Earlier today, the greenback extended gains against the Canadian dollar as declining price of crude oil dampened demand for the commodity-related Canadian currency. Thanks to these circumstances, USD/CAD climbed to important resistance, but is manage to stop currency bulls in the following days?
In our opinion the following forex trading positions are justified - summary:
EUR/USD
Looking at the daily chart, we see that the situation in the very short term hasn’t changed much as EUR/USD is trading in the blue consolidation. Therefore, in our opinion, as long as there won’t be breakout above the upper line of the formation (or a breakdown under the Sep 9 low of 1.1197) another bigger move is not likely to be seen. Nevertheless, we think it is worth considering both pro-growth and bearish scenarios. If currency bulls push EUR/USD above 1.1284, we’ll see further improvement and a test of the medium-term brown resistance line in the following days. On the other hand, sell signals generated by the indicators remain in play, supporting currency bears, which suggests that if the pair extends declines, we’ll likely see a re-test of the green support zone and the upper border of the red declining trend channel in the following days.
Very short-term outlook: mixed
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. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
USD/CAD
From the medium-term perspective, we see that USD/CAD extended gains above the upper border of the blue consolidation, which means that what we wrote on Monday is up-to-date:
(…) Although this is a positive signal, we saw similar price action at the end of Jul.Back then, the proximity to the long-term green rising resistance line was enough to trigger a reversal and decline. Another similar situation we saw at the end of Aug, but currency bulls didn’t manage to hold gained levels once again. Therefore, in our opinion, as long as there won’t be invalidation of the breakdown under green resistance line another sizable move to the upside is not likely to be seen. Nevertheless, buy signal generated by the Stochastic Oscillator suggests that USD/CAD will likely re-test recent highs in the coming week.
(…) USD/CAD rebounded sharply, which took the pair to the Sep high. With this upward move, the exchange rate also approached the yellow resistance zone once again. As you see on the daily chat, this area stopped currency bulls at the beginning of Aug and also at the turn of Aug and Sep, which suggests that we may see similar price action later this week. Neverheless, as long as there won’t be sell signals geerated by the indicators another another upswing (even to the Aug highs) is likely.
Very short-term outlook: mixed
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. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
USD/CHF
Looking at the daily chart, we see that although USD/CHF bounced off the lower border of the purple rising trend channel, currency bulls didn’t manage to push the pair above the Friday’s high (not to mention higher levels). This show of weakness triggered a decline earlier today which suggests a re-test of the purple support line in the coming day(s). If we see such price action and the Stochastic Oscillator generates a sell signal, USD/CHF may move even lower and drop to around 0.9646, where the medium-term blue support line currently is.
Very short-term outlook: mixed with bearish 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. 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, Gold & Silver Fund Manager
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