After Friday's U.S. jobs data, quite a few pairs have reversed their moves. And when one would think that not much can happen over the weekend, Mr. President takes to Twitter to mention China and trade. Needless to say that this has shaken the markets when they opened. It has even led us to make a new trading decision.
In our opinion, the following forex trading positions are justified - summary:
- EUR/USD: none
- GBP/USD: none
- USD/JPY: none
- USD/CAD: none
- USD/CHF: none
- AUD/USD: short (50% of already existing positions) (a new stop-loss order at 0.7039; the downside target at 0.6960)
EUR/USD
While EUR/USD has closed the week higher, the question is how to interpret that. Friday's upswing didn't take the pair above the previously-broken lower border of the red declining trend channel. Such price action looks like a verification of the earlier breakdown below it.
Earlier today, the bulls attempted to go north again. So far, they haven't managed to overcome that lower border of the red declining trend channel either as the pair changes hands at around 1.1200 currently.
Let's examine the daily chart for more clues. The pair plunged in the overnight Sunday session only to rebound earlier today. What is important, are the daily indicators. The Stochastics Oscillator generated its sell signal, suggesting that another attempt to move lower may be just around the corner.
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
The weekly chart shows that USD/CAD closed the week not that far from the upper border of the yellow consolidation. As long as there's no weekly close above it however, one more downswing remains probable. Especially so, when we look at the short-term picture.
The daily perspective reveals that the upper border of the purple rising trend channel combined with the 70.7% Fibonacci retracement has stopped the bulls on Friday. Earlier today, they've made another attempt to overcome that and so far, that hasn't brought lasting results (the pair trades at around 1.3475 currently).
It is our opinion that higher values of the exchange rate will be more likely only if we see a daily close above the rising purple trend channel. Until then, another reversal lower shouldn't surprise us.
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.
AUD/USD
AUD/USD has extended losses earlier today, creating the gap between today's open and Friday's close. This has made our short positions even more profitable.
This is a bearish development. As long as the gap remains open, lower values of the rate remain probable. The bulls would have to overcome the brown declining resistance line (that is based on the previous highs) first.
Connecting the dots, it's justified to move our stop-loss order lower in order to protect a greater portion of our open profits. All details below.
Trading position (short-term; our opinion): short positions (50% of already existing short position that has been opened on April 18 and partially closed on April 24) with a new stop-loss order at 0.7039 and the next downside target at 0.6960. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
Summing up the Alert, the remainder of our profitable short position in AUD/USD continues to be justified. In light of today's downswing, we have moved the stop-loss order lower to protect more of our open profits. There're no other opportunities worth acting upon in the currencies right now. As always, we'll keep you - our subscribers - informed.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
