On Friday, the U.S. dollar moved sharply higher against its Canadian counterpart, which resulted in a fresh October peak. Will we see further improvement in the coming week?
In our opinion the following forex trading positions are justified - summary:
- EUR/USD: short (a stop-loss order at 1.2250; the initial downside target at 1.1510)
- GBP/USD: short (a stop-loss order at 1.3773; the initial downside target at 1.3000)
- USD/JPY: none
- USD/CAD: none
- USD/CHF: none
- AUD/USD: none
EUR/USD
Looking at the daily chart, we see that the Stochastic Oscillator re-generated the sell signal, which encouraged currency bears to act earlier today. As a result, EUR/USD extended Friday losses, suggesting that we’ll see a realization of our pro-bearish scenario from the last alert in the coming days:
(…) if the exchange rate extends losses from current levels, currency bears will re-test the green horizontal support line based on the mid-August low in the coming week.
Very short-term outlook: mixed with bearish bias
Short-term outlook: bearish
MT outlook: mixed
LT outlook: mixed
Trading position (short-term; our opinion): Short profitable positions (with a stop-loss order at 1.2250 and the initial downside target at 1.1510) 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
From today’s point of view, we see that USD/JPY moved sharply higher on Friday, which took the pair above the early October peaks. This show of strength triggered further improvement, which resulted in an increase above the upper border of the purple rising trend channel and the long-term red declining resistance line.
What’s next? Taking into account the breakout above the purple resistance line and the fact that there are no sell signals generated by the indicators, we think that the pair will test not only the yellow resistance zone, but will also climb to the orange resistance area (in this zone, the size of the upward move will correspond to the height of the purple trend channel) in the coming week.
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 at the moment. 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 although USD/CAD pulled back proximity to the previously-broken blue support line and the buy signals generated by the medium-term indicators encouraged buyers to act, which resulted in a breakout above the early October high.
Will we see further improvement in the coming week? Let’s examine the daily chart.
Looking at the daily chart, we see that USD/CAD bounced off the red declining line based on the May and June highs and the 23.6% Fibonacci retracement, which triggered an increase to the highest level since late August. Taking this fact into account and combining it with the lack of the sell signals generated by the indicators, we think that the exchange rate will test the yellow resistance zone and the 38.2% Fibonacci retracement in the coming week.
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 at the moment. 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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