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

• EUR/USD: none
• GBP/USD: none
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: short (a stop-loss order at 0.7769; initial downside target at 0.7542)

EUR/USD

Looking at the daily chart, we see that the overall situation hasn’t changed much as EUR/USD is trading around yesterday’s levels under te yellow resistance zone. Therefore, we believe that what we wrote yesterday remains up-to-date:

(…) EUR/USD reversed and declined after an increase to the yellow resistance zone. Taking this fact into account and combining it with the current position of daily indicators (the CCI and the Stochastic Oscillator are very close to generating sell signals), we think that further deterioration is just around the corner. Therefore, if the exchange rate drops under the orange zone, we’ll consider opening short positions.

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. However, if the exchange rate drops under the orange zone, we’ll consider opening short positions. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

GBP/USD

Although GBP/USD moved little lower earlier today, currency bulls stopped their opponents quite quickly and triggered a rebound to yesterday’s high. Taking this fact into account and combining it with the fact that there are no sell signals (although daily indicators are overbought), we believe that our Wednesday’s commentary is still valid:

(…) what could happen if currency bulls manage to push GBP/USD above the purple resistance line and the upper border of the blue consolidation? In our opinion, such positive event could trigger an upward move to around 1.2602, where the 38.2% Fibonacci retracement (based on the Sep-Oct downward move) is. Additionally, slightly above this level (around 1.2634) the size of the upswing would correspond to the height of the formation, which could encourage currency bears to act.

Very short-term outlook: bullish
Short-term outlook: mixed
MT outlook: mixed
LT outlook: bearish

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

Quoting our previous commentary on this currency pair:

(…) the orange resistance zone stopped currency bulls, triggering a pullback. With this drop, the pair slipped under the previously-broken red zone, invalidating earlier breakout. This negative event encouraged currency bears to act, which resulted in further deterioration earlier today. What’s next? Taking into account the fact that sell signals generated by the indicators remain in place, we think that the pair will test the yellow zone in the coming days.

From today’s point of view, we see that the situation developed in line with the above scenario and USD/JPY reached our initial downside target. As you see this area triggered a small rebound earlier today (similarly to what we saw around a month ago), which in combination with the current position of the indicators (they are oversold and very close to generating buy signals) suggests that reversal in the coming week is very likely. Nevertheless, as long as we do not see buy signals a re-test of the yellow zone should not surprise us.

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/CAD

On the weekly chart, we see that USD/CAD bounced off the previously-broken upper border of the purlpe rising wedge, which suggests that we may see even a test of the 50% Fibnacci retracement (based on the entire Jan-May downward move) in the coming week. Nevertheless, we should keep in mind that the current levels of the CCI and Stochastic Oscillator suggest that reversal may be just around the corner.

Having said the above, let’s check the very short-term picture.

The first thing that catches the eye on the above char is an invalidation of the breakdown under the upper border of the violet rising wedge and the upper line of the blue rising trend channel, which suggests further improvement. Nevertheless, such price action would be more reliable if the pair closes today’s session above both these lines. Finishing today’s commentary on this currency pair it is worth noting that there are negative divergences between all indicators and the exchange rate, which increases the probability of reversal in the coming days.

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. Nevertheless, if we see a daily closure below both above-mentioned lines, we’ll consider re-opening short positions. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

USD/CHF

The situation in the medium term hasn’t changed much as USD/CHF remains in the blue consolidation under the key resistance zone (created by the long-term red declining resistance line based on the Nov and Feb highs, the green rising line based on the May and Aug 2015 lows and May and Jul highs). Today, we’ll focus on the very short-term changes.

On the daily chat, we see that although USD/CHF invalidated earlier breakdown under the green line, currency bulls didn’t manage to hold gained levels, which resulted in another downswing earlier today. With this move, the pair approached the recent lows, which suggests that if this support fails, we may see a drop even to the green support zone (created by the late Sep lows and Fibonacci retracement levels) in the coming week.

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

Looking at the above charts, we see that although AUD/USD moved higher in recent days, the orange resistance zone in combination with the red declining resistance line successfully stopped currency bulls once again. As a result, the exchange rate declined, erasing earlier gains and invalidating small breakout above the red line. Such negative event encouraged currency bears to act at the end of Oct which suggests that we may see a similar price action in the coming days. Therefore, if AUD/USD extends losses from the current levels, the initial downside target would be around 0.7552, where the 61.8% Fibonacci retracement (based on the recent upward move) and the green support line (based on previous lows) are.

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 0.7769 and initial downside target at 0.7542) 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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