Forex Weekly Forecast & FX Analysis December 27-31
The Euro is undergoing a horizontal correction against the US dollar. It started from the level of 1.1200, after which the price is gradually increasing. Hence, we are talking about the upward stage of the corrective movement, which can be traced on the histogram. The oscillator, which is built close to the level of 50 and practically doesn't move away from it, clearly shows the absence of volatility and the absence of the current trend. Also, note that the moving averages practically coincide with the price. Just like in previous weekly reviews, it is important to highlight the sideways range with the boundaries of 1.1280 and 1.1350. It is important that the moving averages began to follow this range and stay within it. In general, the dynamics are upward and the market is already above the moving averages. Therefore, we can consider trading upwards. However, such a contract can be opened only if the price will consolidate above the range. If the market drops below the uptrend line, then we can open a short contract.
The British pound made quite a strong upward movement against the American dollar. As a result, the price rose above the level of 1.3300 and moving averages. Note that the moving averages have been tested twice recently. The first time it led to a reverse correction, and the second time the market managed to break this level. All indicators are also looking up, and the oscillator has already reached the overbought area. Therefore, we can say that we are probably at the top of the market, albeit locally. So, the currency pair may need a corrective move downwards.
The main dynamics for the US dollar against the Japanese yen is upward. The market is growing, and this is confirmed by all analytical tools. It is important to note that last week the price managed to consolidate above the level of 114.222. All indicators are looking up, but none of them have yet reached their limits. Thus, we have every reason to consider trading up.
The Australian dollar continues to develop an uptrend stage against the US dollar. The market rebounded after a very strong fall and continues to grow. The last week it rose above the moving averages and managed to consolidate above that level. It is important to note that we are observing an atypical divergence for the current stage. If we review the last three peaks together, the price of the currency pair is rising and the indicators are drawing a horizontal line. This is a weak divergence, but it is the only signal we can use in trading. Thus, we consider trading downwards.
Last week was negative for the US dollar against the Canadian dollar. The divergence, which we discussed in the previous weekly review, worked out. The key feature of the descending movement is that the price stopped its fall, reached the moving averages, and a strong level 1.2774. So locally we are at the bottom of the market, which means there is a high probability that the price will return to its major upward movement.
The US dollar continues to develop a horizontal retracement stage against the Swiss franc. Last week led to a decline from the moving averages to the level of 0.9165. The absence of trend and volatility is very well seen by indicators, which are close to their neutral values. The market is testing its minimum values for more than a month. Thus, it is logical to assume that the price will return to growth and begin its move up to the level of the moving averages.
Last month's price for the US dollar has mostly been moving downward, or horizontally against the Russian ruble. The key feature of the last week's trading is the formation of a candle with a short body and a very long upside shadow, which reached the level of 78.00. After that no major changes occurred, however, the market ended up below the moving averages. The histogram stays in the negative area. If we refer to the rules of technical analysis, which say the long shadow is a harbinger of the opposite movement, then we can consider trading down. The deal could be opened only if the market consolidates below the level of 73.32. If the price rises again and remains above the moving averages, then it will be possible to trade up.
The price range, which we spoke about in the previous weekly review, was broken up last week, and the price consolidated there. It is very important that the gold price followed the "right" way, by breaking through the range upwards, then testing it again, and only after that it rose above the moving averages. On the one hand, we can say that a new trend is emerging and it is necessary to trade upwards, getting ahead of the market. However, on the other hand, if we compare the position of the price and the indicators, we see a divergence. Hence, it is much more likely that the price will move down to the strong level of 1790.834.