Patience is not only about waiting for the right setup to appear. Patience means also patience in letting the trade develop, in letting the market forces play out to gain edge through dedicated analysis. After all, who wants to be thrown out of open positions by every microrotation? So, how is our ocean liner faring?
- EUR/USD: short (a stop-loss order at 1.1576; the initial downside target at 1.1305)
- GBP/USD: none
- USD/JPY: none
- USD/CAD: none
- USD/CHF: none
- AUD/USD: short (a stop-loss order at 0.7402; the initial downside target at 0.7096)
EUR/USD
Yesterday, we wrote:
(…) it seems that the last block on the way down is the very short-term blue support area created by the recent lows. Taking all the above into account and looking at the shape of Friday’s move, we think that lower values of the exchange rate are just around the corner.
On the daily chart, we see that the situation developed in tune with our expectations and EUR/USD broke below the blue zone. The sell signals remain on the cards, suggesting that we’ll see a realization of the bearish scenario. Don’t be fooled by the lower knots – the indicators are lined-up nicely for a price fall. The lower border of the brown triangle and the green support zone are the first obstacles in the way for the bears, as the art of technical analysis teaches us.
Trading position (short-term; our opinion): Profitable short positions with a stop-loss order at 1.1576 and the initial downside target at 1.1305 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 last commentary on this currency pair:
(…) a breakdown below the lower border of the yellow consolidation. A positive event for the bears? Yes, but unfortunately only at first sight. Why? Although the pair closed yesterday’s session below the formation, USD/JPY is still trading above the lower line of the blue triangle, which continues to keep declines in check for now.
Additionally, Stochastics generated a buy signal, while the CCI slipped to its oversold area, insinuating readiness to also generate a buy signal in the near future (…)
Connecting the dots, as long as there is no breakdown below the lower line of the blue triangle, opening short positions isn’t justified from the risk/reward perspective. (…)
From today’s point of view, we see that our decision not to go short has turned out to be the right one. The bulls made a move to the upside and although they were initially rejected at breaking through the green resistance zone, they keep trying. There are no sell signals in sight by the daily indicators which suggests that the pair could move even to the previously-broken lower border of the brown declining trend channel.
Summarizing, USD/JPY invalidated the earlier breakdown below the lower border of the yellow consolidation and came back above the upper line of the blue triangle. Further improvements would not surprise us yet the RRR (risk-reward ratio) doesn’t favor opening a position.
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
The first thing that catches the eye on the above chart is the breakdown below the green support zone. This breakdown has been confirmed by three consecutive closes. Additionally, the red support line, which looks like the neck line of our head and shoulders formation, was broken. We discussed this in detail in our previous commentary on the pair.
USD/CAD has been spending recent days in the yellow consolidation area, which could be just a pause before further deterioration. Nevertheless, as the daily indicators currently generated multiple buy signals, we think that we’ll likely see breakdown verification first before the price commits to the next move down.
If this is the case, the exchange rate will likely break above the upper border of the yellow consolidation and test the strength of the red resistance line. If currency bulls show hesitation and don’t manage to break above it, we’ll consider opening short positions.
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
