Year 2013 can be described as an interesting and dynamic in terms of currency pairs and precious metals. The daily turnover of the forex market exceeded 5.3 trillion dollars while in 2010 turnover was about 4 trillion dollars. However, experts say the growth of turnover in the market not only by private investors, but also due to various financial companies, which also show a high interest in it to the currency market.
The U.S. dollar is still the most popular currency for the trading, about 87% of all transactions in the market occurs with the participation of the U.S. currency. Euro takes the second place, however, the volume of transactions involving the euro reduced compared to previous periods. You can also note the high interest on the part of traders and investors in the currency pair USD / JPY, it is not surprising since the beginning of the year the pair showed a significant increase.
Year 2012 could be called one of the less volatile years, but during the 2013 the situation has improved in this area, and eventually we were able to observe significant trend in the Forex market. Should also be noted that the dollar exchange rate to the major currency pairs, except the yen remained approximately at the same level that was in the beginning of the year , major changes in this respect did not happen, though of course , during the year there were serious movement in favor of the dollar , for example, on the currency pair GBP / USD by the end of the same year, the pound , as we see, restores position.
As for the prospects of the dollar in 2014, the U.S. dollar has the potential to show good growth. We begin our analysis with the most popular currency pair EUR / USD. In general, if you look closely at the monthly chart, we can safely say that the quotes are in the middle of the model of technical analysis “Symmetrical Triangle”. As the formation of the model it indicates some uncertainty in the market and there is a possibility of movement both up to the level of 1.4550 and down to 1.2250. Yet if the pair will develop from the current downward movement and test the lower boundary of the “triangle”, then we can talk about a potential breakout model down and the formation of long-term downward trend. One might ask, “Why? ” In forming this model, provided that the price does not reach one of the parties to the test and goes the opposite – all this implies weakness of upward movement in this case. Thus, based on the analysis of the monthly chart of the currency pair EUR / USD, we can conclude about the uncertainty in the market, so consider shorter periods of time.
On the weekly chart it is already possible to see more clearly the model that prompt guidance for the near future. Rising resistance line, built on 2012.02.26 and 2013.01.27 points, is a line of sales bearish “Wolfe Waves”. At the moment, confused by the fact that the price just does not reach this line, and there was a drop. While fully applying the method of Bill’s, we see the target area near 1.1810 and date to achieve these levels – 2014.07.20, i.e. middle of next year. Cancellation of this same scenario will be the growth of quotations of the pair above 1.4025 levels. In such a scenario, most likely we will see the upper limit test “symmetrical triangle” on the monthly chart of the EUR / USD – 1.4550. Additional same signal in favor of mining scenario analysis and fall says the relative strength index. Here pattern forming “failure swing” and model “head and shoulders”. “Swipe” indicates a potential break of 1.3335 closing prices. Reversal pattern “head & shoulders” will push the pair even lower and the nearest stop is a serious level of 1.2790.
Summing up on the EUR / USD, while quotes are below 1.4025, the pair is under pressure and can look for opportunities to open short positions in tandem with a common purpose in 1.1810 on bearish «Wolfe Waves “, in the case of rising above 1.4025, we can expect movement to 1.4550.
Currency pair GBP / USD has several other chances than the euro. To date, the pound also squeezed in “symmetrical triangle”. So there is a high probability test local maxima at 1.7068. If set goals based on classical technical analysis, the closest target level is the area of 1.80. In the case of a drop in prices to the level of 1.5850 pounds, the couple will again be within the «Triangle ” and the current movement should be considered only after the price breaks up false , in this scenario , we can see the bottom border of the test at 1.50 . When considering smaller time intervals resurfaces formation model of harmonious trading under the name ” 5-0 ” indicating buying a pair of field 1.61 . Thus, while the quotes of the currency pair GBP / USD are above 1.6285, we can talk about breaking through «symmetrical triangle ” formation up and expect the upward trend in 2014 with the objectives mentioned above. But it is necessary to keep in mind, and the second option, in which a drop below 1.6080 could trigger a test of 1.5850 and further reduce pounds.
But it is possible to simultaneously see the decline of the euro and the pound? And for the development of such a situation also has the potential. To do this, it suffices to estimate currency pair charts Euro / Pound week timeframe. Thus, the currency pair is moving in a downtrend, and recently tested the upper border and currently seeing the beginning of a downward movement. Here you can see “Pattern 1:1” As we see, there are two identical corrections in time and costs, and therefore, it is possible to calculate the potential fall in the area 0.7070. Cancellation option to fall will be the price leaves the channel, in which case you will need to revise the current expectations.
As for the currency pair USD / CHF, everything will depend on the willingness of the Swiss National Bank to intervene in the market by foreign exchange interventions. Technical analysis indicates that potential prospects fall, quotes pairs move in the downward channel, and as we see, it is not enough force to knock it up and thus expand the current downward trend. There is a serious resistance level 0.9870, which can be called critical; the pair was able to test it in the middle of 2013. You can select another level of 0.9340, after breaking through, which you can look closely to buy the pair. At this point all the same as the pair in the descending channel, you need to look only possible to open short positions. An additional signal in favor of the downtrend reversal pattern stands «head and shoulders “, and it is directed precisely towards the total downward trend that eventually can cause a serious drop in prices. Overall aim of improving this model can select an area 0.80, by the way, almost from these levels and start their Swiss National Bank foreign exchange intervention in September 2011. Relative strength index also indicates the potential for further reduction.
The New Zealand dollar can be called one of the most technical pairs in 2013; our expectations for upward movement from 0.77, and then falling from 0.85 were fully justified. At the moment, we still expect the pair to reduce the local minima at 0.7680. However, at higher time intervals have goals and lower level of 0.7160. Here prices pushed off from the rising resistance line constructed through 1996.12.01 and 2008.03.01 point. Such a model cannot be considered correct bearish «Wolfe Waves “, as there is no model “Wedge», but on the whole basis of our observations, prices return to point 1 of the model. This point is located, at the level of 0.71. Relative Strength Index does not preclude the potential of this reduction; the immediate support line is far below. Additional signal to continue falling If the price rising channel and penetration level of 0.77. Under this scenario, the goal will still below the full width of the channel in 0.6530. Critical level downtrend price growth will be above 0.8540. The same is true on a pair of the Australian dollar / U.S. dollar, the same structure bearish «Wolfe Waves ” with the wrong proportions , and therefore target of the fall is the area of 0.8340 .
Currency pair USD / JPY continues the development of the upward movement, again with the help of the Bank of Japan. From a technical point of view, of course, would like to see a rebound from 101.80 levels and continue falling further down a pair of quotes. Here goes the upper limit of the downward channel, so the current levels can be called critical or bounces and there is a further fall, or the price breaks see new highs and test level 123.90. Also serious resistance can become a downward trend line, a landmark on it – 106, where you can also try short positions.
To summarize, we have tried to identify the major current trends in the Forex market for the next 2014 with key targets at critical points and cancel the options considered . While the euro is below 1.40, it is necessary to look for opportunities to open short positions and the expected development of the fall, we are waiting for the pound beginning of growth, the pair left the ” Triangle ” and could easily go on practicing this model, the yen is also at a key resistance level, a break which open the way for the pair further up USD / JPY, a New Zealander and Australian rather look further down.
In the coming year we wish to traders only trade with the trend and observe banal management rules!
Contributed by RoboForex