In previous days, the U.S. dollar moved sharply lower against the Swiss franc, which pushed USD/CHF to a fresh 2017 low. As a result, the exchange rate slipped to important support area, which triggered a small rebound earlier today, but can we trust this move?

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

• EUR/USD: none
• GBP/USD: short (a stop-loss order at 1.3087; the initial downside target at 1.2602)
• 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

Yesterday, EUR/USD extended gains and climbed above the 173.2% Fibonacci extension, which approached the pair to the 88.6% Fibonacci retracement based on the November-January downward move. Although currency bulls tried to push the exchange rate higher earlier today, they failed, which resulted in a pullback. Additionally, daily and weekly indicators are overbought and very close to generating sell signal, which increases the probability that reversal and lower values of EUR/USD in the coming week.

Very short-term outlook: mixed
Short-term outlook: mixed with bearish bias
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/CAD

Earlier this week, USD/CAD extended losses and slipped o the previously-broken upper border of the purple rising wedge. Despite the drop, this support line withstood the selling pressure and triggered a rebound.

What impact did this price action have on th daily chart? Let’s check

In our last commentary on this currency pair, we wrote the following:

(…) currency bears pushed the exchange rate lower as we had expected. Thanks to yesterday’s drop USD/CAD broke below the lower border of the blue consolidation, which suggests further deterioration. Nevertheless, in our opinion, such price action will be more likely and reliable if the exchange rate declines below the upper line of the blue rising trend channel and invalidated the breakout above the November and December highs.

On the daily chart, we see that although USD/CAD closed yesterday’s session under the upper border of the blue rising trend channel, the orange support zone created by the November and December highs stopped further declines, triggering a pullback earlier today. Additionally, the CCI and the Stochastic Oscillator are very close to generating buy signals, which suggests another upswing. If this is the case and USD/CAD extends gains, we may see a comeback to the recent highs and a test of the upper border of the brown rising trend channel in the coming week.

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

Looking at the daily chart, we see that USD/CHF moved sharply lower in the previus days, which resulted in a drop to the important suuuprt area created by the long-term blue support line based on the May and August 2016 lows, the orange support line based on the previous lows and the 61.8% Fibonacci retracement.

Additionally, if we zoom in our picture, we‘ll see that the daily idictors are oversold, which suggests that buy signals and higher prices of USD/CHF may be just around the corner. Nevertheless, before we see such price action oone more downswing and a re-test of yesterday’s low cn’t be ruled out.

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