Earlier today the USD Index temporary declined under the barrier of 100 as a lack of clarity on President Donald Trump’s economic policies continued to weigh. Thanks to this drop USD/CHF slipped to the next support zone. Will it manage to stop the selling pressure in the coming days?
In our opinion the following forex trading positions are justified - summary:
EUR/USD
Looking at the charts, we see that although EUR/USD moved a bit lower earlier today, 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/JPY
From today’s point of view, we see that the proximity to the green support and the 38.2% Fibonacci retracement based on the November-December upward move encouraged currency bulls to act once again. As a result the exchange rate rebounded and invalidated the earlier breakdown below the previous lows. Although this is a positive event, the sell signals generated by the indicators remain in place, suggesting another re-test of the nearest support in the near future. When can we expect a bigger move to the upside? In our opinion, it will be more likely and reliable if USD/JPY breaks above the upper border of the blue declining trend channel. Until this time short-lived moves in both directions should not surprise us. Therefore, waiting on the sidelines for a profitable opportunity is justified from the risk/reward perspective.
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 rebounded earlier today, the exchange rate remains under the previously-broken lower border of the pink consolidation. Today’s upswing looks like a verification of the earlier breakdown under this level, which together with a lack of buy signals, which could encourage currency bulls to act suggest another downswing. How low could the pair go? We believe that the best answer to this question will be the quote from our yesterday’s alert:
(…) In our opinion, the initial downside target will be the 50% Fibonacci retracement based on the November-December upward move. If it is broken, the next target for currency bears will be the lower border of the purple declining trend channel.
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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