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Market Outlook for week of Aug. 31st

Here’s the market outlook for this week:

Dominant bias: Bullish
Last week witnessed the greatest volatility in the markets since January 15, 2015. Between the 19th and 24th, price went up some 680 pips – topping out at the 1.1700 resistance line, from where it immediately began to retrace steadily. From that weekly high of 1.1700, price has dropped 520 pips – threatening the recent bullish bias so seriously that movement below the support line at 1.1100 will result in a bearish outlook.

Dominant bias: Bearish
>From the 19th to the 24th, this pair plunged 500 pips in what was clearly the biggest USDCHF move of the last few months. Price has rallied over 300 pips since then, which is a threat to the existing bearish outlook. If price goes above the resistance level at 0.9700 then things will turn cleanly bullish; whereas failure to break that level could strengthen the existing bearish outlook. As the outlook on CHF is bearish for September, bulls will likely have difficulty pushing USDCHF upwards to any great degree.

Dominant bias: Bearish
When the hope of a weak GBPUSD was almost dashed for August, this pair eventually lost all strength after trudging upwards and managing to test the distribution territory at 1.5800. From that distribution territory, price dived 450 pips to hit the accumulation territory at 1.5350. This means that bears are the overall winners on GBPUSD for August as their efforts overturned all bullish gains for the month. September will see very serious volatility for GBPUSD (actually, all GBP pairs), coupled with fast bearish and bullish movements.

Dominant bias: Bearish
The bearish expectation for USDJPY during August eventually materialized; and so did the bearish outlook on some other JPY pairs. From the 19th to the 24th, price plummeted 800 pips to briefly dip below the demand level at 116.50. Since then, price has been making a noteworthy bullish recovery – a movement of 500 pips so far. If another 200 pips can be attained this week then the bearish outlook will be rendered ineffectual. However, a move of that size could be difficult to achieve because most JPY pairs are expected to be bearish for much of September.

Dominant bias: Bearish
Owing to anticipated strength in the Yen, EURJPY fell sharply – resulting in a Bearish Confirmation Pattern. Though an ongoing struggle exists between bulls and bears, price was able to reach the demand zone at 135.50 last week (following a drop of 300 pips), but that level was not effectively broken… despite being battered several times. That demand zone needs to be breached within the next two weeks for the bearish bias to remain logical.