Weekly / Long-Term Forecast
Situation with dollar is coming better and better, so in near future with have potential for its rising, by next reasons:
1. US CPI stopped falling, where downtrend started from February 17 from 2.25 till 1.75. Reason for this was as falling of US Manufacturing PMI, as FED % rates strong tightening, that they stopped over few month;
2. and now US CPI have potential for rising, because Man. PMI stopped downtrend and have some signs of rising, where the same time Serv. PMI started strong uptrend;
3. as result we have rising of US GDP, that increased from 1% to 3% and have potential for further increasing.
Euro have loosing positions against dollar:
1. CPI still low (1.2) that is not enough for ECB for QE stop (should to be closer to 2%) and any Draghi words about this is just words, not more;
2. same time euro became to cost much more against dollar, from 1.05 to 1.2, that will made further negative influence on CPI, because EU goods is became to cost on over 20% more, so their selling’s also will be reduced;
3. As expensive euro is cost, as slower we have Man. PMI, where same time Serv. PMI have strong downtrend.
Seems this currency is most weaken against dollar and euro:
1. In first time from 6 month CPI started to go down;
2. GDP felt from 2% to 1.7% (where same time US and EU is rising);
3. Serv. PMI still on the bottom;
During time of US economy recovery dollar was in downtrend (may – aug 17), where EURUSD became to very high price 1.2050. Fact of this was Draghi words about QE stop, but as we now see, here is still no reasons for this, because EU CPI do not have strong uptrend and can’t became closer to 2% target level. So Draghi missed, where same time US became much stronger (GDP increased from 0.7% to 3%).
Worsens the situation with euro also that now eurusd course 1.2, that increased from 1.035, that is over 20%. EU goods became more expensive, where US more cheaper, so US now became in more profitable situation. Also technically levels 1.2 – 1.22 is very strong resistance, from that market can have confident correction to 1.14. Same time pound will be more weaken currency against dollar and can fell from current 1.29 to 1.25.
Same time Dollar Index on monthly chart is trading on the key support level as lower boundary of double top pattern, level 91.92, that can be a very good support for uptrend till 96 - 99.
We came to main resistance levels 1.2020 - 1.2237, from that can expecting correction to first strong support 1.1450.
The uptrend may be expected to continue in case the market rises above resistance level 1.2237, which will be followed by reaching resistance level 1.2800 - 1.3800.
Market is trading between resistance 1.1977 and support 1.1821.
An downtrend will start as soon, as the market drops below support level 1.1821 - 1.1760, which will be followed by a move down to support level 1.1565 - 1.1450.
The uptrend may be expected to continue in case the market rises above resistance level 1.1977, which will be followed by reaching resistance level 1.237.
Last monthly downtrend candle (black) as closed as absorption, that open road for further downtrend to support levels 1.2580 - 1.2380.
The uptrend may be expected to continue in case the market rises above resistance level 1.3215, which will be followed by reaching resistance level 1.3915.
Market is trading between resistance 1.3010 and support 1.2873. Seems that from resistance 1.3010 now we will have correction to support 1.2873.
An downtrend will start as soon, as the market drops below support level 1.2873, which will be followed by a move down to support level 1.2718.
The uptrend may be expected to continue in case the market rises above resistance level 1.3010, which will be followed by reaching resistance level 1.3136 - 1.3215.
Price became very closer to main reslstance level 1350, where also we have blue trend line. From it possible to have correction back to 1268. In other way, the uptrend may be expected to continue in case the market rises above resistance level 1350, which will be followed by reaching resistance level 1420 and 1557.
We trading on resistance 1337 and also can get the next on 1350. Anyway, from one of them can expecting cirrection to first support level 1321 and then, with it break down, to 1290.
Fundamental situation have neutral position. From one hand inventories still falling, that must increase oil price. But from another production is not increasing so fast, as before and this in same time, when oil price is because much more interesting for this, trading over $50. Also US Manufacturing PMI is still not increasing, that is not support deman on oil. So now oil more understandable from technical side, where we have range from $45 to $50.
We got main support levels as 45.50 and 46.30 from that can expecting correction to the main resistance $50. Formation of flag pattern is confirm this scenario, that will be activated after break up of resistance leve 47.50.
The downtrend may be expected to continue in case the market drops below support level 46.30 - 45.50, which will be followed by reaching support level 43.10.
by Anton Kolhanov
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