Earlier today, the British pound moved higher against the greenback, which pushed GBP/USD to important resistance levels. Will they stop further improvement 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

On the daily chart, we see that EUR/USD increased a bit earlier today. Despite this move, the pair remains under the previously-broken upper border of the brown rising trend channel and the long-term red declining resistance line (both marked on the weekly chart), which means that an invalidation of the earlier breakouts and its negative impact on the exchange rate is still in effect.

On top of that, the sell signals generated by the indicators remain in place, suggesting lower values of the exchange rate. Therefore, if EUR/USD drops under 1.0851, we’ll see a test of the 50% Fibonacci retracement (around 1.0796) in the following days.

Very short-term outlook: bearish
Short-term outlook: bearish
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 overall situation hasn’t changed much as GBP/USD is still trading around the upper border of the red declining trend channel (marked on the weekly chart) and the upper line of the blue consolidation seen on the monthly chart. Nevertheless, the current position of the weekly indicators could encourage currency bears to act in the coming days. If this is the case and GBP/USD closes the week lower, we’ll consider opening short positions.

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.

USD/JPY

From today’s point of view, we see that USD/JPY extended gains above the green resistance zone and the 61.8% Fibonacci retracement, which resulted in a climb to the resistance area created by th 76.4% and 78.6% retracements. Although this area could pause further rally, we think that as long as there are no sell signals generated by the daily indicators another attempt to move higher is very likely – especially when we factor in the medium-term picture of the exchange rate.

Looking at the weekly chart, we see that USD/JPY is still trading above the upper border of the brown declining trend channel, which together with the current position of the weekly indicators suggests further improvement. If this is the case, we could see an upward move to the orange resistance zone in the coming days.

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

Trading position (short-term; our opinion): Long positions (with a stop-loss order at 107.62 and the initial upside target at 111.16) 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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