Earlier today, the euro increased against the greenback once again, which resulted in another increase above the resistance line. Will currency bulls manage to hold gained levels?

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

• EUR/USD: short (stop-loss order at 1.1363; initial downside target at 1.0462)
• GBP/USD: none
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

Although EUR/USD invalidated small breakout above the upper border of the brown declining trend channel yesterday, currency bulls didn’t give up and pushed the exchange rate higher once again. Taking into account a similarity to yesterday’s session, we believe that our previous commentary is still valid:

(…) Although this is a positive signal, which suggests further improvement, the exchange rate remains under the 38.2% Fibonacci retracement (and well below the navy blue resistance line and the previous highs) and the Monday’s high. Additionally, sell signals generated by the indicators remain in place, supporting currency bears. On top of that, the medium-term outlook remains bearish. Why? Let’s examine the weekly chart and find out.

From this perspective, we see that EUR/USD is still trading under the long-term red declining line, which serves as the key resistance at the moment. Therefore, as long as there is no weekly closure above it another downswing is more likely than not.

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

Trading position (short-term; our opinion): Short positions (with a stop-loss order at 1.1363 and the initial downside target at 1.0462) 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.

On an administrative note, today’s alert is much shorter than our usual Friday’s Forex Trading Alerts, but you will find all our six currency pairs in our Monday's alert. Thank you for understanding.

Thank you.

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

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