First, a review of last week’s forecast
The Christmas holidays simply cannot help affecting financial market participants. They are the reason most analysts expected EUR/USD to move in the rather narrow range of 1.1685-1.1900. In fact, this channel turned out to be even narrower, ending up being 1.1717-1.1862, with the week’s fluctuations not exceeding 150 points. Thus, the week produced no real results: the pair ended it in almost the same place where it started, namely in the 1.1750 zone;
In giving a forecast for GBP/USD, most experts (65%) voted for its fall, identifying 1.3300 as the support level. This was the level the pair descended to in the middle of the week. It then rebounded briefly, before returning and finishing the week there on Friday, 15 December.
USD/JPY. Here, as is often the case, the analysts were defeated by the oscillators. Recall that the former voted for the continuation of the uptrend; the latter, meanwhile, signalled that the pair was overbought and could decline to 112.00-113.00, and proved completely correct: the weekly minimum was fixed at 112.02. The pair then rose 60 by points and stopped at 112.62;
USD/CHF. Here the readings of many oscillators also said that the pair was overbought and would likely move south, and identified 0.9880 and 0.9845 as support levels. This forecast was fully vindicated. The pair repeatedly tried to break through the level of 0.9880 during the first half of the week, and an attempt on Wednesday ended up being successful. As a result, the pair sank to the second support level in the 0.9840 zone. After this, a reversal followed, and, like EUR/USD, USD/CHF returned to the week’s starting values.
Christmas: the end of the financial year ... Banks and funds have already wrapped things up and the Forex market is experiencing a lull. Therefore, as long as nothing extraordinary happens in the world (and we sincerely hope nothing does!), there should not really be any serious exchange rate fluctuations.
In these conditions, it is very difficult to make forecasts. This time, we, as usual, summarize the opinions of analysts from a number of banks and brokerages, as well as forecasts made on the basis of a variety of technical and graphical analysis methods. However, the overwhelming likelihood is that we will only be able to tell which of them came true at the beginning of the new year. Thus:
Starting with EUR/USD, there is a very slight advantage on the side of the bears. 45% of experts have voted for the fall of the pair, 30% for its growth, and the remaining 25% have predicted a lateral trend. The situation remains the same with technical analysis, with about half of the indicators pointing southwards. However, it should be noted that about 20% of oscillators indicate that the pair is oversold. The resistance levels are 1.1815 and 1.1860; the support levels, meanwhile, are 1.1720 and 1.1650;
GBP/USD. 50% of analysts expect growth, 25% a decline, and 25% predict a lateral movement. Most trend indicators (70%), like oscillators, are coloured red. At the same time, a third of the oscillators indicate that the pair is oversold. Graphical analysis agrees with them, showing a possible rise of the pair to 1.3425 on H4, and even higher to 1.3550 on D1. After that, the pair is expected to descend first to 1.3300, and then even lower to the support at 1.3225 (as per H4) or to 1.3065 (as per D1 readers). 65% of experts support such a medium-term drop;
USD/JPY. Here, most analysts (65%), graphical analysis and indicators on H4 have firmly sided with the bears, expecting the pair to fall to at least 110.85. 30% of experts are waiting for the pair to return to 113.70. The remaining 5% of experts, as well as trend indicators and oscillators on D1, have taken a neutral position;
The last pair of our review is the USD/CHF. Here, there is a complete discord among both experts and oscillators. Most trend indicators (75%) point north on both H4 and D1. Graphical analysis supports this development, predicting a side trend with a predominance of bullish sentiment on D1. However, according to its readings, the pair may first brush against the bottom in the 0.9800 zone, and only then perform a U-turn. After this, it will rise to the resistance in the 0.9925-0.9935 zone. Once it breaks through this, it will rise even higher to 0.9975.
Dear trading colleagues,
Our next forecast will be released next year. From the bottom of our hearts, we wish you a Merry Christmas and a Happy New Year. Whilst you are enjoying the festivities, however, please do keep in mind that even though the Forex market may calm down during the holiday period, cryptocurrency trading does not diminish even for a second.
By Roman Butko, NordFX
Notice: These materials should not be deemed a recommendation for investment or guidance for working on financial markets: they are for informative purposes only. Trading on financial markets is risky and can lead to a loss of money deposited.