January 29, 2017
First, a review of last week’s forecast:
- The majority of analysts and graphical analysis on D1 had expected the EUR/USD pair to decline to the 1.0500 level and then to return to its Pivot Point at 1.0650. However, the pair stayed within a narrow side corridor 1.0710-1.0775 for almost the entire week and it was only on Thursday that it went down. At the same time the decline was quite small and, having found a local bottom in the Pivot Point area 1.0657, the pair turned around and went back to where it started the week, to the level of 1.0695;
- GBP/USD. Regarding the behaviour of this pair, only 35% of experts and indicators on H4 had supported its growth, although they did turn out to be right. As for graphical analysis, it had not ruled out growth of the pair to the level of 1.2550 on D1, where the pair actually finished the week after reaching the height of 1.2673;
- USD/JPY finished the week-long session at the Pivot Point level of January in the 115.60 zone. Talking about its movement within the week, the forecast given by 40% of analysts supported by oscillators on D1 and graphical analysis on H4 and D1, proved correct. Recall, they had insisted that the pair should once again test the January lows of 113.00 and 112.55, which is what ended up happening;
- USD/CHF. Most experts along with graphical analysis had expected a sideways trend from the pair, and the pair did move east obediently for the whole week in a narrow range, having kept within 0.9960-1.0025.
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:
- Speaking about the near future of EUR/USD, the vast majority (70%) of experts continue to expect the pair to decline to the level of 1.0600 and further to the area of 1.0500. As for technical analysis, the findings of oscillators differ: one would need to sell the pair if they follow H4, and to buy on D1. 15% of analysts and graphical analysis on H4 also talk about buying, indicating the height of 1.0775 as the target and the next resistance level as 1.0890. The remaining 15% of experts, together with trend indicators, have taken a neutral position;
- A similar picture emerges with respect to the behaviour of GBP/USD. The majority of experts (55%) and the indicators on H4 expect the pair to initially fall to the support at 1.2415, and then further on to 1.2255. As for the remaining analysts, indicators on D1 and graphical analysis on H4, they suggest that the pair will first reach resistance in the 1.2730-1.2775 zone. Only then will it start descending southwards. The next resistance to which graphic analysis on D1 indicates is located at the level of 1.2875;
- The opinions of the experts on the future of the USD/JPY are almost equally divided: 30% expect its growth, 40% expect it to fall and 30% take a neutral position. Trend indicators, oscillators and graphical analysis on D1 also remain neutral. But their "colleagues" on H4 are set to purchase. The Pivot Point is 115.12. The nearest resistance is 115.60, with the subsequent levels being 116.35 and 117.00. The support levels are at 114.40, 113.85 and 112.50. Regarding the medium-term forecast, it should be noted that about 70% of analysts expect the pair to grow;
- As for the last pair of our review, USD/CHF, all 100% of experts believe that the pair will not be able to stay in such a narrow sideways channel for the second week in a row. However, the views differ as to where it will go: 35% expect its growth, 65% believe it will fall. Indicators also tend to believe it will fall to the 0.9900 zone. But graphical analysis both on H4 and on D1 shows that a correction may take place before the downwards trend continues, implying that the pair may rise to the resistance in the 1.0085-1.0100 area;
Summing up our weekly review, it is important to remember that the upcoming week will be filled with numerous events, which traditionally attract the attention of currency traders. To be precise, a decision by the Bank of Japan on interest rates is expected on Tuesday, 31 January, a similar decision by the US Federal Reserve is expected on Wednesday, 1 February, and the Bank of England is expected to announce its decision on Thursday, 2 February. In addition, at the end of the week on Friday, 3 February the ECB will hold a meeting, important economic data from China will be published, and employment data (NFP) from the United States will be released.
Roman Butko, NordFX