Today's weekly jobless claims or any other economic data announcement didn't herald much of a movement in the leading currency pairs. But that's not a signal to lower one's guard! Just as nobody rings the bell at the market top, the opportunities don't just announce themselves when it's time to act. Let's dive in and make the most of it!
In our opinion, the following forex trading positions are justified - summary:
EUR/USD
Yesterday, EUR/USD has bounced off the blue support zone and went on to almost touch the 61.8% Fibonacci retracement. The bulls however didn't manage to hold on to their gains. Earlier today, the bears again took the pair closer to the blue support zone as the rate trades currently at around 1.1365.
Another test of the blue support zone remains probable. While the daily indicators' position supports the bearish scenario, one more upswing targeting a retest of recent resistances can't be ruled out as long as the pair still trades above the blue support zone.
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
In our Wednesday's commentary, we wrote:
(...) Bears then took the pair to the support area created by the 76.4% and the 78.6% Fibonacci retracements. The exchange rate currently trades inside the yellow consolidation.
As there are no buy signals on the daily indicators, one more downswing targeting the green support zone remains probable. There, the size of the downward move would correspond to the height of the purple trend channel, which should work to decrease the selling pressure once the green support zone is reached.
USD/CAD has indeed slipped to the green support zone yesterday. Earlier today, the bulls didn't get much success in taking the pair higher. As a result, the pair is still trading within the green support zone and well below the yellow consolidation it had broken down from.
As the daily indicators have dropped to the oversold readings, they hint at an increasing likelihood of a rebound from current levels in the very near future. Should we see reliable signs of the bulls' strength, we'll consider opening long positions.
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 recent gains and broke above the 38.2% Fibonacci retracement and the brown declining resistance line that is based on its previous peaks. This is certainly a bullish development, suggesting 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.
Should we see the bulls' weakness on full display (unsuccessfully attempting to move higher and such), we'll consider opening short positions. 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.
Summing up the Alert, while the EUR/USD technical posture is deteriorating, we haven't yet seen the bulls' weakness prominently displayed. Similarly, there're not yet enough signs of a sustainable USD/CHF or USD/JPY reversal higher. Neither it's the time yet to open a short AUD/USD positions. As for now, there're no opportunities worth acting upon in the currencies and capital preservation still rules the day. As always, we'll keep you - our subscribers - informed.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
