Yesterday, the euro moved higher against the greenback, which pushed EUR/USD to two very important resistance levels. Will they withstand the buying pressure in the coming days?

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

• EUR/USD: short (a stop-loss order at 1.1052; the initial downside target at 1.0521)
• GBP/USD: none
• USD/JPY: long (a stop-loss order at 107.62; the initial upside target at 111.16)
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

From today’s point of view, we see that EUR/USD tested the strength of the upper border of the brown rising trend channel, the 61.8% Fibonacci retracement (both marked on the weekly chart) and the 112.8% Fibonacci extension (seen on the daily chart), which resulted in a comeback below the March high. Additionally, the sell signal generated by the RSI remains in place, supporting currency bears. On top of that, the CCI and the Stochastic Oscillator are very close to generating sell signals, which suggests that reversal and lower values of the exchange rate are just around the corner.

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 1.1052 and the initial downside target at 1.0521) 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.

GBP/USD

Looking at the above charts, we see that the very short-trm situation hasn’t changed much, because GBP/USD is still trading in the blue consolidation in the yellow resistance zone (marked on the weekly chart), which means that what we wrote on Monday is up-to-date also today:

(…) the yellow resistance zone (…) was strong enough to stop currency bulls at the beginning of Ddecember, which together with the current position of the weekly indicators suggest that we may see a reversal in the coming week.

How did this ncrease affect the very short-term chart?

(…) GBP/USD broke above the yellow resistance zone and January high, which resulted in a climb to the upper border of the brown rising trend channel and the 1.272% Fibonacci extension. The combination of these resistances triggered a pullback in the previous days, which suggests that further deterioration may be just around the corner – especially when we factor in the medium-term picture and the current position of the daily indictors (…). However, as long as there is no invalidation of the breakout above the January high, short-lived moves in both directions are likely.

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. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

USD/CHF

On the daily chart, we see that USD/CHF remains in the blue consolidation inside the brown declining trend channel, which makes the very short-term picture unclear. Nevertheless, the current position of the indictors (the CCI and the Stochastic Oscillator generated sell signals) suggests that further improvement in the coming day(s) should not surprise us. However, in our opinion, a bigger move to the upside will be more likely and reliable if the exchange rate breaks above the upper line of the consolidation and the upper border of the trend channel. If e see such price action, we’ll consider opening long positions.

Very short-term outlook: mixed with bullish bias
Short-term outlook: mixed with bullish 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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