In our opinion the following forex trading positions are justified - summary:
EUR/USD
Looking at the charts, we see that EUR/USD verified the earlier breakout above the 38.2% Fibonacci retracement and the upper border of the pink consolidation, which suggests that our yesterday’s commentary on this currency pair is up-to-date:
(…) the exchange rate is still trading above the previously-broken red line based on the March and November 2015 lows, the 38.2% Fibonacci retracement and the upper border of the pink consolidation. Additionally, there are no sell signals at the moment of writing these words, which means that as long as there is no invalidation of the breakout above these levels another attempt to move higher and a test of the 50% Fibonacci retracement (around 1.0820) and the yellow resistance zone is likely.
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/CAD
The first thing that catches the eye on the weekly chart is a breakdown under the lower border of the purple rising trend channel. How did this move affect the very short-term picture? Let’s examine the daily chart and find out.
Quoting our Monday’s alert:
(…) Although USD/CAD climbed above the upper border of the purple declining trend channel and the 61.8% Fibonacci retracement, this improvement was very temporary and the pair reversed, closing Friday’s session under these levels. In this way, the exchange rate invalidated the earlier breakout, which triggered a decline earlier today. Additionally, the CCI and the Stochastic Oscillator generated sell signals, increasing the probability of further deterioration. If this is the case and the pair moved lower from here, we may see a decline even to the previously-broken lower border of the purple declining trend channel seen on the daily chart.
From today’s point of view, we see that the situation developed in line with the above scenario and USD/CAD extended losses, reaching our downside target. What’s next? Taking into account the sell signals generated by the indicators, it seems that the exchange rate will move lower once again and test the lower border of the blue rising tend channel (seen on the daily chart) in the coming days.
Very short-term outlook: mixed with bearish 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.
AUD/USD
Quoting our Forex Trading Alert posted on January 16:
(…) AUD/USD (…) broke above the upper border of the blue consolidation earlier today. With this increase, the pair also climbed above the mid-December highs, which suggests further improvement and an increase to around 0.7595, where the size of the upward move will correspond to the height of the consolidation. (…)
On the daily chart, we see that currency bulls pushed AUD/USD higher as we had expected and the exchange rate reached our upside target. Taking this fact and the sell signals generated by the indicators into account, we think that the pair will move lower in the coming days. How low could AUD/USD go? In our opinion, if the pair drops under the green support zone, the initial downside target will be around 0.7437, where the 38.2% Fibonacci retracement (based on the December-January upward move) and the lower border of the blue consolidation are.
Very short-term outlook: mixed with bearish 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.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager
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