July 17, 2016
First, a review of last week’s forecast:
- as to EUR/USD, the forecast for this pair may be considered only partly fulfilled – the experts reckoned that the pair would move in a sideways channel, but only after its sliding down, as a result of which the level of 1.1050 should act as the resistance zone. However, as the last week showed, it continued to act as the upper boundary of the support area of 1.1025–1.1050, and all attempts to break through it failed. Eventually the pair has been moving within the range of 1.1025–1.1160 for almost three weeks, which is, obviously, due to the uncertainty around effects of Brexit on Europe;
- making forecast about the future of GBP/USD, the majority of experts, backed by the graphical analysis, tended to believe that the pair would soar, having rebound from the bottom in the area of 1.2860, where it would reach the resistance of 1.3370 and briefly pause within the range of 1.3100–1.3370. That is just what happened. Then on Thursday under the onslaught of bulls, the pair could go further upwards and reached the level of 1.3480, but by Friday night their pressure weakened and the pair returned into the predetermined range, wrapping up the week at the level of 1.3180;
- and acting of USD/JPY must have come as a big surprise to analysts. The pair was expected to follow the scenario of spring/summer 2014 and move within the ranges, predetermined by the support levels of 100.20 and 99.00 and resistance levels of 102.30 and 103.50. However, having bounced off the support of 100.20, the pair made such a mighty heave, that it literally flew over nearly 600 points, got to the level of 106.320 and at once regained everything it had lost during announcement of Brexit results;
- USD/CHF – the forecast for this pair can be considered 100% fulfilled. As it was expected, the pair had been fluctuating around the pivot point of 0.9850. In attempts to return to the zone of 1.0000, it could reach the high of 0.9893, and afterwards it again returned to the pivot point and ended the week at the level of 0.9820.
Forecast for the Upcoming Week:
Summing up the opinions of several dozen analysts from world leading banks and broker companies as well as forecasts based on different methods of technical and graphical analysis, the following can be suggested:
- as to EUR/USD, it’s clear that in this case all indicators point to south. However the majority of experts reckon that the pair will continue moving within the range of 1.1025–1.1160. ECB rate decision and speech of Mario Draghi on Thursday can make some adjustments, and thus a certain rise of the pair is possible. As to the graphical analysis, it points out that the pair, following the example of USD/JPY, may well surge upwards, paring losses it had incurred during the referendum in the Foggy Albion. In this case 1.1220, 1.1290 and 1.1410 are deemed as the resistance levels. An alternative scenario, backed by only 25% of analysts for now, suggests that the pair would go down to the low of June 24 at the level of 1.0900;
- as to the future of GBP/USD, according to both opinions of analysts and technical analysis, the bearish trend still gets a firm hold of the market. However, in terms of retracement, during the upcoming week the pair has potential to rise to the resistance of 1.3470 (and according to the graphical analysis on H4 even higher – up to 1.3800), following which it will again plunge – first to the support of 1.3100, and then to its historic lows in the area of 1.2800;
- opinions of the analysts about the future of USD/JPY may be narrowed down to the point, that last week’s rebound upwards is only a retracement, and that bulls’ strength is almost gone. Eventually, the pair is expected to change over to the sideways movement within 104.50–106.50 (the next resistance will be at 107.80) during the next week. Graphical analysis and indicators agree to this scenario, which both the ones on Н4 and on D1 took a neutral position. Medium-term forecast suggests that the descending trend, started as early as last December, should continue and the pair would retest the level of 99.00;
- as to the last pair of our review – USD/CHF, according to virtually all analysts, supported by the graphical analysis on Н4 and 80% of indicators, the pair will remain bullish and continue moving in an ascending trend. The nearest target will be at 0.9950, then at 1.0000. The main support will be at 0.9800, and if will be broken through – 0.9680.
Roman Butko, NordFX