Goldman Sachs' outlook for Q1 2018 on the forex, indices and commodities

Goldman Sachs offers its outlook for the first quarter of 2018 on the major forex pairs, stock indexes and commodities.

S&P 500: Bullish bias (with medium conviction) and a target at 2750.

The next big pivot to watch is at 2718-2752. There is a risk that the market will form a top in this zone. However, a break above 2718-2752 would see an increase of about 7% at 2904-2949. For this reason, it is difficult to jump into the trend until there are obvious signs of reversal.

DAX30: Bullish bias (with strong conviction) and a target at 15190.

The index has potentially completed a 3/V wave formation since the trough of February 2016 after reaching 13,457. Wave 4 has targets at 12525-12508 (23.6% retracement and an ABC from the top). We then anticipate a 5V wave that has a minimum target at 14307 and an extension target at 15190-15404.

EUR/USD: Neutral bias.

The wave count since January seems to be an incomplete wave number 4 over 5 rising waves. Wave 4 can fall back to 38.2% (1.1482) while remaining corrective. From this threshold, wave 5 targets are located at 1.19 and 1.22.

GBP/USD: Neutral bias.

The pair potentially forms a diagonal line and a wave number 1. If this is the case, it probably forms a significant dip. However, it still needs to observe a correction process to 1.2963 and 1.2749. The resistance level is at 1.3885 (38.2%).

USD/JPY: Bullish bias (with average conviction) and a target at 118.

The pair is showing a new break attempt over the top of its range, which is at 114.12-114.73. Given the number of times the pair tested these pivots, a break above it would be significant. The initial target is 118.25, and then 125.86-127 above.

Gold: Bearish bias (with average conviction) and a target at 1202.

Gold is currently probably in wave C of an ABC sequence since July 2016 that could reach 1123-1105 (including the December 2016 low). We anticipate a corrective decline. If and when 1123-1105 is reached, we will look for signs that a hollow point has been formed.