysts and indicators about the future of USD/JPY radically diverged last week. If the former had expected the pair to rise, the latter were determined that it would fall. Both appeared to be right. At first, the pair rose by 100 points. It then proceeded to drop by 165 points, returning to the values of the end of January/ beginning of February this year and vindicating the ambiguity of the latest forecasts in the process;
  • USD/CHF. As is often the case, last week this pair chose not to play its own "game" and simply mirrored the behaviour of the EUR/USD, confirming the confidence of the market that the dollar will strengthen. As a result, by the middle of the week the pair reached a height of 1.0140, after which the bulls’ strength weakened and it completed the week’s session near the strong support level of 1.0075, which is easily visible on the D1 and W1 charts.

 

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:

  • 75% of experts believe that EUR/USD will fall to the 1.0340 zone, where it had already been in December 2016, if not next week then certainly in March. 100% of trend indicators and oscillators on D1 agree with this forecast. As for short-term forecasts, the oscillators on H4 have taken a neutral position, and graphical analysis indicates a possible temporary rise to the resistance of 1.0680;
  • GBP/USD. 65% of analysts are still siding with the bears here. According to their forecast, the pair still has to fall to the lower boundary of a five-month side corridor at 1.1985-1.2720. As for graphical analysis, it says that, seeing as the pair has failed to break through the centre line of the channel, it may now spend some time oscillating in the 1.2400-1.2720 range, after which it will still end up rushing to the January lows;

  • It is clear that, in predicting the future of USD/JPY, all indicators point to the south. The main support is in the area of 111.60. However, the opinion of 70% of experts and graphical analysis on D1 is strictly opposite to the above. According to them, the pair should rise to the level of 114.00, before possibly ascending even higher to 115.60;
  • As for the last pair of our review, USD/CHF, 70% of experts and 85% of indicators vote for the bulls’ victory and the growth of the pair to the 1.0150-1.0180 area. An alternative point of view is represented by graphical analysis, according to which, the pair is expected to move laterally dominated by bearish sentiment in the coming days, before gradually descending to 1.0000, or, potentially, even lower to the support at 0.9965. 

 

Roman Butko, NordFX


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