Yesterday, AUD/USD reached important resistance zone, which stopped currency bulls, triggering a pullback. Will their opponents take control and push the exchange rate lower in the coming days?
In our opinion the following forex trading positions are justified - summary:
- EUR/USD: none
- GBP/USD: short (stop-loss order at 1.4785; initial downside target at 1.4220)
- USD/JPY: none
- USD/CAD: none
- USD/CHF: none
- AUD/USD: none
EUR/USD
As you see on the daily chart EUR/USD declined under Monday’s low yesterday, which encouraged currency bears to act and resulted in further deterioration earlier today. Taking the above into account, we believe that our yesterday's commentary id up-to-date also today:
(…) the CCI generated a sell signal, while the Stochastic Oscillator is very close to doing the same, which suggests lower values of the exchange rate in the coming days. Therefore, if the pair drops under Monday’s low of 1.1323, we’ll likely see a decline to around 1.1219, where the 61.8% retracement (based on the May 30 – Jun 9 upward move) and the Jun 2 high are. If this area is broken, the next target would be the brown rising support line based on the Dec and Mar lows (currently around May 30 low).
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/CAD
On the above charts, we see that USD/CAD extended declines and slipped slightly below the 70.7% Fibonacci retracement based on the May 2015 – Jan 2016 upward move. Despite this drop currency bulls didn’t give up and pushed the pair higher yesterday. Additionally, the current position of the daily indicators suggests that further improvement is just around the corner. However, as long as there won’t be buy signals another attempt to move lower (even to the green support zone) can’t be ruled out.
Very short-term outlook: mixed
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.
AUD/USD
Quoting our previous commentary on this currency pair:
(…) AUD/USD approached the orange resistance zone created by the late-Mar and early Apr lows and the 50% Fibonacci retracement (based on the Apr-May downward move), which may stop further improvement – especially when we factor in the current position of the CCI and Stochastic Oscillator (both indicators are overbought and close to generating sell signals).
Looking at the above charts we see that the situation developed in line with the above scenario and AUD/USD reversed and declined yesterday. With this move, the pair dropped under the red declining resistance line marked on the weekly chart, invalidating earlier breakout. Taking this negative signal (which would be more bearish if the exchange rate closes the week below it) and sell signals generated by the daily indicators into account, we think that further deterioration is very likely. If this is the case and the pair declines from here, the initial downside target would be the brown declining line, which serves now as support (currently around 0.7335).
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
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