January 7, 2018
First, a review of last week’s forecast:
- The markets are apparently still on winter vacation. Hence, the pair EUR/USD spent five days in the very narrow lateral channel of 1.2000-1.2085 and completed the five-day period in the same place where it started at 1.2030;
- it is difficult to conceive a 40-point weekly increase as being serious growth. Rather, it represents a lateral trend once again, which for GBP/USD was in the corridor 1.3493-1.3611. Unlike EUR/USD, this width at least slightly exceeded 100 points;
- USD/JPY grew by 40 points as well, demonstrating its intent to stay in the corridor 112.00-113.75 for a while. This is what the readings of the graphical analysis that we announced a week ago were talking about. Having quickly reached the lower limit of this range on Monday 2 January, the pair reversed and climbed to 113.30 on Friday 5 January. After that, a 25-point rebound followed, and the pair froze in the zone of 113.05;
- a classic lateral trend was also demonstrated by USD/CH: it denoted 0.9745 as a Pivot Point. The minimum of this week was at 0.9698, with a maximum 99 points higher at 0.9797.
As for the forecast for the coming week, summarizing the opinions of analysts from a number of banks and brokerages, as well as forecasts made on the basis of a variety of methods of technical and graphical analysis, we can say the following:
- EUR/USD is currently in a landmark zone: on the border between the two-year high of summer end/autumn start 2017, and the lows of June 2010 and July 2012. This is clearly visible on the graphs of W1 and MN. This zone may contend to be "Barrier of the Decade"; where the pair moves from it will depend on major economic and political events. These are not, however, expected this week. That is why the opinions of experts at the moment are divided almost equally.
55% of them, supported by graphical analysis and oscillators on D1, think that the pair will try again to break through the resistance of 1.2100 and subsequently rise to the zone 1.2150-1.2200. As for the remaining 45%, in their opinion, the pair will first decrease to the Pivot Point of the medium-term summer/winter channel of 2017 (1.1830). It will then potentially go even further, to its lower border at 1.1550-1.1650.
It should be noted that in the medium term, the number of supporters of the bearish scenario, counting on strengthening the dollar, increases from 45% to almost 70%;
- as for the GBP/USD, most analysts (85%) voted for the fall of this pair. The nearest support is 1.3400, the target is 1.3300.
Only 15% of analysts side with the alternative scenario, along with almost 100% of trend indicators and oscillators. They indicate a height of 1.3655 and think that the pair will only reach southwards upon having reached this height;
- USD/JPY. The graphical analysis on D1 still draws a continuation of the lateral corridor. However, as if anticipating the end of the New Year holidays, volatility forecasts are upgraded, with the corridor’s borders being expanded from 112.00-113.75 to 111.60-114.40.
Recall that the 111.60 zone is the Pivot Point of the medium-term channel 108.00-114.75, in which the pair throughout the whole of last year. 65% of experts agree that this situation will continue
After this, a rebound up should follow. If the pair manages to break the upper boundary of the channel, its target will be a maximum of 2016, 118.60. This possibility is not ruled out by 55% of analysts;
- The last pair of our review is USD/CHF. This New Year period immediately reminds us of the "Black Thursday" on January 15, 2015. Then, because of a decision by the Central Bank of Switzerland, the pair immediately collapsed from 1.0200 to 0.6700, losing about 35% of its value. However, in just two months it fully recovered, which once again proved the speculative impulsiveness of the market.
As for the forecast for the near future, like last week, about 65% of experts believe that the pair will be able to break through the support of 0.9730 and fall to the zone of 0.9600-0.9650. The rebound should happen then, and the pair should return to parity at 1.0000.
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