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

Although the exchange rate rebounded and came back into blue consolidation, currency bears didn’t give up and attack once again earlier today. As a result, the pair declined below the lower border of the blue consolidation, which together with the sell signals generated by the daily indicators indicate that lower values of EUR/USD are still ahead of us.

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 in the coming days.

GBP/USD

The overall situation in the very short term hasn’t changed much, because although the pair bounced off the first support area (created by the 38.2% Fibonacci retracement based on the entire October-January upward move and the black support line based on the October, November and December highs) yesterday, currency bears showed their claws once again earlier today. Thanks to their action, the pair re-approached the above-mentioned support zone, which together with the lack of the buy signals suggests further deterioration in the following days.

If this is the case and the pair moves lower from current levels, the next downside target will be around 1.3685, where the 50% Fibonacci retracement (based on the entire October-January upward move) is.

USD/JPY

Yesterday, currency bulls took the exchange rate above the previously-broken lower border of the blue declining trend channel, invalidating the earlier breakdown. Despite this positive event, their opponents pushed USD/JPY lower once again, which resulted in a short-lived decline below the lower line of the trend channel earlier today. At the moment of writing these words, the exchange rate erased most of this drop and came back into the trend channel. But if we see a daily closure under the above-mentioned support/resistance line, we’ll consider closing our long positions. We’ll keep you - our subscribers - informed should anything change.

USD/CAD

Yesterday, the pair slipped below the previously-broken 38.2% Fibonacci retracement based on the entire December-January downward move. Despite this development, currency bulls didn’t give up and the exchange rate rebounded earlier today, invalidating yesterday’s drop.

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, one more upswing is likely. If this is the case, we’ll likely see a test of the next retracement and the January 11 peak around 1.2581 in the coming day(s).

USD/CHF

Although the pair extended gains, it is still trading inside the green consolidation. Nevertheless, as we wrote yesterday, an invalidation of the earlier breakdown under the brown declining line (based on the mid-, late November and December lows) and the buy signals generated by the daily indicators suggest that the test of the upper border of the consolidation (at 0.9427) is just ahead of us.

AUD/USD

Yesterday, the exchange rate bounced off the 38.2% Fibonacci retracement, but as we wrote yesterday, the lack of the buy signals, which could encourage currency bulls to act, triggered another move to the downside earlier today. As a result, the pair came back under the support zone created by the mid-October highs and the above-mentioned Fibonacci retracement, which suggests a test of the next downside target around 0.7816, where the next retracement and the January 9 and 10 lows are.

Finishing today’s commentary please note that there will be no regular Forex Trading Alerts until the end of the week. The next full alert (with charts and broader perspective) will be post on Monday. Nevertheless, short text messages such as the one you are reading now will also be sent on Thursday and Friday.

Thank you for understanding.

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

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