Today looks like one of the calmer days in the currencies. The U.S.-China trade uncertainty hasn't yet translated into bigger moves. Is is a reason to lower our guard? Not in the least. Even on relatively uneventful days, the markets drop subtle hints about where they plan to go next. Today is also one of these days. Time to get ready so as to catch the next profits just like we have cashed them in the Australian dollar earlier today.
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: none
- AUD/USD: none (our profitable short positions were closed by the stop-loss order earlier today and we took profits of the table)
EUR/USD
The short-term situation hasn't changed much. EUR/USD is still trading in a narrow range between the orange support zone and the 50% Fibonacci retracement. This makes the situation less than clear and we have to look for clues elsewhere..
So, let's move to the weekly chart below. EUR/USD is still trading underneath the lower border of the red declining trend channel. As long as there is no successful breakout above it that would invalidate the earlier breakdown, higher values of the exchange rate are not likely to be seen. Another downside reversal should 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.
USD/JPY
Last week, the bulls have failed to push USD/JPY above the previously-broken lower border of the purple triangle and the pair closed the month beneath it. This looks like a verification of the earlier breakdown below this resistance line. Earlier this month, the sellers approached it again only to give up all of their gains and then some.
On top, the pair opened this week with an orange gap. As long as it is open, lower values of USD/JPY are more likely than a move to the upside. If the pair extends losses from here, we could see a test of the late-March lows or even the 38.2% Fibonacci retracement in the following days.
Examination of the daily indicators however shows that the room for declines may be limited. Reversal from the late-March lows support are should thus 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.
USD/CHF
It's apparent that the bulls still haven't overcome the major orange resistance zone as seen on the monthly chart.
The daily chart shows that USD/CHF still trades inside the blue consolidation. Also here, the orange resistance zone and the proximity to the 127.2% Fibonacci retracement continue to keep further gains in check. The potential for price deterioration remains as the daily indicators show.
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 remainder of our profitable short position in AUD/USD has been profitably closed with a stop-loss order. Currently, there're no other opportunities worth acting upon in the currencies. Best to be waiting and acting on strongest opportunities only - that's most beneficial to the bottom line. As always, we'll keep you - our subscribers - informed.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
