Earlier today, the combination of two resistance lines triggered a pullback in GBP/USD. Is it enough to encourage currency bears to act in the coming days?

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

• EUR/USD: none
• GBP/USD: short (a stop-loss order at 1.3232; the initial downside target at 1.2375)
• USD/JPY: long (a stop-loss order at 107.62; the initial upside target at 113.08)
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

Earlier today, EUR/USD moved below the upper border of the blue consolidation (seen on the daily chart) once again, which together with the sell signals generated by the indicators suggests that may finally see a bigger move to the downside in the coming days. If this is the case, the first target for currency bears will be around 1.1150-1.1160. Nevertheless, if the pair closes today’s session below 1.1204, we’ll consider opening short positions. As always, we’ll keep you - our subscribers - informed should anything change.

Very short-term outlook: mixed with bearish
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 the pair closes today’s session below 1.1204, 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

On the long-term chart, we see that GBP/USD is still trading around the upper border of the blue consolidation, which makes the situation a bit unclear. Nevertheless, when we take a closer look at the current position of the Stochastic Oscillator, we see that it climbed to the highest level since June 2014. Back then, such high reading of the indicator preceded a significant decline, which suggests thatanother bigger move to the downside may be just around the corner.

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

Looking at the daily chart, we see that although GBP/USD increased slightly yesterday, the combination of the upper border of the brown rising trend channel and the upper line of the blue rising wedge triggered a pullback earlier today, which suggests a test of the lower blue line in the coming day. If the exchange rate breaks below it, we’ll see a drop to the first downside target around 1.2686, where the 38.2% Fibonacci retracement is.

Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
MT outlook: mixed with bearish bias
LT outlook: mixed

Trading position (short-term; our opinion): Short positions (with a stop-loss order at 1.3232 and the initial downside target at 1.2375) 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 although USD/CAD declined in the previous days, the proximity to the lower border of the brown rising trend channel encouraged currency bulls to act, which resulted in a rebound. Thanks to yesterday’s increase the exchange rate came back above the upper border of the blue consolidation, which together with the buy signal generated by the Stochastic Oscillator suggests further improvement and a test of the orange resistance zone in the coming days.

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.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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