In today's Forex Trading Alert, we present you with an update of a very short-term situation in all our currency pairs. One of them deserves special attention and applause. Can you guess what we mean?
EUR/USD: short (a stop-loss order at 1.1833; the initial downside target at 1.1588)
GBP/USD: none
USD/JPY: long (a stop-loss order at 111.15; the initial upside target at 113.50)
USD/CAD: none
USD/CHF: none
AUD/USD: short (a stop-loss order at 0.7510; the initial downside target at 0.7315)
EUR/USD
Looking at the daily chart, we see that EUR/USD extended losses after our last alert was posted, making opened short positions profitable. Although the pair rebounded slightly earlier today, the sell signals generated by the indicators continue to favor currency bears and lower values of the exchange rate in the coming day(s).
If this is the case, and EUR/USD moves lower form current levels, we’ll likely see a test of the previously-broken upper line of the brown triangle or even a drop to the lower border of the brown rising trend channel later this week.
Trading position (short-term; our opinion): Already profitable short positions with a stop-loss order at 1.1833 and the initial downside target at 1.1588 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.
GBP/USD
The first thing that catches the eye on the daily chart is a breakdown under the lower border of the very short-term green rising trend channel.
As you see, GBP/USD closed yesterday’s session under the lower line of the formation, which suggests further deterioration – especially when we factor in the fact that today’s rebound looks like a verification of Wednesday’s breakdown.
If this is the case, we’ll likely see another attempt to move lower and a test of the blue support line or even the recent lows in the coming days. Finishing today’s commentary on this currency pair, please note that this scenario is also reinforced by the sell signals generated by the daily indicators.
Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective, because the space for declines seems to small as the blue support line is not far from current levels. Nevertheless, if we see a breakdown under this important support, we’ll consider opening short positions. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
USD/JPY
Looking at the weekly chart, we see can summarize it only with on word: breakout!
From today’s point of view, we see that USD/JPY broke not only above the upper border of the blue consolidation, but also above the major resistance (the orange declining line based on the August 2015, December 2015 and January 2017 peaks) for the first time since 2015.
This is a bullish sign, which suggests that we could see even a test of the orange resistance zone seen on the above chart in the following week(s). Therefore, taking all the above into account, we think that opening long positions is justified from the risk/reward perspective.
Trading position (short-term; our opinion): Long positions with a stop-loss order at 111.15 and the initial upside target at 113.50 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
From today’s point of view, we see that USD/CAD moved sharply higher during yesterday’s session, which suggests that what we wrote in our last commentary on this currency pair is u-to-date also today:
(…) What’s next for USD/CAD?
If we see an invalidation of the breakdown under the lower line of the blue consolidation, the exchange rate will likely extend gains and test the previously-broken upper border of the pink rising trend channel.
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
On the daily chart, we see that although USD/CHF moved higher earlier today, the pair is still trading inside the orange resistance zone and the brown rising trend channel. Therefore, what we wrote yesterday is valid:
(…) In other words, another attempt to move higher from current levels should not surprise us. Nevertheless, in our opinion, opening any positions now is not justified from the risk/reward perspective.
Why? Because as long as there is no breakout above the orange resistance zone or a confirmed breakdown below the (…) supports a bigger move is not likely to be seen – especially when we factor in the medium-term picture below, which clearly shows that the pair still remains in a bigger blue consolidation that makes the broader perspective too unclear to risk money.
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
Yesterday, AUD/USD (similarly to what we saw in the case of EUR/USD) extended losses after Wednesday’s Forex Trading Alert was posted, making short positions profitable.
Earlier today, the pair moved to the north, but the sell signals generated by the CCI and the Stochastic Oscillator continue to support currency bears, increasing the probability of lower values of the exchange rate in the coming days.
If this is the case and the pair goes lower, we’ll likely see not only a test of the lower border of the blue declining trend channel, but also last month’s lows in the following days.
Trading position (short-term; our opinion): Already profitable short positions with a stop-loss order at 0.7510 and the initial downside target at 0.7315 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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