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

• EUR/USD: short (a stop-loss order at 1.0967; the initial downside target at 1.0521)
• GBP/USD: short (a stop-loss order at 1.2738; the downside target at 1.2157)
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

Looking at the daily chart, we see that although EUR/USD moved a bit higher earlier today, the exchange rate remains under yesterday’s high the previously-broken 50% Fibonacci retracement. Additionally, the pair is trading in the blue consolidation, which suggests that another downswing is still likely. Therefore, we believe that what we wrote on April 3 remains up-to-date also today:

(…) we think that lower values of EUR/USD are more likely than not. Therefore, if the pair extends losses, (…) the initial downside target for currency bears will be around 1.0521 (slightly above the late February and March lows).

Additionally, when we zoom out our picture and take a closer look at the weekly chart below, we’ll see that the current upswing took EUR/USD to the previously-broken blue support/resistance line based on the January and February lows, which looks like a verification of the earlier breakdown and suggests that another attempt to move lower is 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 1.0967 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.

USD/CHF

Last Wednesday, we wrote the following:

(…) the next upside target will be the 50% retracement or even the orange declining resistance line based on the January and March highs in the coming days (…)

From today’s point of view, we see that the situation developed in line with the above scenario and USD/CHF climbed slightly above the orange declining resistance line on Monday. Despite this improvement, the exchange rate pulled back, invalidating the earlier tiny breakout, which together with the sell signals generated by the indicators suggests that we may see further deterioration and a drop to around 1.0000, where the previously-broken 38.2% Fibonacci retracement and the April 5 low are.

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.

AUD/USD

On the daily chart, we see that although AUD/USD moved slightly below the green support zone in the previous days, currency bears didn’t manage to close the day below it, which is a positive sign. As a result, the pair is consolidating around the March low, which in combination with the buy signals generated by the indicators suggest that reversal and higher values of the exchange rate are just around the corner. Therefore, if we see more bullish factors (like an invalidation of the breakdown under the 38.2% Fibonacci retracement) we’ll consider opening long positions.

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.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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