2016 Market Forecast

2015 was full of surprises and made market extremely volatile in certain period ; however despite a lot of fundamental changes many instrument held a big range for the whole year which is clearly reflected in the DXY , SPX , USDJPY , EURUSD while the commodity sector extended it’s decline ( GOLD , OIL , AUD , CAD ) .

The main focus next year is on US.Dollar after the FED finally raised the rates in almost a decade so will this be the reason for major pairs to breakout and continue the move in favor of king Dollar ? Could this mean new highs for world indices as ECB , BOJ , BOE will keep it’s monetary police steady ?

If we take a look around USD pairs we’ll find it’s still favoring a stronger dollar for next year and every pullback is an opportunity to join the bulls so this current corrective move which could extend in the coming weeks will find buyer at extreme levels . However monthly charts for some pairs already reached yearly target and could just stay sideways or start a bigger correction only if DXY breaks below 90.

DXY support area around 96.5 – 95.5 or even lower around 92 area are the main zone to look for the next leg to the upside
USDIndexWeekly BullishUSDIndexWeekly RangeUSDIndexWeekly Bearish
Update 10/01/2015 Daily Charts
USDIndexDaily Bullish 1 USDIndexDaily Bullish

With ECB extending QE to 2017 , EURUSD bears still targeting parity and lower areas 0.98 – 0.96 but the question remain is the correction over yet ? while 1.17 is a strong resistance for now euro could still make it’s way up to around 1.2 before resuming lower .
Weekly structure could take different forms but it’s all calling for a move lower after it ends this bullish corrective leg.
EURUSDWeekly Bearish EURUSDWeekly Triangle EURUSDWeekly WXY

Pound correcting the move from last June and needs to remain below 1.535 for another leg to the downside.
GBPUSDDaily Bearish
Update 10/01/2016 Weekly Charts
Pound broke to new lows without any big retrace could extend lower to 1.39 or It could bottom around 1.42
GBPUSDWeekly Bearish GBPUSDWeekly Bulish

USDCAD keeps making strong moves to the upside and remain supported above 1.34 for a target around 1.42.
USDCADDaily BullishUSDCADDaily Bullish 1
Update 11/01/2016
USDCAD reaching 1.4270 – 1.4370 target so it could pullback to 1.38 – 1.34 before another rally

USDJPY loves spending weeks sideways but bulls are waiting for support areas to ride it toward 128 – 130 however any strong move below 116 will extend to 110.
USDJPYWeekly Bullish 1USDJPYWeekly BullishUSDJPYWeekly Bearish
Update 10/01/2016
USDJPYWeekly Bullish 1 USDJPYWeekly BullishUSDJPYWeekly Bearish

If you want to buy the dollar you should consider USDSEK because of it’s structure that’s ending a corrective move either in a triangle form or a bullish flag .
USDSEKWeekly Bullish 1 USDSEKWeekly Bullish

US Indices showing a possible head & shoulder formation in the weekly chart which could be huge only if it closes below the neckline because world indices almost having the same structure it’s only considered as a 3 corrective waves meaning another leg to the upside is expected after finishing this correction , while commodities still pointing to lower levels.

SPX remain bullish and the support area 1900 – 1800 is the key for SPX to start the next move 

#S&P500_H6Weekly Bullish#S&P500_H6Weekly Bullish 1

Dax could start the next move either from 9500 (Trendline) or 8500 – 8300 support area .

#GER30_H6Weekly Bullish 1 #GER30_H6Weekly Bullish

The support trendline comes around 17500 and a stronger support zone is at 16000 .

#JPN225_H6Weekly Bullish 1 #JPN225_H6Weekly Bullish

Gold still trading withing it’s bearish channel which means even with a pullback to 1200 levels it’s still targeting 1000 and lower , the path could be tricky as it could extend in time with a slow move or just break lower in the coming weeks .

XAUUSDWeekly Bearish 1 XAUUSDWeekly Bearish

The main target for Crude remain around 26 and while holding below 42 it’s expected to extend lower.
Also we have to notice that It’s bouncing from the lower edge of a descending wedge which could be the start of a big corrective move above 45 .

USOILDaily Bearish USOILDaily Bullish

For a conclusion , if you are currently shorting the US Dollar ( as my self ) you should consider extreme levels to take profits and prepare for the next move in favor of the USD.
 ” Trade what you see not what you think ” .


Full time Trader & Analyst