On Friday, the euro bulls have surprised on the upside. After such a showing, strong buying follow-through looks certain, right? Bit by bit, the charts keep telling us their stories. We like what we see in the euro right now. It's a precious opportunity in disguise. Just join us to learn the details. The other pairs are waiting, too.
In our opinion, the following forex trading positions are justified - summary:
EUR/USD
Taking a look at the weekly chart, we see that the rate has rebounded in the previous week. The combination of the lower border of the red declining trend channel and the long-term green support line made the bulls act.
On the daily chart, we see that as the exchange rate having climbed above the upper border of the very short-term green rising trend channel on Friday. However, the bulls didn't manage to hold on to all their gains.
The 50% Fibonacci retracement combined with the proximity to the upper border of the blue declining trend channel encouraged the bears to push the pair back below the upper border of the green rising trend channel.
This is not an encouraging sign for the bulls.
Earlier today, they have been fighting for higher prices once again. So far, we haven't seen any breakout above both resistances.
If the bulls fail in this area once again, we'll consider opening short positions. Signs of the bulls' weakness wouldn't surprise us - especially when we factor in the current position of the daily indicators.
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.
USD/JPY
The first thing that catches the eye on the daily chart, is the breakout above the orange resistance zone based on the March-April highs. The pair however remains below the early-March peak and the yellow resistance zone. They continue to block the way to higher prices for now.
Additionally, the position of the daily indicators suggests that the space for gains may be limited. However, we haven't seen any sell signals by the daily indicators just yet. Therefore, one more test of the above-mentioned resistances wouldn't be unexpected.
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.
USD/CAD
Let's start with the weekly perspective. The overall situation hasn't changed much and USD/CAD keeps trading inside the yellow consolidation that continues to keep gains and declines in check so far.
Let's continue with the daily chart. It' our opinion that as long as there is no breakout above the yellow resistance zone or a breakdown below the blue support zone, another bigger and lasting move is not likely to be seen.
Examining the position of the daily indicators, we see a sell signal generated by the Stochastic Oscillator. It suggests one more downswing this week. A test of the blue support area (or even the upper border of the blue declining trend channel) would not surprise us.
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 potential for the euro reversing early this week remains high and we're on the lookout for signs of euro bulls' weakness. No position is justified today from the risk-reward point of view, however. There're no other opportunities worth acting upon in the forex arena right now. As always, we'll keep you - our subscribers - informed.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
