FX CURRENCY WATCH
the next 16 months. Only a monthly close back above 1.6380 close [ in January or any month thereafter to avoid “Holiday December” ] would avert the forecast gradual decline to 1.4230 and result in a weak rally to 1.7045 strong long-term resistance over the subsequent six months.
NOTE: EUR/GBP is forecast to decline to .7030 over the next 16 months.
USD/JPY OUTLOOK Chart 1: EUR/USD Monthly bar chart
Chart 2: GBP/USD Monthly bar chart GBP/USD OUTLOOK
GBP/USD has been technically medium-term neutral for five years, in an increasingly neutral, broad, long-term outlook. The massive wedge formation of the last 30 years has now tightened relatively to [1.4170 – 2.0245]. Although the beginnings of this broad ranging wedge have only been experienced
34 FX TRADER MAGAZINE January - March 2014
by the very long-standing members of the financial community like myself, the post- 2007/2008 plunge has resulted in an ever more neutral long-term momentum. We are forecasting only a weak further retest of 1.6470 weak long-term resistance into January 2014 before a gradual decline to retest 1.4230 into March 2015 in a neutral/ bearish medium-term outlook over
The decline in USD/JPY to 75.55 in late 2011 produced the strongest medium-term and long-term divergences of the previous ten years. This rare but very significant occurrence that we have stressed for the last two years has begun to produce the forecast long-term rally in USD/JPY. We continue to forecast a rally to 107.15 through early 2014, and continue to forecast a further gradual rally to 118.80 through May 2014. We are forecasting a subsequent broad medium-term consolidation to ensue through March 2015 [96.45 – 118.80]. As we discussed in the above two forecasts, for risk management purposes, our
long-
term outlook would only change if there was a monthly close back below 96.80 [ in January or any month thereafter to avoid “Holiday December” ]. Only this monthly close would terminate the forecast rally and result in a broad neutral medium-term outlook [87.10 – 107.15] over the subsequent year.
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