Yesterday, the U.S. dollar moved higher against its Canadian counterpart after the price of crude oil declined and approached the barrier of $50. Despite this increase, USD/CAD remains under the previously-broken support levels. Where will the exchange rate head next?
In our opinion the following forex trading positions are justified - summary:
EUR/USD
On the daily chart, we see that although EUR/USD moved lower yesterday, earlier today currency bulls tried to push the exchange rate higher, which suggests that we may see a re-test of the green resistance zone later in the day. Additionally, as long as buy signals generated by the indicators remain in place another attempt to move higher and a test of the upper border of the green zone (around 1.0850) or even the next retracement (50% around 1.0900) can’t be ruled out. Nevertheless, such price action would be more likely only if we see a breakout above the 38.2% Fibonacci retracement. Therefore, if currency bulls fail, the exchange rate will reverse and correct yesterday’s rally in very near future.
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
The situation in the medium and short term hasn’t changed much as USD/CAD is trading under the upper border of the purple rising wedge marked on the weekly chart and the orange resistance zone seen on the daily chart. This means that what we wrote yesterday is valid also today:
(…) Although the pair rebounded slightly earlier today, we think that as long as there won’t be a comeback above the lower line of the very short-term purple declining trend channel another attempt to move lower is likely. If this is the case, the next downside target for currency bears would be the purple, dashed support line based on the Sep and Oct lows (currently around 1.3207) or even the 50% Fibonacci retracement around 1.3174.
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.
USD/CHF
Quoting our yesterday’s alert:
(…) USD/CHF declined sharply and closed yesterday’s session under the upper border of the grey rising trend channel, which doesn’t bode well for the exchange rate – especially when we factor in sell signals generated by the indicators. However, with Monday’s drop the pair slipped to the first Fibonacci retracement (23.6%), which could trigger a rebound to the previously-broken upper lines of rising trend channels in the coming day(s).
As you see on the daily chart, the situation developed in line with the above scenario and USD/CHF climbed to the previously-broken upper lines of rising trend channels. Such price action looks like a verification of the breakdown and suggests another attempt to move lower is just around the corner. If this is the case, and the pair declines once again, we may see a drop even to the green support line based on the May, Jun and Oct highs and reinforced by the 38.2% Fibonacci retracement based on the recent rally.
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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