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Weekly Outlook for Week of December 12-16, 2016

Here’s the market outlook for this week:

Dominant bias: Bearish
Price rallied 300 pips at the start of last week – testing the resistance line at 1.0850 before beginning a strong bearish move. The upside gains that were initially made last week were eventually lost as price plummeted to test and close just above the support line at 1.0550. The outlook is bearish for this week as EUR is expected to remain weak while USD gains strength. There is a real possibility of EUR reaching parity with USD in the foreseeable future.

Dominant bias: Bullish
This market moved sideways from Monday to Wednesday, then started moving upwards on Thursday – in line with the extant bullish bias. Price tested the resistance level at 1.0200, and later closed below it. The outlook is bullish for this week, so price could reach the resistance levels at 1.0250 and 1.0300. However, CHF should be seen rallying against some major currencies and that may temper the bullishness against USD.

Dominant bias: Bearish
Price climbed on Monday and Tuesday – reaching the distribution territory at 1.2750. Attempts were made to stay above that distribution territory, but were ultimately rejected as a move down began – eventually posing a threat to any bullish signal. Price should decline further this week – breaking through one accumulation territory after the other. The outlook on GBP pairs is bearish for the week.

Dominant bias: Bullish
The market consolidated from December 5 to 7 (though the consolidation started earlier than that), and then rallied on December 8 and 9. Since the low of November 9, the market has moved up some 1400 pips, and is likely to continue. As forecast for the past three weeks, the outlook on this and other JPY pairs remains bullish, so the supply levels at 115.50, 116.00 and 116.50 could be reached this week.

Dominant bias: Bullish
There is a conspicuous Bullish Confirmation Pattern on this pair, albeit a volatile one. Price has recently swung up and down in the context of an uptrend, but the overall movement was bullish. The targets this week are the supply zones at 122.00, 122.50 and 123.00, which were all tested last week. The major reason for the bullish here is serious weakness in the Yen, and until that resolves, the Euro (which is weak itself) will continue to gain against it.