The euro practically hasn't moved one iota earlier today, and sits right at an important support. This support is part of one technical pattern that carries wider implications if the euro bears succeed. The Japanese yen situation looks a bit different and should we see certain price action, it'll lead to a new trading decision. What do we mean exactly? Below, you'll discover all the details.

In our opinion, the following forex trading positions are justified - summary:

• EUR/USD: none (in other words, we closed our short positions and took profits off the table after the pair slipped on Friday to our exit target)
• GBP/USD: none
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: short (a stop-loss order at 0.7113; the downside target at 0.6935) ; the downside target at 0.6925)

EUR/USD

On Friday, EUR/USD reached our exit downside target. Our short position was therefore closed with a profit.

Friday's drop took the pair to the green support line based on the previous lows. This is the neckline of the potential head and shoulders formation about which we wrote in our Thursday's Alert:

(...) As long as there is no daily close below the green line, the sketched head and shoulders formation remains incomplete and as such, doesn't carry any implications just yet. Therefore, a bigger downside move would be more likely only if EUR/USD finishes soon below both the green line and the green support zone.

Looking at the green line and green support zone, how likely is a move lower actually? Let's remember our Friday's Alert:

(...) ... a bigger move south will be more likely and reliable only if we see a breakdown below the first two supports.

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 rebounded on Friday, and the bulls took the pair to the previously-broken green support line. This is the neckline of the potential head and shoulders formation. Earlier today we saw another attempt to move higher, but the bulls haven't made it above the green line.

Such price action looks like a verification of the earlier breakdown and suggests that another attempt to move lower may be just around the corner. Let's quote our Thursday's commentary:

(...) Should it be the case and the pair closes soon below the green line, the probability of a test of the June lows would increase. It is worth noting that below this line, the size of the downward move would correspond to the height of the above-mentioned potential head and shoulders formation.

Should we see the bulls' weakness with a daily close below the neckline, 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

The overall situation hasn't changed much as USD/CAD is still trading inside the yellow consolidation. Earlier today, the pair is challenging its upper border as it trades at around 1.3100 currently. Let's recall our Wednesday's observations regarding the green support-turned-resistance zone (around 1.3120):

(...) Although USD/CAD reversed higher from the turquoise support zone yesterday, the bulls couldn't make it even to the previously-broken green support-turned-resistance 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.

Summing up the Alert, on Friday, our profitable EUR/USD short position has been automatically closed at our exit target. While AUD/USD hasn't moved much today, its upswing appears to have run its course, and both the invalidation of recent breakouts and the position of the daily indicators support a downside move. Therefore, the short position is justified. Should we see the USD/JPY bears return to the trading floor in earnest, 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