TECHNICAL OUTLOOK
slight medium-term divergences. We
are now forecasting only a
weak further corrective rally to 1.4565 in April to alleviate the divergences, then a gradual decline to the 1.3655 October 2016 objective, in a less bearish medium-term outlook into yearend 2016 [1.3655 – 1.5885]. Only a monthly close back above 1.5890 would completely neutralize the bearish long-term momentum and result in a weak retest of 1.6670 over the subsequent three months. NOTE: EURGBP decline to the .7070 long-term objective complete; now volatile, broad consolidation into October 2016 [.7070 - .8050].
USD/JPY
As in the mid-year 2015 quarterly outlook highlighting the USD/
JPY, the rally to the 124.15 top of the medium-term consolidation view and forecast correction to 115.55 in August 2015 left the medium-term and long-term technical
outlooks eroding to
neutral/bearish. Although we did not expect a deeper decline than 115.55 through the first quarter of 2016, the monthly close in February
2016 below 115.55
confirmed our view of the long- term top in USD/JPY at 124.65. We are forecasting a decline to 107.80 weak long-term support through May 2016 in the now bearish medium-term outlook [105.35 – 117.30] through October 2016. As a significant currency pair to the EUR/ USD, we expect a high degree of volatility to ensue as
the Dollar
declines against the Yen and the Dollar appreciates against the
FX
Euro. As a result, we are focused on EUR/JPY, which has been testing the 125.35 critical monthly close for the last two months. We are forecasting a monthly close below 125.35 in May 2016, paving the way for the decline to 111.10 through September 2016, and
facilitating the forecasts
for these currencies against the Dollar. Only a monthly close back above 121.55 in USD/JPY would neutralize the bearish outlook and revert to a more neutral medium- term outlook [110.60 – 124.65] into November 2016.
USD/CHF
The Swiss Franc remains the bellwether, proactive currency. Once again we have rallied to only 1.0330 shy
of the 1.0525
medium-term objective for late last year, mixing the medium- term technical attributes further in neutral/bullish. The resulting decline to .9650 shy of .9475, forecast for the February/March 2016 timeframe alleviated the mixed technical, and we continue to forecast the subsequent, gradual rally
October 2016 in a less bullish long-term outlook for USD/ CHF
USD/JPY
to 1.0440 into through 2016. Only a
monthly close back below .9475 would terminate the forecast rally and commence a decline to .8240 strong long-term support
FX TRADER MAGAZINE April - June 2016 19
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