Here’s the market outlook for the week:

EURUSD

Dominant bias: Bearish

This pair moved downwards by over 300 pips last week, reaching a low of 1.1459. There is a strong Bearish Confirmation Pattern in the market and price may test the support line at 1.1450, even if there would be an upwards bounce after that. On the other hand, there is a possibility that the resistance lines at 1.1700 and 1.1750 could be challenged.                 

USDCHF

Dominant bias: Bearish   

This is now an abnormal market, since the Swiss National Bank (SNB) removed the peg on EURCHF and cut their interest rate, which is currently negative. This happened on January 15, 2015 and it has had extremely huge impact on all CHF pairs, including USDCHF. For example, CHFJPY rose by over 2400 pips, reaching a high of 138.97; and USDCHF nosedived by over 2800 pips, reaching a low of 0.7309. This happened in one day, plus similar unusual volatility happened on all CHF pairs. These kinds of movements in a single day are extremely spectacular, and therefore, current CHF pairs’ prices are bound to get corrected in the long run and things would return to normal in a matter of weeks. For instance, when USDCHF dropped like a stone, EURUSD ought to spike skywards, since they are negatively correlated in a normal condition. The latter was not affected, and both pairs cannot remain bearish for a long time (and Greenback is strong in its own right). USDCHF would, therefore, move upwards by at least, 500 pips this week.  

GBPUSD

Dominant bias: Bearish

Cable made noticeable effort to go bullish last week, but further bullish effort was halted at the distribution territory of 1.5250, and since then, there has been a bearish retracement in the market. On Friday, January 16, 2015, price closed around the distribution territory at 1.5150. More bearish movement is expected this week; the price could reach the accumulation territories at 1.5100 and 1.5050.

USDJPY

Dominant bias: Bearish  

The general outlook on this currency trading instrument is weak – though price is making some effort to go upwards in a context of the downtrend. The demand levels at 116.50 and 116.00\ could be tested this week (whereas the same demand levels could defend further southerly thrust). Bullish effort could enable price to test the supply levels at 118.00 and 118.50.

EURJPY

Dominant bias: Bearish

This cross dropped by over 400 pips last week, closing at 135.97 on Friday. Generally, it has dropped by over 1000 pips since the beginning of this year. The current shallow rally pales into insignificance when compared to the overall bias – bearish.  The only thing that can change the situation is the weakening of the Yen, which could happen this week or next.

This forecast is concluded with the quote below:

“Trading wasn’t the hardest thing for me to learn. The hardest thing to learn by far was how to let go of the old patterns that had stopped serving me.”- Mercedes Oestermann van Essen