The dust is settling down, revealing several opportunities. The euro has retraced its yesterday's downswing, the Japanese yen is strengthening - just as the Canadian dollar is. Swiss franc is another currency we're keeping a close eye on. But how does it translate into our trading plans?
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: short (a stop-loss order at 0.9996; the initial downside target at 0.9768)
- AUD/USD: none
EUR/USD
The short term situation remains almost unchanged as EUR/USD is trading inside the blue slightly below the upper border of the yellow declining trend channel.
The buy signals remain on the cards, suggesting that we'll likely see a test of the upper border of the formation, or even of the recent high and the 38.2% Fibonacci retracement in the very near future.
Should the bulls show weakness in this area, we'll consider opening short 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.
USD/JPY
USD/JPY moved slightly above the 50% Fibonacci retracement during yesterday's session, but the bulls didn't manage to hold gained ground, and a pullback followed earlier today.
As a result, the pair invalidated yesterday's breakout. Coupled with the extended position of the daily indicators, it suggests that further deterioration is just around the corner. Nevertheless, a bigger downside move will be more likely and reliable only if the exchange rate closes today or one of the following sessions below the previously-broken upper border of the declining grey trend channel.
Should we see such a breakout invalidation, we'll consider opening short 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.
USD/CAD
For the third time in a row, USD/CAD moved above the upper border of the blue consolidation and the 61.8 Fibonacci retracement based on the September decline. The buyers however didn't manage to go any higher, and a pullback followed earlier today.
This way, the pair invalidated its earlier breakouts, which increases the probability of further deterioration in the coming days. Nevertheless, a decline will be more likely and reliable only if USD/CAD closes today or one of the following sessions below the upper border of the consolidation.
Should we see such price action, we'll consider opening short 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.
USD/CHF
Although USD/CHF extended gains in the previous days, the pink resistance zone and the proximity to the upper border of the green rising trend channel stopped the buyers.
The sellers took over, and the pair moved quite sharply lower earlier today. It suggests that further deterioration may still be ahead of us. If this is the case, we'll see at least a test of the lower border of the rising green trend channel in the following days.
Trading position (short-term; our opinion): Short positions with a stop-loss order at 0.9996 and the initial downside target at 0.9768 are justified from the risk/reward perspective.
Summing up the Alert, the euro keeps trading inside its recent consolidation, and the buy signals support a test of the formation's upper border, or even of the recent high and the 38.2% Fibonacci retracement. Should the buyers show weakness there, we'll consider opening short positions. USD/CHF has reversed at the pink resistance zone and the upper border of the rising green trend channel, and the short position remains justified. Should USD/JPY invalidate its breakout above the upper border of the declining grey trend channel, we'll consider opening short positions. Should USD/CAD close today or one of the following sessions below the upper border of its consolidation, we'll consider 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
