Heading into the long weekend, the currencies are trading far from timidly. Aided by the weak employment figures, intraday volatility looks to be picking up again. Let's step back and see the moves for what they're worth. What precious clues can be found?
In our opinion, the following forex trading positions are justified - summary:
- EUR/USD: short (a stop-loss order at 1.1375; the initial downside target at 1.1233)
- 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
EUR/USD extended losses earlier today and slipped to the 61.8% Fibonacci retracement. This could certainly encourage the bulls to act. However, as long as the pair remains below the previously-broken blue zone and there are no buy signals by the daily indicators, another attempt to move lower remains likely.
Should the bears return to the trading floor in strength and the pair moves lower from here, we'll likely see a test of the lower border of the rising orange trend channel.
Trading position (short-term; our opinion): Short positions with a stop-loss order at 1.1375 and the initial downside target at 1.1233 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
Let's recapitulate the bullish events of recent days. USD/JPY broke above the upper border of the blue declining trend channel and created a blue gap on Monday. It also broke above the declining red resistance line in the process. With the pink resistance zone just ahead, the bears stepped in.
The pair moved sharply lower, slipping to the previously-broken declining red line. Although it withstood the selling pressure, the sellers managed to close the day below the lower border of the blue gap. As it was closed, the bulls lost a short-term technical factor speaking in their favor.
Earlier today, the bears tried to move lower once again. At the moment of writing these words, the declining red line still holds. As long as it continues doing so, a bigger move to the downside is questionable.
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. While USD/CAD is still trading inside the yellow consolidation, the bulls didn't manage to break above the upper border of the green zone. The upward move has fizzled out and further deterioration remains very much likely. It would target a test of the lower border of the turquoise support zone (created by the early-November 2018 lows and the 70.7% Fibonacci retracement).
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 EUR/USD reversal aftermath continues to favor the bears. lower has caught the bulls off guard and warrants opening short positions. Today's AUD/USD upswing notwithstanding, both the short- and medium-term outlook continue to point in the direction of deterioration ahead. Apart from these, there're no other opportunities worth acting upon in the currencies. As always, we'll keep you - our subscribers - informed.
On an administrative note, the 4th of July - the U.S. Independence Day is tomorrow, and the long weekend begins, which means that the trading should be limited as the U.S. markets will be closed tomorrow, and many traders will still be out of their offices until Monday. Consequently, there will be no regular Forex Trading Alerts (the same goes for our other Alerts) posted tomorrow and on Friday, but if anything changes regarding our outlook in the meantime, we will keep you informed via intraday Alerts.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
