Forex Trading Alert originally sent to subscribers on April 21, 2015, 6:50 AM.
Earlier today, the minutes of the Reserve Bank of Australia suggested a possible rate cut in the near future, which pushed the Aussie lower against the greenback. As a result, AUD/USD declined to the support lines. Will they withstand the selling pressure in the coming days?
In our opinion the following forex trading positions are justified - summary:
- EUR/USD: none
- GBP/USD: none
- USD/JPY: none
- USD/CAD: short (stop loss order at 1.2876)
- USD/CHF: none
- AUD/USD: none
EUR/USD
In our previous Forex Trading Alert, we wrote the following:
(…) the proximity to the orange resistance line triggered a pullback, which took EUR/USD to Friday’s low. Taking this fact into account, and combining it with the current position of the Stochastic Oscillator (the indicator is very close to generate a sell signal), it seems that another downswing is likely. If this is the case, the downside target would be the (…) long-term green support line.
As you see on the charts, currency bears pushed the exchange rate lower as we expected. Earlier today, EUR/USD hit an intraday low of 1.0659, approaching our downside target. Although the pair could rebound from here (as the long-term green support line is very close), we should keep in mind that the Stochastic Oscillator generated a sell signal, supporting further deterioration. If this is the case, and the pair extends declines, the next downside target would be around 1.0591, where the lower border of the long-term declining trend channel (marked on the monthly chart) and the green dashed support line are.
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 at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
USD/CHF
Quoting our last commentary on this currency pair:
(…) the exchange rate approached the long-term red line, which serves as the key support at the moment. In the previous months this line stopped further deterioration and triggered upswings. This suggests that we could see similar price action in the near future. However, taking into account the current position of the indicators, it seems that currency bears will try to push the exchange rate lower.
The first thing that catches the eye on the charts is an invalidation of a small breakdown under the long-term red line. Taking this positive fact into account, and combining it with the current position of the indicators (they generated buy signals), it seems that we’ll see further improvement and an increase to the orange resistance line (around 0.9800) in the coming days.
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 at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
AUD/USD
Looking at the above chart, we see that the medium-term picture hasn’t changed much as AUD/USD is still trading in a narrow range around the Jul 2009 lows. Today, we’ll focus on the very short-term changes.
As you see on the above chart, although AUD/USD broke above the upper line of the rising trend channel, the resistance zone created by the 76.4% and 78.6% Fibonacci retracement levels stopped further rally and triggered a pullback, which invalidated earlier breakout. This negative signal in combination with sell signals generated by the indicators encouraged currency bears to act and resulted in a sharp decline, which took the pair to the lower line of the rising trend channel. Earlier today, AUD/USD bounced off this support line, but taking into account sell signals generated by the indicators, it seems that lower values of the exchange rate are ahead us. If this is the case, we might see a drop even to the green support zone (around 0.7532-0.7585) 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 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
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