Earlier today, the USD Index moved a bit higher after the U.S. Commerce Department said that consumer prices gained 0.3% in December. Thanks to this news USD/CHF came back above 1.0000, but is this increase reliable?
In our opinion the following forex trading positions are justified - summary:
EUR/USD
On the daily chart, we see that although EUR/USD closed yesterday’s session above the 38.2% Fibonacci retracement, currency bulls didn’t hold this level, which resulted in a pullback earlier today. On one hand, we see an invalidation of the earlier breakout, which suggests further deterioration. However, on the other hand, the exchange rate is still trading above the previously-broken orange zone, which may be a verification of the earlier breakout. Such situation makes the very short-term picture unclear, which means that waiting at the sidelines for more reliable and valuable clues is best decision at the moment. As always, we will keep you – our subscribers – informed should anything change.
Very short-term outlook: mixed
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
Looking at the daily chart we see that although USD/CHF moved a bit higher earlier today, the previously-broken green zone stopped currency bulls and triggered a pullback which looks like a verification of the earlier breakdown. If this is the case, we’ll see a realization of yesterday’s scenario:
(…) if the exchange rate extends losses, we’ll likely see a drop to around 0.9945, where the 50% Fibonacci retracement is. If this support is broken, the next downside target for currency bears will be the 23.6% Fibonacci retracement (based on the entire January 2015-December 2016 upward move) and the previously-broken red declining line based on the November 2015 and January 2016 peaks, which now serves as support.
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
On the charts, we see that AUD/USD closed yesterday’s session above the 61.8% Fibonacci retracement, which suggests further improvement and realization of yesterday’s scenario:
(…) 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.(…)
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.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief
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