Forex Trading Alert originally sent to subscribers on November 3, 2015, 9:47 AM.
Earlier today, the USD Index extended yesterday’s increase and climbed above the level of 97. As a result, EUR/USD declined sharply and dropped under 1.1000. Will we see a test of the recent lows in the coming week?
In our opinion the following forex trading positions are justified - summary:
- EUR/USD: short (stop-loss order at 1.1476; initial downside target around 1.0462)
- GBP/USD: none
- USD/JPY: none
- USD/CAD: none
- USD/CHF: none
- AUD/USD: none
EUR/USD
Quoting our previous commentary:
(…) EUR/USD verified the breakdown under the red rising support/resistance line, which suggests further declines. (…) the exchange rate verified the breakdown below the Sept lows and invalidated an increase above the upper border of the declining trend channel, which is a negative signal. Earlier today, the pair extended losses, which suggests that lower values of EUR/USD are just around the corner.
Looking at the charts we see that the situation developed in line with the above scenario and EUR/USD extended losses below the upper border of the red declining trend channel. This means that the exchange rate will move lower from here and re-test the strength of the navy blue support line in the coming days (currently around 1.0912).
Very short-term outlook: bearish
Short-term outlook: bearish
MT outlook: mixed with bearish bias
LT outlook: mixed
Trading position (short-term; our opinion): Short positions (which are profitable) with a stop-loss order at 1.1476 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
As you see on the daily chart, the exchange rate is trading in the consolidation (marked with blue) between the green support line and the horizontal resistance line based on the Aug high. Therefore, we think that as long as there is no daily closure above/below the upper/lower border of the formation, another sizable move is not likely to be seen. However, finishing today’s commentary on this currency pair, please note that the exchange rate invalidated the breakdown below the blue support line, which is a positive signal that suggests a re-test of the upper border of the consolidation and the Aug high 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 at the moment. 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 extended losses and slipped to the 50% Fibonacci retracement (based on the recent rally) on Friday. However, this support level (in combination with the 2009 high marked on the weekly chart) encouraged currency bulls to act, which resulted in a rebound. Earlier today, the pair came back above the level of 1.3100, which suggests that we’ll see further improvement in the coming days (especially if the Stochastic Oscillator generates a buy signal). If we see such price action, the initial upside target would be the barrier of 1.3300 (reinforced by the 70.7% retracement), which stopped the last week’s rally.
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
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