Yesterday's Fed day brought quite a few highly interesting currency moves, to say the least. Today's moves also attract great attention. Without further ado, this is the new open position it leads to.
In our opinion, the following forex trading positions are justified - summary:
- EUR/USD: short (a stop-loss order at 1.1136; the initial downside target at 1.0980)
- GBP/USD: none
- USD/JPY: short (a stop-loss order at 109.68; the initial downside target at 107.86 - stop-loss order adjusted for yesterday's volatility)
- USD/CAD: none
- USD/CHF: short (a stop-loss order at 1.0021; the initial downside target at 0.9815)
- AUD/USD: none
EUR/USD
EUR/USD has yesterday broken below the green support zone and closed the day beneath it. This move triggered further deterioration earlier today.
As the pair previously broke below the green support line that forms the neckline of the head and shoulders formation, further losses are probable in the very near future.
Which area will the bears target? The initial downside target appears to be around 1.0980, where the size of the downward move would correspond to the height of the above-mentioned formation.
Trading position (short-term; our opinion): short positions with a stop-loss order at 1.1136 and the initial downside target at 1.0980 are justified from the risk/reward perspective.
GBP/USD
GBP/USD has extended losses this week, breaking below the green support line based on its previous lows. This is a bearish development, increasing the probability that the pair will test the green support zone in the coming days.
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
Although the pair broke above the orange resistance zone, the position of the daily indicators suggests that the space for gains is limited and reversal in the very near future should not surprise us.
Today's upswing will be more reliable if the pair finishes above the orange resistance zone and also above the 38.2% Fibonacci retracement. If the bulls fail here and we'll see an invalidation of today's tiny breakout, 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.
AUD/USD
AUD/USD extended losses, slipping to the support area created by the mid-June low and the lower border of the red declining trend channel. If these important supports withstand the selling pressure, we're likely to see a reversal and rebound in the very near future. However, if the buyers fail, the way to the 127.2% Fibonacci extension (around 0.6763) and the early-2019 low will be likely open.
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.
Summing up the Alert, the euro support didn't hold yesterday, and the bulls' losses have been mounting earlier today. This suggests further downside and opening a short position is therefore justified. USD/JPY has rolled over to the downside, and the daily indicators support a downside move - our short positions remains justified. USD/CHF closed higher yesterday, yet the bulls have run into formidable headwinds earlier today - the short position remains justified. We're watching the USD/CAD bulls for signs of weakness that would warrant opening 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
