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Market Outlook for Week of Oct. 26th

Here’s the market outlook for this week:

Dominant bias: Bearish
After trading in a tight range from Monday to Wednesday, price broke down on Thursday with a move that was strong enough to result in a new, bearish outlook on this pair (and most other EUR pairs, too) that will continue for the rest of this month. Overall, price fell some 350 pips last week to test the support line at 1.1000 – an important psychological level, and any breach of that will be unchallenged as there are no near-by support levels to prevent a significant drop.

Dominant bias: Bullish
The movement of USDCHF is largely determined by EURUSD. As long as EURUSD has strength, USDCHF experiences bearish pressure, and vice versa so, as soon as EURUSD broke down, USDCHF sky-rocketed roughly 300 pips – rising from the support level at 0.9500 to almost reach the resistance level at 0.9800. This resulted in a Bullish Confirmation Pattern and additional upward movement is expected this week with the resistance levels at 0.9850 and 0.9900 being potential targets.

Dominant bias: Bearish
There is a bearish signal on GBPUSD due to its inability to trend upwards. All previous attempts were foiled at the distribution territory of 1.5500, which is now a major barrier for bulls, and the bias on this market will remain bearish while price remains below that level. Over the last few trading days, price made a bearish move, and is now very close to the accumulation territory at 1.5300. Unless the distribution territory at 1.5500 is breached, short positions are recommended.

Dominant bias: Bullish
As mentioned in the last forecast, we saw an end to the recent equilibrium phase on this pair (which lasted for several weeks). One of the requirements signaling the end of that equilibrium phase was a close above the demand level at 121.00. The current bullish journey actually began on October 15, but was not considered significant until price closed above that demand level – almost testing the supply level at 121.50 in the process. USDJPY now looks sexy (attractive) to swing and position traders and should continue its upward trajectory for the rest of this month (potentially even beyond October).

Dominant bias: Bearish
This cross initially exhibited a faint bullish indication at the start of last week, as it moved above the supply zone at 136.00. However, the sudden loss of EUR strength caused price to tumble – diving smoothly to reach the demand zone at 133.50. A rally will be difficult while EUR remains very weak (unless JPY itself becomes weaker than EUR), but there is still some hope of JPY pairs strengthening before the end of this month.