Although the greenback declined against the Japanese Yen, the U.S. currency improved against other major currencies hitting a fresh January high against the euro and its Canadian counterpart. Did these moves change the outlook for major currency pairs? We invite you to read our today's Forex Trading Alert.
Forex Trading Positions - Summary:
EUR/USD
As you see on the above chart, EUR/USD extended its decline and hit a fresh January low. From this perspective, it seems that we will likely see further deterioration and the downside target for the sellers will be the lower border of the declining trend channel (currently around 1.3453). Please note that sell signals generated by the CCI and Stochastic Oscillator still remain in place supporting the bearish case.
Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: bearish
Trading position (short-term): we do not suggest opening any trading positions at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
GBP/USD
Looking at the above chart, we see that the situation has deteriorated slightly as GBP/USD remains below the lower border of the rising wedge. Nevertheless, we should keep in mind that we saw similar price action earlier this month. Back then, after a small breakdown below this line the pair reversed and rebounded sharply. Therefore, this time it seems justified to wait for a confirmation of the breakdown before opening speculative short positions.
Please note that if the breakdown is confirmed, we will likely see further deterioration and the first downside target for the sellers will be the January low at 1.6308.
Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: mixed
Trading position (short-term): we do not suggest opening any trading positions at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
USD/JPY
On the above chart, we see that the situation hasn’t changed much as USD/JPY remains in a consolidation (between Wednesday low and high) slightly above the 38.2% Fibonacci retracement level. If this support level encourages the buyers to act we will likely see a corrective upswing to the upper line of the consolidation range. However, if the buyers fail and the pair drops below the January low, we will likely see further deterioration. In this case, the downside target for the sellers will be the next Fibonacci retracement level at 100.99.
Very short-term outlook: mixed
Short-term outlook: mixed
MT outlook: bullish
LT outlook: bearish
Trading position (short-term): we do not suggest opening any trading positions at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
USD/CAD
On the above chart, we see that USD/CAD extended gains and hit a fresh four and a half year high. With this upswing, the pair almost reached the 50% Fibonacci retracement level (based on entire 2009-2011 decline). From this perspective, the situation remains unclear and what we wrote in our last Forex Trading Alert remains up-to-date.
(…) on one hand, if this resistance level encourages the sellers to act, we will likely see a pullback. Please note that this assumption is reinforced by the position of the indicators (the RSI and CCI remain overbought and still support the bearish case). On the other hand, looking at the recent price moves, the pair may hit this resistance level and turn back after reaching it.
Very short-term outlook: mixed
Short-term outlook: bullish
MT outlook: bullish
LT outlook: bearish
Trading position (short-term): we do not suggest opening any positions at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
USD/CHF
Quoting our last Forex Trading Alerts:
(…) USD/CHF still remains in a rising trend channel slightly below the next Fibonacci retracement level (…) if the pair successfully breaks above the upper line of the trend channel and the 50% retracement, we will likely see further improvement. In this case, the initial upside target will be the 61.8% Fibonacci retracement level (but the final target for this formation is well above this level). This assumption is reinforced by the indicators, which generated buy signals.
On the above chart, we see that although USD/CHF broke above the upper line of the trend channel and the 50% retracement yesterday, the pair quickly gave up the gains and declined. Earlier today, we saw further deterioration as the pair came back to the trend channel. Despite this drop, the buyers didn’t give up and managed to push the exchange rate above the major very short-term resistance lines once again. This is a bullish signal, but taking into account yesterday’s price action, we can’t rule out another attempt to move lower.
Very short-term outlook: mixed
Short-term outlook: bearish
MT outlook: bearish
LT outlook: bearish
Trading position (short-term): we do not suggest opening any trading positions at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
AUD/USD
Looking at the above chart, we see that the situation has deteriorated once again as AUD/USD bounced down the resistance zone created by December lows and Wednesday high once again. With this drop, the pair broke below the lower line of the consolidation range and reached the lower border of the declining trend channel (you can read more here). From this perspective, it seems that if this support level is broken, we will see a re-test of the strength of the January low.
Very short-term outlook: mixed with bearish bias
Short-term outlook: bearish
MT outlook: bearish
LT outlook: bearish
Trading position (short-term): we do not suggest opening any positions at the moment. 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
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