In our opinion the following forex trading positions are justified - summary:

• EUR/USD: short (a stop-loss order at 1.2250; the initial downside target at 1.1466)
• GBP/USD: short (a stop-loss order at 1.3272; the initial downside target at 1.2375)
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

Looking at the daily chart, we see that EUR/USD extended gains and broke above the upper border of the blue consolidation and the upper line of the brown rising wedge. Thanks to today’s increase the exchange rate approached the August high, but then reversed and declined, which suggests that we ay see further deterioration in the coming days.

Very short-term outlook: mixed with bearish bias
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): Short positions (with a stop-loss order at 1.2250 and the initial downside target at 1.1466) are justified from the risk/reward perspective. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

USD/JPY

On Tuesday, we wrote the following:

The first thing that catches the eye on the above chart is an invalidation of the breakout above the medium-term green line, which is a bearish development. When we take a closer look at the daily chart, we can notice a similar price action in the previous month. Back then, such situation preceded fresh lows, which suggests that further deterioration and a test of the recent lows (area between 108.25 and 108.90) should not surprise us in the coming days – especially when we factor in the sell signals generated by the daily indicators.

From today’s point of view, we see that the situation developed in line with the above scenario and USD/JPY extended losses. Earlier today, the exchange rate broke below the August low, slipping to the lowest level since mid-April. Although the pair rebounded slightly, the sell signals generated by the indicators remain in place, suggesting a test of the 61.8% Fibonacci retracement. Nevertheless, if this support doesn’t stop currency bears, we may see a decline even to the mid-April low in the coming days.

Very short-term outlook: mixed with bearish bias
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

AUD/USD

Quoting our last commentary on this currency pair:

(…) AUD/USD invalidated the tiny breakdown under the lower border of the purple rising trend channel, which together with the buy signals generated by the daily indicators (they still remain in place), suggests that we’ll likely see a test of the orange resistance zone, the recent highs or even the upper border of the purple rising trend channel in the coming days.

On the daily chart, we see that currency bulls pushed AUD/USD higher as we had expected and the exchange rate climbed to the orange resistance zone. Taking into account the fact that there are no sell signals generated by the daily indicators, it seems that we’ll see another attempt to move higher and a test of our next upside targets in the coming days.

Very short-term outlook: mixed with bullish bias
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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