An eventful weekend is behind. The trade war truce is on and the currencies react to the risk-on mood. The moves are far from boring or tame. Actually, it's high time to enter a new trading position. And add a few other pairs on our watch to do the same. Take a look what that means exactly.

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 (a stop-loss order at 0.7072; the initial downside target at 0.6937)

EUR/USD

Earlier today, EUR/USD moved sharply lower. It broke down below the lower border of the yellow consolidation and tested the lower border of the blue support zone based on its previous peaks.

While the sellers took the pair even lower, their achievement turned out to be only temporary. The exchange rate reverted to trade back at the previously-broken lower border of the yellow consolidation.

Such price action could be nothing more than a verification of the earlier breakdown below the yellow consolidation, and could bring on a follow-through downward move. But as long as there is no daily close below the yellow consolidation, opening short positions is premature, not yet justified from the risk/reward perspective. We keep monitoring the market and will let you know once we see reliable signs pointing to the bulls' weakness that would translate into opening a short position with confidence. Stay tuned.

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

USD/CAD has extended losses in the previous week, breaking down below the green support zone. Thanks to this drop, the sellers took the pair to the early-2019 lows, which brought about a tiny rebound earlier today.

How far can it be trusted? Remembering the above-mentioned support and the favorable positioning of the daily indicators, a reversal followed by a bigger rebound is probably just around the corner. You see, the RSI slipped to its oversold readings, and the CCI and the Stochastic Oscillator just flashed their buy signals.

Until we see reliable signs of the bulls' strength, we won't open long positions. Should the bullish spirits return (demonstrated by e.g. invalidation of the earlier breakdown below the green zone), we'll consider going long. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective.

AUD/USD

We have written these words in our Thursday's commentary:

(...) we're likely to see a test of the nearby yellow resistance zone shortly.

The room for gains seems however rather limited, as the CCI and Stochastic Oscillator have reached their overbought readings. They suggest we might see a reversal in the coming days.

AUD/USD not only tested, but unsuccessfully attempted to break above the yellow resistance zone and the 50% Fibonacci retracement.

The bulls however didn't manage to hold on to their gains, and the exchange rate powerfully reversed lower earlier today. The Friday's intraday breakouts have been invalidated, and the probability of further deterioration in the very near future rose.

Additionally, the Stochastic Oscillator went on to generate its sell signal, while the CCI is very close to doing the same. These also support the case for lower AUD/USD values down the road.

Next, let's take a closer look at the weekly chart. There's one more bearish sign apparent.

Thanks to recent increases, the pair has also reached the green support-turned-resistance zone that is created by the 2018 and early-2019 lows. We have seen a similar situation earlier in May.

Back then, the bulls took the pair higher after hitting a fresh low. However, the above-mentioned green zone stopped them, triggering another another move to the downside. If you look at the position of the weekly indicators carefully, you'll see that they were lower back then that where they're now. In other words, any downward price move has longer to go before they become oversold.

This time, the buyers have one more resistance to break - the pink dashed declining resistance line. The bulls have tried unsuccessfully to overcome it in March already. But instead of higher values, another downward move followed and a fresh 2019 low has been made.

Taking all the above into account, we think that opening short positions is justified at the moment of writing these words. All details below.

Trading position (short-term; our opinion): Short positions with a stop-loss order at 0.7072 and the initial downside target at 0.6937 (the previously-broken brown declining line) are justified from the risk/reward perspective.

Summing up the Alert, EUR/USD has reversed lower but it's advisable to first see more signs of the bulls' weakness prior to opening any short positions. USD/CAD has pushed lower and appears primed for a rebound in short order - the bulls should however first return in force in order to justify opening long positions. The AUD/USD situation is different - both the short- and medium-term outlook point in the direction of deterioration, justifying opening short positions. 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