In our opinion the following forex trading positions are justified - summary:
EUR/USD
On the daily chart, we see that EUR/USD broke above the upper border of the blue consolidation and climbed to the orange resistance zone, which suggests a test of the 38.2% Fibonacci retracement and the upper border of the blue rising trend channel in the coming day(s). If this resistance area is broken, the next target for currency bulls will be the yellow resistance zone and the 50% Fibonacci retracement. Nevertheless, the current position of the indicators suggests that the space may be limited and reversal in the coming week should not surprise us.
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.
GBP/USD
Last Thursday, we wrote the following:
(…) a breakdown under the lower border of the blue rising trend channel, suggests a drop to around 1.2090, where the size of the move would correspond to the height of the channel. In this area is also the October low and the barrier of 1.2000, which together could stop further deterioration once again.
From today’s point of view, we see that the situation developed in line with the above scenario and GBP/USD declined to our downside target yesterday. However, the combination of the October lows and the lower border of the purple declining trend channel encouraged currency bulls to act, which triggered a rebound. Earlier today, the exchange rate extended gains, but the green zone (the nearest resistance) stopped further improvement. This suggests that as long as there is no breakout above this area another attempt to move lower and a re-test of recent lows can’t be ruled out.
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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