Weekly Outlook: 2015, February 01 - 08

The US Dollar Index initially fell during the course of the week, testing the 94 handle for support. We found enough support back there to bounce and form a hammer, and as a result it looks like the markets ready to go higher. This is a bit surprising though, considering how massively parabolic this contract seems to be. Nonetheless, what this means is that the US dollar should continue to strengthen against most spot Forex pairs as well. With that, we look at pullbacks as potential buying opportunities.



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The gold markets fell during most of the week, but found the $1250 level to be supportive enough to turn things back around and form a hammer. That being the case, it looks like the market is fairly well supported and as a result should continue to go higher over the longer term. Because of that we are buyers of gold for longer-term moves, and believe that it’s only a matter of time before we break out to the upside and perhaps head as high as $1400 going forward.



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The USD/JPY pair tried to rally during the course of the week, but as you can see struggled a bit and formed a shooting star. It is because of this that we believe that the market will different here, probably looking for support at the 115 level. We have no interest in selling this market, and look at the upcoming dip as a potential buying opportunity. We will look for supportive candles, and then start buying the US dollar on perceived value. We have no interest in shorting because of the central bank attitudes, as the Bank of Japan continues to work against the value of the Yen.



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The USD/CHF pair broke higher during the course of the week, slicing through the 0.90 handle. However, this market is most certainly in a downtrend now after the impulsive candle that we had seen a couple of weeks ago, so we are still interested in selling and not interested in buying. With that, the 0.95 level above should now be resistive, and we are looking for some type of resistant candle in that region in order to start selling. With that, we have no interest in buying this market.



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The USD/CAD pair broke higher during the course of the week, slicing through the 1.25 level. That being the case, it appears that the market should continue to go higher, but we may need to see a little bit of a pullback in order to continue the momentum higher. This is especially true considering that we formed a shooting star for the session on Friday, but ultimately we are obviously in an uptrend. The market should now head to the 1.30 level, and as a result we look at pullbacks as opportunities to pick up the US dollar “on the cheap.”



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The NZD/USD pair initially tried to rally during the course of the week, testing the 0.75 level. That being the case, the market looks as if it’s ready to continue falling, and as a result we are still very bearish. The Royal Bank of New Zealand suggested during an interest-rate meeting that interest rates are not necessarily going to stay where they are, and the cuts are in fact possible. That being the case, it appears that the market should continue to drop from here and head towards the 0.70 handle. That being the case, we remain very bearish of this market but also recognize that it might be easier to trade on the daily charts. However, longer-term traders will probably take selling opportunities as we rally, and with that being the case the market should continue to be bearish.

With that, we should also keep in mind that the Royal Bank of New Zealand has recently stated that the “fair value” of this pair is closer to the 0.68 level, and as a result they will probably get that given enough time. On top of that, you have to keep in mind that the Royal Bank of New Zealand has recently jumped into the Forex markets in order to sell this pair and drag it lower.

With all that being said, you have to keep in mind that the US dollar is the favored currency by far with perhaps the one exception being the Swiss franc, sell this pair should continue to drift lower. In fact, we have to now wonder whether or not we are going to get below the 0.68 handle even. In fact, we should see this pair as one that we can continue to sell again and again every time we rally. Remember, the New Zealand dollar is highly sensitive to commodity markets as well, and of course those are not doing fairly well in general and that should continue to keep the demand for the New Zealand dollar lower going forward at this point.



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The GBP/USD pair initially tried to rally during the course of the week, but as you can see sold off to form a shooting star. The shooting star is sitting just on top of the 1.50 level though, and that is massively supportive. In fact, we believe that the support goes all the way down to the 1.48 level so it is going to be difficult to break down from here. It’s not that we don’t think it will, it’s just a matter of taking the easiest trades possible. This is not going to be one of them.



the source

The EUR/USD pair broke higher during the course of the week, but fell at the 1.14 level to turn things back around and form a little bit of a shooting star. That being the case, we feel that the market is going to continue lower, trying to reach the 1.10 level. Ultimately, we believe that rallies continue to offer selling opportunities, and a break below the 1.10 level probably opened the door way to the 1.00 level in the longer run. We have absolutely no interest in buying this pair although we recognize it has been oversold.



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