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.
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.
Pound correcting the move from last June and needs to remain below 1.535 for another leg to the downside.
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
USDCAD keeps making strong moves to the upside and remain supported above 1.34 for a target around 1.42.
USDCAD reaching 1.4270 – 1.4370 target so it could pullback to 1.38 – 1.34 before another rally
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.
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 .
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 ” .