Earlier today, the euro extended gains against the greenback, which resulted in a fresh 2017 high. Will we see further improvement in the coming week?
In our opinion the following forex trading positions are justified - summary:
- EUR/USD: none
- GBP/USD: none
- USD/JPY: none
- USD/CAD: none
- USD/CHF: none
- AUD/USD: short (a stop-loss order at 0.7873; the initial downside target at 0.7498)
EUR/USD
The first thing that catches the eye on the monthly chart is an invalidation of the breakdown under the long-term green support/resistance line, which is a positive development and suggests further improvement. Nevertheless, in our opinion, such price action will be more likely and reliable if the exchange rate closes the month above this important line.
How did this increase affect the medium-term chart? Let’s examine the weekly chart and find out.
From this perspective, we see that EUR/USD broke above the January high and reached the upper border of the yellow resistance zone and the December high. Will this area stop currency bears? In our opinin, it coud pause the rally, hoever, when we take a closer look at the chrt, we’ll notice that the recent uwrd move took the pair above the 50% Fibonacci retracement based on the November-January downward move and the 38.2% retracement based on the entire May – January decline, which is a bullish signal. Additionally, although the CCI and the Stochastic Oscillator are overbought, there are no sell signals, which suggest that another upswing can’t be ruled out.
How high could EUR/USD go in the coming week? Let’s examine the daily chart and find.
On the daily chart, we see that the exchange rate reached the December high and the 1.128% Fibonacci extension, which could pause the upward move. Nevertheless, there are no sell signals at the moment (the CCI and the Stochastic Oscillator came back to their overbought areas), which suggests that we may see an increase to the upper border of the orange rising trend channel or the 1.272% Fibonacci extension in the coming days. If these resistances are broken, the next target for currency bulls may be even around 1.0931, where the 61.8% Fibonacci retracement based on the November-January downward move is.
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.
USD/JPY
From today’s point of view, we see that USD/JPY extended losses, which means that what we wrote in our previous commentary on this currency pair is up-to-date also today:
(…) USD/JPY reached the key support area created by the lower border of the brown declining trend channel and the green support zone, (…) if the pair drops below this important area, we may see a decline even to around 108.86, where the 50% Fibonacci retracement (based on the entire June-December rally) is.
Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
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.
USD/CHF
Looking at the daily chart, we see that USD/CHF broke below the green support zone and the January low, which is a bearish signal and suggests further deterioration. If this s the case and the exchange rate extends declines, we may see a drop even to around 0.9783, where the 70.7% Fibonacci retracement (based on the November-December upward move) and the previously-broken red line (based on the November 2015 and January 2016 and marked on the weekly chart) are.
Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
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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