FX.co ★ Weekly review from Alexey Portnov

Sometimes people call the first week of the year a trend start because the major players comes back to their work places and the most important reports are being released. Everybody was waiting for Friday, especially, NFP. The data became much worse the forecast that is why a kind of reversal came next. I predicted a further boost of the US dollar against other currency pairs, but for now, we should be extremely careful as on Friday, large trading volumes were observed at the currency market. It is hard to say whether big players bought or sold, it is needed to wait for a strengthening. Let us analyse the CFTC reports.

As it was mentioned before, we are waiting for short operators’ entry into the extreme zone, so this event has appeared without any significant advance of the greenback therefore it is possible to say that the American dollar is into the extreme zone, we just need the confirmation. Most probably, Friday’s big volumes were directed to sales and we can see the US dollar decline versus major currencies. Let us look at the picture in more detail for that.

At this graph, we see that the US dollar index is placed in trading range for about two weeks, it signals about serious volume accumulation. On Friday, NFP were released that caused the high volumes. Now, breakthrough of the range will happen from these levels and strengthening will take place. The main task will be to wait for the index fixation above or below the trading range. In case of strengthening below, we will go to 76. In case of strengthening above - to 79.5. The same with other currency pairs. Locking higher news level means to move up, below – down. Everything is very simple.

Kind regards,

Analyst: A. Portnov.