While the EUR/USD action may not be the most exciting one to watch, there's plenty going on in the other pairs. The British pound keeps sliding, and the Japanese yen and Swiss franc are readying for their next tradable moves. In which direction would these be? Let's find out.
In our opinion, the following forex trading positions are justified - summary:
EUR/USD
The overall situation in EUR/USD hasn't changed much as the exchange rate is still trading inside the blue consolidation. The bulls have been strong enough to defend the upper border of the declining yellow yellow trend channel, yet unable to push above Tuesday's highs.
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
We wrote these words in our Wednesday's commentary regarding the buyers' attempts to move higher:
(...) the exchange rate is trading well below several previously-broken support areas. Namely, below the support created by the December and January lows and also below the late-July peak, suggesting that the bears may not have said their last word.
If this is the case and the pair moves lower once again, we'll likely see a retest of the lower border of the declining grey trend channel. Even a test of the nearby green support zone (seen more clearly on the weekly chart) isn't out of the question.
GBP/USD has extended losses earlier today to trade in the vicinity of the lower border of the declining grey trend channel. The daily indicators still support a further downside move.
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 situation in the short term remains almost unchanged as USD/JPY is still trading inside both the blue consolidation and the declining grey trend channel. As long as there is no breakout above the upper border of the blue consolidation or a breakdown below its lower border, a bigger move in either direction is not likely to be seen.
Nevertheless, should we see reliable signs of the bulls' weakness and the breakdown below the grey channel, we'll consider reopening 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.
USD/CHF
Similarly to what we wrote regarding USD/JPY, USD/CHF also remains trapped inside the blue consolidation, suggesting that another opportunity to profit from its move will be more likely and reliable should we see a breakout above the upper border of the formation, or a breakdown below its lower border. Until that time, short-lived moves in both directions should not surprise us.
Nevertheless, the current position of the indicators suggests that the space for declines is limited and reversal at the beginning of the upcoming week is likely. Should we see reliable signs of the bulls' strength, we'll consider opening next 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, as the euro is still trapped inside its recent consolidation, no new positions are justified. USD/JPY is also trading inside its consolidation, and should we see reliable signs of the bulls' weakness combined with a break below the grey trend channel, we'll consider reopening the short positions. Likewise, USD/CHF is trading in a consolidation, yet the scope of possible downside action appears limited - should we see signs of the bulls' strength, we'll consider opening long 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
