Earlier today, the U.S. dollar moved higher against the yen, which took USD/JPY to the first resistance level. Will we see further improvement in the coming days?
In our opinion the following forex trading positions are justified - summary:
EUR/USD
Although EUR/USD gave up some gins on Friday, the pair remains above the barrier of 1.1000, mid-Dec highs and the long-term green line based on Mar and Apr lows, which suggests that the pullback could be just a verification of earlier breakouts. Therefore, as long as there is no invalidation of the breakout above these levels, another attempt to move higher can’t be ruled out. Additionally, the exchange rate is trading in the blue consolidation, which suggests that further deterioration will be more likely if the pair drops under the lower line of the formation (under 1.1069).
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 at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
USD/JPY
On Thursday, we wrote the following:
(…) Taking into account the size of yesterday’s drop and sell signals generated by the indicators, it seems that the exchange rate will test the green support zone in near future.
Looking at the daily chart, we see that currency bears pushed the pair to our downside target on Friday. Although the green support zone triggered a rebound earlier today, the size of the move is (so far) too small to be sure that the worst is behind yen. As you see on the chart, the pair increased to the 23.6% Fibonacci retracement, which could result in another test of the green zone in the coming days. Nevertheless, the current position of the indicators suggests that the space for declines may be limited and reversal is just around the corner.
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 at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
AUD/USD
Quoting our Thursday’s alert:
(…) AUD/USD extended gains and climbed above previous highs. This improvement encouraged currency bulls to act, which resulted in a rally above the green resistance line. Taking this fact and the medium-term picture into account, we think that the pair will increase to the resistance zone based on the 76.4% and 78.6% Fibonacci retracement.
On the daily chart, we see that currency bulls pushed the pair higher as we had expected. As you see, the proximity to the Fibonacci retracement levels encouraged currency bears to act, which resulted in a pullback. With this sharp downswing the pair invalidated earlier small breakout above the green line and slipped to slightly below the 38.2% Fibonacci retracement, approaching the lower border of the brown rising trend channel. Earlier today, the exchange rate invalidated earlier breakdown under the Fibonacci retracement, which in combination to the lower line of the trend channel suggests that we may see a rebound from here in the coming days – especially if AUD/USD come back above the lower border of the purple trend channel marked on the weekly chart. If we see such price action, the initial upside target would be around 0.7200, where the green resistance line currently is.
Very short-term outlook: mixed with bullish bias
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
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