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Weekly Forex Forecast for 18 – 22 July 2016

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Weekly Forex Forecast for 18 – 22 July 2016

Weekly Forex Forecast for 18 – 22 July 2016
July 18
10:00 2016

First, a few words about the forecast for the previous week:

  • Giving a forecast about the future of GBP / USD, the majority of experts, supported by graphical analysis, tended to believe that the pair would go up, having rebound from the bottom in the area of 1.2860, where it would reach the resistance of 1.3370 and briefly pause in the channel of 1.3100-1.3370. That is just what happened. Then, on Thursday under the pressure of the bulls, the pair managed to rise even higher, reaching 1.3480. But by Friday evening their strength had weakened, and the pair returned to the specified range, having finished the week at the level of 1.3180;
  • With regard to EUR / USD, the outlook for this pair can be considered only partly come true – experts suggested the pair would move in the sideways channel, but only after its decline, as a result of which the level of 1.1050 had to be a resistance zone. However, as the last week showed, it continued to play the role of the upper limit of the support area of 1.1025-1.1050, and all attempts to break through it failed. As a result, the pair had been moving in the corridor of 1.1025-1.1160 for almost three weeks, which is, surely, due to the uncertainty around the effects of Brexit for Europe;
  • But the behavior of the pair USD / JPY greatly surprised analysts. It was expected that, following the scenario of spring-summer 2014, the pair would move within the ranges, predetermined by the support levels of 100.20 and 99.00 and resistance levels of 102.30 and 103.50. However, having bounced from the support of 100.20, the pair made such a powerful leap up that it literally flew over nearly 600 points, reached the mark of 106,320 and returned all it had lost during the announcement of the Brexit results;
  • USD / CHF –the forecast for this pair can be considered 100% fulfilled. As expected, all the week the pair had been fluctuating around the Pivot Point of 0.9850. In an effort to return to the zone of 1.0000, it was able to reach a high of 0.9893, and then it returned to the Pivot Point again and completed a five-day period at the level of 0.9820.

The forecast for the upcoming week:

Summarizing the views of several dozen analysts from the world leading banks and brokerage firms as well as the forecasts made on the basis of a wide variety of methods of technical and graphical analysis, we can say the following:

  • as to the future of GBP / USD, according to analysts and technical analysis, the bearish trend persists in the market. However, in terms of retracement, during the upcoming week the pair potentially can rise to the resistance of 1.3470 (and according to the graphical analysis on H4 even higher – up to 1.3800), after which it will again rush down – first to the support of 1.3100, and then to its historical lows in the area of 1.2800;
  • With regard to EUR / USD, it is clear that in this case all indicators look to the south. But most experts believe that the pair will continue to move further in the channel of 1.1025-1.1160. Some adjustments may be made due to the ECB’s decision on interest rates and the speech of Mario Draghi on Thursday, causing some possible growth of the pair. As for the graphical analysis, it points out that the pair, following the example of USD / JPY, may make a breakthrough upwards; regaining losses it obtained during the referendum in the Foggy Albion. In this case, 1.1220, 1.1290 and 1.1410 are the levels of the resistance. An alternative scenario, which is now supported by only 25% of analysts, suggests that the pair will fall to the low of June 24 at the level of 1.0900;
  • Analyst’ opinion regarding the future of USD / JPY may be reduced to the point that the rebound that occurred last week is just a correction and that the bulls’ strength has almost gone. As a result, it is expected that the pair will change over to the sideways movement within the boundaries of 104.50-106.50 (the next resistance is 107.80) during the coming week. Graphical analysis and indicators that took the neutral position both on H4 and D1 agree with this. In the medium-term forecast, the downward trend that started in December last year should continue, and the pair would retest the level of 99.00;
  • As for the last pair of our review – USD / CHF, according to the opinion of almost all analysts supported by graphical analysis on H4 and 80% of the indicators, the pair will keep the bullish trend and continue moving in the ascending trend. The nearest target is at 0.9950, then – at 1.0000. The main support will be at 0.9800, and in case of its breakthrough – 0.9680.

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