December 3, 2017
First, a review of last week’s forecast:
- As practice shows, if at least 25-30% of oscillators signal that a pair is oversold or overbought, one should expect a correction. This is what happened last week with the EUR/USD. At the beginning of the week, it seemed to have gone north, continuing the main trend of November, but the bulls' strength quickly dried up, and soon the pair retreated to where one third of analysts and oscillators had indicated - to the local bottom in zone 1.1800. However, while the pair was falling, the bulls regained their forces and by the end of the week they managed to bring it back to the level of 1.1900 - practically to the same place where the pair started on Monday;
- When giving forecast for the GBP/USD, 70% of experts, graphical analysis on D1 and all indicators had agreed that the upward trend of the pair, which started in January 2017, would continue, and it would rush to the September high in the zone 1.3650. The level of 1.3450 was named as the nearest resistance.
It is common knowledge that the truth is in the middle. So, it happened this time too - the maximum peak that the pair could conquer was the height of 1.3550, after which the forward impulse of the pair came to naught, and it completed the week at 1.3470;
- USD/JPY. The forecast for this pair assumed it would go down to the zone of 110.00-110.50 with the subsequent rise to the zone 112.00-113.45. This is what happened, with minor amendments. First, the pair dropped to the level of 110.83, and then, having turned around, it went up, rising to the height of 112.87. Afterwards, a powerful leap down 140 points followed, then up 80, and the finish was at 112.20;
- The basic forecast was accurate for the USD/CHF too. «Southwards and only to the south,"- claimed 70% of experts, graphical analysis on D1, 100% trend indicators and 80% of oscillators. The support was 0.9750. At the same time, graphical analysis on H4 together with the remaining 20% of oscillators warned that before going down, the pair could temporarily rise to the level of 0.9865.
The fairness of this forecast is clearly visible on the pair's chart - a smooth slow rise to the height of 0.9880, then a throw to the south to horizon 0.9733 and the week finished almost where expected, at 0.9760.
As for the forecast for the coming week, summarizing the opinions of analysts from a number of banks and broker companies, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:
- Exactly like last week, 65% experts predict a further weakening of the dollar and the growth of the EUR/USD at least to 1.2000. The following resistance levels are 1.2045 and 1.2090, the August maximum. Both graphical analysis and 95% of indicators agree with this forecast. But as for the medium-term forecast, the number of bulls' supporters is reduced to 35%, and the balance bows to the bears' side. According to the latter, starting from August, the pair is in a sideways trend in the range of 1.1575-1.2090, and therefore, having reached the upper border of this channel, it should turn around and rush to its Pivot Point in zone 1.1835.
At the same time, when opening positions on EUR/USD, it is necessary to take into account events that may affect the trend change or increase the volatility of this pair. Among the main events are the ECB meeting on Wednesday 6 December, publication of data on Eurozone GDP on Thursday and Friday publication of data on the US employment;
- The dollar is expected to weaken against the British pound as well. Thus, in the opinion of 60% of experts, graphical analysis on H4 and D1, as well as about 90% of indicators, the goal of the GBPUSD is a maximum of September 20 at 1.3650. The nearest resistance is 1.3600.
In case the trend reverses right now, the strongest support will be located at the levels 1.3325, 1.3265 and 1.3050. It is necessary to note here that the pair has been moving in the side corridor 1.3050-1.3325 for nearly two months and it was only last week that it managed to break through its upper border. Therefore, the desire of the bears to return it to this framework is strong enough, and they are ready to implement it at the first opportunity. Almost 70% of analysts do not rule out such a scenario in the medium term;
- If you try to give any forecast for the USD/JPY using indicators, you won't be able to do so. Some of them are painted in green, some in red, and some in neutral gray, both on H4, and on D1, And, this concerns both trend indicators and oscillators.
Among experts, there is a slight advantage (60% versus 40%) of those siding with the bulls, in their opinion the pair will once again try to rise to the level of 113.30-114.00, which is confirmed by graphical analysis on H4 as well. However, if we look at the D1 chart, the pair's desire to re-test the Pivot Point of the medium-term side channel 108.00-114.50 in the area of 111.70, becomes evident. If this line is broken through successfully, the pair will rush again to its lower boundary. This is exactly what we could observe in the period from March 22 to April 11, from May 17 to June 6 and from July 20 to July 31 this year;
- USD/CHF. 45% of experts believe that having reached a strong support/resistance level of 0.9760, the pair will break up and go to resistance 0.9845, and, in case of its breakthrough, and another 100 points higher. Graphical analysis on H4 and D1 as well as a quarter of the oscillators indicating that the pair is oversold, vote for this development as well.
Speaking about the movement of the pair to the north, it should also be noted that in the medium term, the number of supporters of its growth to the level of 1.0100 increases to 65%. At the same time, the bears who predict a decline of the pair to the 0.9700 level, prevail among analysts (55%).
Roman Butko, NordFX