As usual, let us start with a few words regarding our forecast for last week, which, overall, turned out to be quite accurate:
- for EUR/USD we predicted that the pair, most probably, would continue to be in a sideways trend with fluctuations around the line of 1.1230, which is what happened: at first the pair went downwards, then returned to its Pivot Point, after which the “bulls” gained strength and began to persistently push the pair towards the upper boundary of the corridor. As the final bastion of resistance we named the level of 1.1440, through which the pair tried to break through all of Friday, but failing to do so finished the five days in this very zone;
- one of the possibilities offered for GBP/USD was the breakthrough of the resistance level of 1.5600, which was also supported by 87% of the indicators. This breakthrough had already happened on Tuesday, and then the pair tried several times to rise above the upper boundary of the corridor we named (1.5785), but, being unsuccessful, settled down and finished on the level of 1.5727;
- for USD/JPY the level of 119.70 was named as the Pivot Point, and it fully justified this “honorary title” – the pair crossed it twice during the week, having stayed exactly in the average values of the corridor 118.75÷120.30 that we had specified;
- yet USD/CHF turned out to be the only pair regarding which both analysts and indicators were only partly right. At first everything seemed to go as planned – the pair began to grow, trying to secure itself in a zone higher than 0.9300. But then on Tuesday, with a powerful jerk, the pair broke through the support line and went down sharply, reaching the minimum of a week ago.
***
Now regarding the forecast for the coming week. Generalising the opinions of 35 analysts from world leading banks and broker companies, as well as forecasts based on different methods of technical and graphical analysis, we can note the surprising unanimity of the analysts, who predict growth for all four pairs. This kind of forecast always causes strong suspicion, because some of the pairs are generally characterised not by direct, but by multidirectional correlation:- for the EUR/USD pair the opinions of the experts look like this: ↑ - 40%, → - 3%, ↓- 6%, ↔ (shrugged their shoulders) – 51%, as for the indicators, we see a similar picture (↑ - 83%, → - 17%, ↓- 0%). However, with graphical analysis you can see that the pair has almost finished the “inverted hat” shape, and it only has the second brim of the hat left to draw. Thus we can assume that this week EUR/USD will hold in a sideways corridor of 1.1070÷1.1530, and after a small growth the pair can expect a relatively strong rebound downwards;
- if you look at the D1 graph, you will clearly see that the GBP/USD pair has reached the upper boundary of the corridor (1.5800) in which it was located for a whole one and a half months at the end of last year. With high probability, we can predict that the pair will now be delayed for some time in the zone of 1.5500÷1.5815. Thus, despite the vast majority of analysts and 91% of indicators pointing towards growth, it is worth expecting the prevailing of “bearish” tendencies and a rebound of the pair downwards;
- regarding the USD/JPY pair the opinions of the experts and the readings of the indicators diverge (experts: ↑ - 42%, → - 3%, ↓- 3%, ↔ – 52%, indicators: ↑ - 26%, → - 4%, ↓- 70%). Hence, we can consider the level of 119.40, on which the pair finished the previous five days, as a Pivot Point, and from then on, we can be guided by the readings of indicators on the H1 timeframe and lower. Support will be on the levels of 119.20, 118.90, 118.75, 118.50, resistance – 119.60, 119.90, 120.00 and 120.30;
- as for the nearer future of USD/CHF the statements of both analysts and indicators are very similar to the statements regarding the USD/JPY pair (experts: ↑ - 40%, → - 6%, ↓- 4%, ↔ – 50% and indicators: ↑ - 17%, → - 9%, ↓- 74%). At the same time, because the pair is inversely proportional to EUR/USD, we can predict its growth to at least the zone of 0.9290÷0.9380. In the case that this forecast is not fulfilled, the support levels will be 0.9110, 0.9075, 0.8980, resistance – 0.9500.
Roman Butko, NordFX & Sergey Ershov
