The Fed day has arrived, and many currencies are retracing parts of their earlier moves. Yet doesn't this back-and-forth trading tell important stories nonetheless? Coupled with as much information as we can glean from the charts, these moves help us prepare for the scenarios ahead. And plan the trading action. Let's go.
In our opinion, the following forex trading positions are justified - summary:
- EUR/USD: none
- GBP/USD: none
- USD/JPY: none
- USD/CAD: none
- USD/CHF: short (a stop-loss order at 0.9996; the initial downside target at 0.9768)
- AUD/USD: none
EUR/USD
We wrote these words yesterday:
(...) If the buyers manage to close today's session above 1.1000, we'll likely see further improvement and a test of the 61.8% Fibonacci retracement based on the recent decline or even a test of the orange resistance zone.
Just as we expected, EUR/USD moved higher. The pair then reversed and declined however, reaching the previously-broken 38.2% Fibonacci retracement. This means a verification of the earlier breakdown below the resistance.
Coupled with the shape of the recent rebound, it seems that the bulls could push the exchange rate higher in the nearest hours and retest the orange resistance zone before another attempt to move lower.
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.
GBP/USD
GBP/USD tried again and unsuccessfully to break above the pink resistance zone. Also, the current position of the indicators is extended, increasing the likelihood of a reversal being just around the corner.
Should we see another daily close below the pink resistance, we'll consider opening short positions.
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
AUD/USD extended losses earlier today, reaching the previously-broken 38.2% Fibonacci retracement. This could translate into a rebound in the coming day.
Let's take a look at the daily indicators. They're still on their sell signals however, suggesting that a bigger downside move still awaits us.
Should we see reliable signs of the bulls' weakness, we'll consider opening short positions.
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.
Summing up the Alert, the euro rebound from 1.1000 reached our target, then declined and looks primed for a resistance retest prior to committing to its next move. USD/CHF keeps testing the pink resistance zone near the upper border of the rising green trend channel, and this combination of resistances coupled with extended daily indicators increases the likelihood of reversal. Should GBP/USD and AUD/USD bulls show weakness at their respective resistances, we'll consider opening short positions. Also, should USD/JPY invalidate its breakout above the upper border of the declining grey trend channel, we'll consider opening short positions. Apart from these, there're no other opportunities worth acting upon in the currencies. As always, we'll keep you - our subscribers - informed.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
