In our opinion the following forex trading positions are justified - summary:

• EUR/USD: short (a stop-loss order at 1.0957; the initial downside target at 1.0538)
• GBP/USD: none
• USD/JPY: none
• USD/CAD: long (a stop-loss order at 1.2949; the initial upside target at 1.3302)
• USD/CHF: long (a stop-loss order at 0.9879; the initial upside target at 1.0064)
• AUD/USD: short (a stop-loss order at 0.7723; the initial downside target at 0.7520)

EUR/USD

Looking at the charts, we see that the overall situation hasn’t changed much as EUR/USD is trading around yesterday’s levels, which means that our last commentary on this currency pair is up-to-date:

If (…) the pair drops under the long-term red support line (seen more clearly on the weekly chart), we’ll see (at least) a test of the lower border of the pink consolidation and the January 19 low of 1.0588 in the following days.

(…) please keep in mind what we wrote (…) about the long-term picture of EUR/USD:

(…) the exchange rate climbed in the previous month to the previously-broken long-term green line, which serves as the key resistance now. Although currency bulls tried to push EUR/USD higher earlier this month, they failed, which resulted in a pullback. This action looks like a verification of the earlier breakdown under this important line, suggesting lover values of the exchange rate in the coming days/weeks.

Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): Short positions (with a stop-loss order at 1.0957 and the initial downside target at 1.0538) 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 today’s point of view, we see that USD/CAD gave up some gains and corrected Tuesday’s sharp increase. With this decline the exchange slipped to the previously-broken upper border of the blue consolidation, which looks like a verification of the earlier breakout.

If this is the case, the exchange rate will likely test not only this week’s high, but also the upper border of the purple trend channel. If this resistance is broken, the next upside target will be the yellow resistance zone and the January 20 high of 1.3385.

Very short-term outlook: bullish
Short-term outlook: mixed with bullish bias
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): Long positions (with a stop-loss order at 1.2949 and the initial upside target at 1.3302) 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.

AUD/USD

Looking at the daily chart, we see that although AUD/USD invalidated the earlier breakdown under the lower border of the blue consolidation yesterday, currency bulls didn’t manage to push the pair even to the upper line of the formation, which resulted in a pullback earlier today. Additionally, the sell signals generated by the indicators are still in play, supporting currency bears and lower values of the exchange rate.

If this is the case and AUD/USD declines under the lower border of the blue consolidation once again, we’ll see a realization of the bearish scenario from our Tuesday’s alert:

(…) AUD/USD extended losses, slipping under the lower border of the blue consolidation (based on the January 24 low of 0.7606). Additionally, all indicators generated the sell signals, increasing the probability of further declines. If this is the case and AUD/USD moves lower from here, the next downside target will be the green support zone seen on the daily chart (around 0.7520).

Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): Short positions (with a stop-loss order at 0.7723 and the initial downside target at 0.7520) 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.

As a reminder – “initial target price” means exactly that – an “initial” one, it’s not a price level at which we suggest closing positions. If this becomes the case (like it did in the previous trade) we will refer to these levels as levels of exit orders (exactly as we’ve done previously). Stop-loss levels, however, are naturally not “initial”, but something that, in our opinion, might be entered as an order.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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