Earlier today, the USD Index extended gains after the release of upbeat U.S. economic growth data. As a result, USD/CAD invalidated yesterday’s breakdown under support line. Will we see further rally in the coming days?
In our opinion the following forex trading positions are justified - summary:
EUR/USD
Looking at the daily chart, we see that EUR/USD moved little lower earlier today, which means that our previous commentary on this currency pair is up-to-date:
(…) the exchange rate moved higher and broke above the last week high earlier today. Despite this improvement, currency bulls didn’t manage to push EUR/USD even to the first Fibonacci retracement, which resulted in a pullback in the following hours. Taking this fact into account, it seems that the exchange rate may re-test the last week low in very near future.
Nevertheless, buy signals generated by the CCI and Stochastic Oscillator remain in place, suggesting that another attempt to move higher is just around the corner. Additionally, the size of the downward move between the May high and the Oct 23 low is very similar to the decline between the Nov high and the last week low, which increases the probability of reversal in the coming week – especially when we factor in the fact that the green support zone (marked on the weekly chart below) continues to keep declines in check.
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
On the weekly chart, we see that the upper border of the purple rising wedge stopped currency bears once again and triggered a rebound. What impact did this move have on the very short-term chart? Let’s check.
From this perspective, we see that although USD/CAD dropped below the upper border of the blue rising trend channel, currency bulls didn’t give up and pushed the pair higher, which resulted in an invalidation of earlier breakdown earlier today. Nevertheless, this positive event will be more reliable only if the exchange rate drops today’s session above the blue line – similarly to what we saw a week ago. If we see such price action, the pair will likely test the recent highs (around 1.3516-1.3586). Nevertheless, the current position of the indicators suggests that another downswing and (at least) a test of the orange support zone is just around the corner.
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
On the weekly chart, we see that the overall situation hasn’t changed much as USD/CHF remains above the previously-broken green line.
Will the very short-term chart give us more clues about future moves? Let’s check.
From perspective, we see that although USD/CHF moved lower yesterday, the previously-broken upper border of the grey rising trend channel stopped further deterioration, triggering a rebound. Despite this move, the exchange rate remains in a blue consolidation, which makes the very short-term picture a bit unclear. Nevertheless, we should keep in mind that all indicators generated sell signals, suggesting another attempt to move lower in the coming days. In our opinion, however, lower values of the exchange rate would be more reliable if we see an invalidation of a breakout above the upper border of the grey rising trend channel. Until this time, short-lived moves in both directions are very 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.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager
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