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

• EUR/USD: short (a stop-loss order at 1.0957; the initial downside target at 1.0538)
• GBP/USD: none
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

Looking at the daily chart, we see that although EUR/USD moved lower on Friday, currency bulls pushed the pair higher, which resulted in a test of the previously-broken lower border of the blue rising trend channel. Such price action looks like a verification of the breakdown and suggests further deterioration. Taking this fact into account, we believe that we wrote on Friday is up-to-date also today:

(…) What’s next? Taking into account the breakdown under the lower border of the blue rising trend channel and the sell signals generated by the indicators, we think that the pair will extend losses in the coming days (especially if the exchange rate closes today’s session under this line). If this is the case, the initial downside target will be the green support zone seen on the daily chart.

Finishing today’s commentary on this currency pair, we would like to draw your attention to the long-term chart.

From this perspective, we see that the exchange rate climbed in the previous month to the previously-broken long-term green line, which serves as the key resistance at the moment. Although currency bulls tried to push EUR/USD higher earlier this month, they failed, which resulted in a pullback. This action looks like a verification of the earlier breakdown under this important line, suggesting lover values of the exchange rate in the coming days/weeks.

Very short-term outlook: bearish
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 1.0957 and the initial downside target at 1.0538) 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 daily chart, we see that although USD/CAD tested the strength of the blue support line several times in the previous week, currency bears didn’t manage to push the pair below it. As a result, the exchange rate rebounded earlier today, which together with the buy signals generated by the indicators suggest further improvement in the coming days. Nevertheless, in our opinion, a bigger move to the upside will be more likely and reliable if USD/CAD invalidates the earlier breakdown under the lower border of the purple declining trend channel. In this case, we’ll consider opening long positions.

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. However, if USD/CAD invalidates the earlier breakdown under the lower border of the purple declining trend channel, we’ll consider opening long positions. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

AUD/USD

Last Tuesday, we wrote the following:

(…) taking into account the buy signal generated by the Stochastic Oscillator, it seems that currency bulls will try to push the pair higher in the coming days. If this is the case, and the exchange rate breaks above the upper border of the consolidation, we’ll see not only a test of the recent highs, but also an increase to the resistance zone created by the 76.4% and 78.6% Fibonacci retracement levels (around 0.7629-0.7643). If this area is broken, the next target will be around 0.7677, where the size of the upward move will correspond to the height of the blue consolidation.

From today’s point of view, we see that the situation developed in line with the above scenario and AUD/USD reached our upside targets. With the recent increases the exchange rate approached the 88.6% Fibonacci retracement and the yellow resistance zone (marked on the weekly chart), while the daily and weekly indicators climbed to the overbought zones. Such situation increases the probability of reversal and declines in the following days. Therefore if the pair drops below the January 24 peak of 0.7606 and the daily indicators generate sell signals, well consider opening short positions. As always, we’ll keep you - our subscribers - informed should anything change.

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): No positions are justified from the risk/reward perspective. However, if we see more bearish developments, we’ll consider opening short positions. 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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