The euro is sitting right there, at the support. Will it hold, or will it break? In today's Alert, we're taking a look at both scenarios, and the target prices such moves would aim at. Except for the euro, there's a new promising opportunity to keep an eye on, and we lay out what we expect to see in the market for us to make a new trading decision. And we also comment thoroughly on our currently open position. Let's dive into it all.
In our opinion, the following forex trading positions are justified - summary:
- EUR/USD: none
- GBP/USD: none
- USD/JPY: none
- USD/CAD: short (a stop-loss order at 1.3353; the initial downside target at 1.3144)
- USD/CHF: none
- AUD/USD: none
EUR/USD
We wrote these words in our yesterday's analysis:
(...) EUR/USD has opened with a bearish red gap while the Stochastic Oscillator has flashed its sell signal. Both signs suggest further deterioration. (...) we could see a test of the lower border of the formation and the green horizontal support line in the very near future.
The pair went on to reach our downside targets, and is currently testing the green horizontal support line. Should it hold, the exchange rate is likely to rebound and at least test the upper border of the blue consolidation. But if it doesn't hold, Friday's lows or even the early-August lows are likely to be seen.
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
There's little overall change in USD/JPY as the pair keeps trading in a narrow range around Tuesday's peak. The daily indicators' buy signals remain on, suggesting the exchange rate could test the upper border of the declining red trend channel or even the orange resistance zone in the very near future.
Should the bulls prove their mettle and successfully break above the upper border of the declining red trend channel and the orange zone, we'll consider going long.
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 Tuesday, the USD/CAD bears broke below the lower border of the blue consolidation, yet their attempt has been invalidated and the exchange rate bounced higher. However, the breakdown below the lower border of the black triangle has been verified, and the pair went on a downswing earlier today.
This suggests that we'll see another test of the lower border of the blue consolidation. Should the bears break below it, the way to our downside target will be open - let's quote our Tuesday's observations:
(...) If that's the case and the exchange rate moves lower from here, the initial downside target will be around 1.3144, where the size of the downward move will correspond to the height of the triangle. This is also where the 61.8% Fibonacci retracement is.
Trading position (short-term; our opinion): Short positions with a stop-loss order at 1.3353 and the initial downside target at 1.3144are justified from the risk/reward perspective.
Summing up the Alert, EUR/USD downside targets have been reached, and the pair is now precariously sitting at a key support. USD/CAD verified its earlier breakdown below the lower border of the black triangle, and is currently trading inside the blue consolidation. The short position remains justified. Should the USD/JPY bulls break above the nearby resistances, we'll consider going long. GBP/USD hasn't so far given us a reason to open a short position. Apart from these, there're no other opportunities worth acting upon in the currencies. As always, we'll keep you - our subscribers - informed.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
