Earlier today, the U.S. dollar moved lower against the Swiss franc and reached the first important support zone once again. Will it withstand the selling pressure in the coming week?
In our opinion the following forex trading positions are justified - summary:
EUR/USD
On the weekly chart, we see that EUR/USD climbed above the yellow resistance zone, but is this event as positive as it looks at the first sight? Let’s take a closer look at the daily chart and find out.
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 once again. Although this is a positive signal the 38.2% Fibonacci retracement and the upper border of the blue rising trend channel continue to keep gains in check. This means that as long as there is no successful breakout above these resistance levels further improvement is questionable. Additionally, 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.
USD/JPY
On Monday, we wrote the following:
From the medium-term perspective, we see that the pair re-approached the blue declining resistance line in the previous week, which could stop the appreciation in the coming week(s) – similarly to what we saw in mid December. Additionally, the RSI, the CCI and Stochastic Oscillator generated sell signals, increasing the probability of declines. If we see such price action, the initial downside target will be the orange zone, which serves now as the nearest support at the moment.
Looking at the charts, we see that the situation developed in line with the above scenario and USD/JPY declined sharply, breaking below the orange support zone marked on the weekly chart. This negative event triggered further deterioration and a drop to the green support zone (seen on the daily chart) and the 23.6% Fibonacci retracement based on the entire June-December upward move. What’s next? Taking into account the above support area and the current position of the daily indicators, it seems that the exchange rate will rebound and verify the breakdown under the orange zone in the coming week. Nevertheless, this scenario will be more reliable if the CCI and Stochastic Oscillator generate buy signals.
Very short-term outlook: mixed with bullish 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
On the daily chart, we see that although USD/CHF climbed above the upper border of the blue consolidation and the grey resistance line, this improvement was very temporary and the pair reversed quickly, invalidating earlier breakout. This negative development encouraged currency bears to act, which resulted in a decline to the green support zone. What does it mean for the exchange rate? In the previous weeks this solid support was strong enough to stop further declines, which suggests that we may see a similar action and a re-test of the strength of the blue and grey resistance lines in the coming week.
Very short-term outlook: mixed with bullish 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 Trading Alerts
Forex Trading Alerts
Oil Investment Updates
Oil Trading Alerts
