Earlier today, the USD Index extended yesterday’s losses, which pushed USD/CAD to the previously-broken support resistance line. Will this verification of the breakout encourage currency bulls to act in the coming week?

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

• EUR/USD: short (a stop-loss order at 1.0735; the initial downside target at 1.0388)
• GBP/USD: none
• USD/JPY: long (a stop-loss order at 111; the initial upside target at 115.43)
• 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 0.9891; the initial upside target at 1.0180)
• AUD/USD: none

EUR/USD

On the daily chart, we see that EUR/USD extended yesterday’s gains, which resulted in a climb to the upper border of the blue declining trend channel. Such price action suggests that another reversal is just around the corner. If this is the case, we’ll likely see a drop to around 1.0460 (the 76.4% and 78.6% Fibonacci retracements) or even to the lower border of the blue tend channel (around 1.0420 at the moment of writing these words) in the coming week.

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 1.0735 and the initial downside target at 1.0388 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

Looking at the weekly chart we see that GBP/USD dropped to the lower border of the blue consolidation, which resulted in a rebound. How did this increase affect the very short-term picture? Let’s check.

From this perspective, we see that currency bulls pushed GBP/USD above the upper border of the blue triangle, which suggests a test of the purple declining resistance line or even a climb to the February high in the following days. Nevertheless, in our opinion such price action will be more likely and reliable if the pair closes today’s (or one of the following) session above the February 9 high of 1.2580.

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/CAD

On the daily chart, we see that the resistance area created by the February 7 high and the 38.2% Fibonacci retracement encouraged currency bears to act, which resulted in a pullback to the previously-broken orange declining line, which serves now as a support. Such decline looks like a verification of the breakout and suggests that another reversal is just around the corner – especially when we factor in the proximity to the long-term blue support line, which stopped currency bears and triggered an upward move several times in the past.

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 1.3055 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.

Thank you.

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

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