In our opinion the following forex trading positions are justified - summary:
EUR/USD
Looking at the daily chart, we see that although EUR/USD hit a fresh multi-month low earlier today, the green support zone marked on the weekly chart finally encouraged currency bulls to act, which resulted in a sharp rebound. This means that what we wrote in our Wednesday’s commentary on this currency pair is up-to-date also today:
(…) the exchange rate remains under the Monday’s high and the 23.6% Fibonacci retracement, which means that further improvement would be more likely and reliable only if the pair climbs and closes today’s session (or one of the following) above these levels. In this case, the next target for currency bulls would be the previously-broken green zone (around Nov low), which serves as the nearest stronger resistance.
Very short-term outlook: bullish
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
On the weekly chart, we see that although USD/JPY moved lower in the previous week, currency bulls didn’t give up and pushed the exchange rate higher, erasing almost all earlier losses, which is a positive signal that suggests further improvement and a test of the orange resistance zone in the coming days.
Will the very short-term picture confirm this scenario? Let’s check.
From this perspective, we see that the CCI invalidated earlier sell signal, while the Stochastic Oscillator generated a buy signal, which will likely support currency bulls and result in a test of the 61.8% Fibonacci retracement in near future. Nevertheless, there are negative divergences between indicators and the exchange rate, which increases the probability of reversal in the coming days.
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/CHF
Last Tuesday, we wrote:
(…) the exchange rate remains in a blue consolidation, which makes the very short-term picture a bit unclear. Nevertheless, we should keep in mind that all indicators generated sell signals, suggesting another attempt to move lower in the coming days. In our opinion, however, lower values of the exchange rate would be more reliable if we see an invalidation of a breakout above the upper border of the grey rising trend channel. Until this time, short-lived moves in both directions are very likely.
From today’s point of view, we see that the situation developed in line with our assumptions and USD/CHF wavered in the previous week. Nevertheless, after several days in the consolidation, currency bears took control and pushed the exchange rate lower, which resulted in a decline under the previously-broken upper border of the grey rising trend channel. This is a negative signal, which suggests further deterioration. However, in our opinion, lower values of USD/CHF would be more if the pair closes today’s or one of the following days below the grey support/resistance line. In this case, we may see a correction even to the green support line based on the May, Jun and Oct highs and reinforced by the 38.2% Fibonacci retracement based on the recent rally.
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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