Forex Forecast for 18-22 January 2016

January 18, 2016

For starters, a review of last week’s forecast:

- the forecast for EUR/USD panned out almost fully – according to the experts and graphical analysis on H1, the pair was supposed to be in a sideways trend, rebound from the upper boundary of the channel early in the week, then drop and return to the upper boundary;

- in their dispute with the analysts, the indicators turned out to be right when they clearly pointed to GBP/USD’s further fall;

- the experts based their forecast for USD/JPY on the fact that the pair had reached its local minimum and should enter a sideways trend, which did happen. However, on Monday and Friday, the pair made two attempts to break through support at 117.20. The first attempt failed, and it is too early to talk about the outcome of the second one;

- on Monday, after breaking through support at 0.9920, USD/CHF tried to go down to the next level of 0.9800 but failed. As predicted by graphical analysis, the pair rose to the upper boundary of the range – 1.0100. On reaching it, in accord with the experts’ opinion, the pair returned to its main level of the last few months 1.0000 where it wrapped up the week.

Forecast for Coming Week

Summing up the views 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 said:

- regarding EUR/USD, 75% of the indicators vote for the pair’s rise while most exerts support bearish sentiment. In line with the latter, graphical analysis on D1 draws a further downward tunnel and indicates that in the first half of the week, the pair will go down to the lower boundary of ​​1.0650 and then bounce off to the upper boundary at 1.0900. At the same time, a look further down the tunnel shows that it finishes at last year’s low of 1.0450. The pair may reach this level already by the end of this month;

- the GBP/USD pair is replaying last week’s scenario as both experts and graphic analysis cannot wait to see a rebound at least up to 1.4370 (H1) while larger timeframes show bigger rebounds – 1.4520 on H4 and 1.4700 on D1. However, all indicators still insist on a continuing downtrend. Moreover, the W1 chart clearly shows that there’s room for the pair to fall – it’s at the low of May 2010 now but there is still the low of January 2009 at 1.3500, which may become the next target;

- according to 65% of the analysts and graphical analysis on H4, next week USD/JPY is facing a slight correction with the transition to 117.40-118.00 and then a drop to support at 116.00. The indicators on H4 and D1 echo this;

- last week’s forecast was that USD/CHF would be fluctuating within a wide range from 0.9800 to 1.0100. The same scenario stands for this week, although there’re differences as to the sequence of these fluctuations. Thus, the indicators on H1 are neutral, on H4 they side with the bears whereas on D1 they root for the bulls. Graphical analysis on H1 points to a rise to 1.01125 first and then a return to 1.0020. After that, according to the indicators on H4, USD/CHF will go down to support at 0.9870, rebound and come back to early January’s highs. Graphical analysis on D1 predicts quite a fast rise to 1.02500, followed by a drop to a 1.0000 pivot point.

Roman Butko, NordFX

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