In our opinion the following Forex Trading Positions are justified - summary:

• EUR/USD: short (a stop-loss order at 1.2806; the initial downside target at 1.2186)
• GBP/USD: short (a stop-loss order at 1.4548; the next downside target at 1.3685)
• USD/JPY: long (a stop-loss order at 107.82; the initial upside target at 111.33)
• USD/CAD: none
• USD/CHF: none
• AUD/USD: short (a stop-loss order at 0.8222; the downside target at 0.7730)

EUR/USD

Earlier today, the pair broke below the lower border of the blue consolidation, which together with the sell signals generated by the daily indicators suggests further deterioration. How low could the pair go? In our opinion, the first downside target for currency bears will be the previously-broken upper border of the rising wedge (orange line based on the November and January highs) around 1.2200. Additionally, slightly below this level, the size of the downward move (around 1.2190) will correspond to the height of the consolidation, which increases the probability of the test of this area.

GBP/USD

The exchange rate broke below the lower line of the blue consolidation yesterday, which triggered a sharp decline below the barrier of 1.4000. This negative development and the sell signals generated by the daily indicators encouraged currency bears to act earlier today, which resulted in further declines. As a result, the pair slipped to the 38.2% Fibonacci retracement (based on the entire October-January upward move), the black support line based on the October, November and December highs, approaching our initial downside target and making our short positions even more profitable. Although this area could trigger a rebound, the sell signals generated by the indicators suggest that another move to the downside is still ahead of us.

USD/JPY

Although the pair declines sharply and closed the day under the lower border of the blue declining red channel yesterday, currency bulls didn’t give up and attacked earlier today. Thanks to their action, the exchange rate invalidated the above-mentioned breakdown, which is a positive development that suggests further improvement and at least a test of the last week’s peak.

USD/CAD

The exchange rate moved sharply higher on Friday, which resulted in a breakout above the upper border of the lack declining trend channel. This bullish development triggered further rally in the following days and the pair broke above the 38.2% Fibonacci retracement based on the entire December-January downward move. What’s next? Although the CCI and the Stochastic Oscillator climbed to their overbought areas, we think that as long as there are no sell signals, another upswing is likely. If this is the case, we’ll likely see a test of the next retracement and the January 11 peak.

USD/CHF

Despite recent problems, the pair bounced off the 127.2% Fibonacci extension and came back to the green consolidation earlier today. Thanks to this increase, the pair also invalidated the earlier breakdown under the brown declining resistance line based on the mid-, late November and December lows, which together with the buy signals generated by the daily indicators suggests a test of the upper border of the consolidation (at 0.9427) in the coming day(s).

AUD/USD

The exchange rate declined sharply on Friday, which resulted in a breakdown under the lower line of the orange consolidation. This bearish sign and the sell signals generated by the indicators encouraged currency bears to act, which resulted in a drop to the 38.2% Fibonacci retracement. Nevertheless, taking into account the fact that there are no buy signals, which could encourage currency bulls to act, we think that one more downswing can’t be ruled out. If we see such price action, the pair will test the next retracement and the January 9 and 10 lows.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

Gold & Silver Trading Alerts
Forex Trading Alerts
Oil Investment Updates
Oil Trading Alerts