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Weekly Outlook for Week of December 19-23, 2016

Here’s the market outlook for this week:

Dominant bias: Bearish
Price moved sideways between Monday and Wednesday, but then began dropping as expected. The support line at 1.0400 was tested and, although price closed above, will be tested again. The outlook is bearish for this week so a break of the support lines at 1.0400, 1.0350 and 1.0300 is possible – reinforcing the likelihood of EUR reaching parity with USD.

Dominant bias: Bullish
In a mirror image of EURUSD, a shallow bearish retracement from December 12 to 14 then saw price rise significantly to briefly reach above the resistance level at 1.0300 and later close below it. Continued rally attempts are expected, though there will be challenges. Bearish corrections should be contained around the support levels of 1.0050 and 1.0000, and the resistance levels at 1.0300 and 1.0400 are targets for this week.

Dominant bias: Bearish
After consolidating on Monday and Tuesday, a drop occurred on Wednesday – just as forecast last week. The accumulation territory at 1.2400 has been tested again and again, but there has been considerable opposition to further bearish movement. However, the bearish bias on multiple GPB pairs should support a break down this week that ought to extend at least 300 pips by the end of the month.

Dominant bias: Bullish
As per last week’s analysis, price climbed 300 pips after moving sideways on Monday and Tuesday. Since November 9, this market has gained over 1700 pips …and the trend could continue. There is a Bullish Confirmation Pattern in place, so the supply levels at 118.50 and 119.00 may be tested this week. Movement on JPY pairs from this point onward will be determined by the strength of individual currencies, not weakness in the Yen, so some JPY pairs might rally while others plummet.

Dominant bias: Bullish
There are going to be serious movements in the JPY markets this week and, despite this being a bull market, the ongoing weakness in EUR could scuttle the expectation of further gains. However, if price can stay above the demand zone at 121.00 then the bullish bias will hold.