Earlier today, the Australian dollar moved higher against its U.S. counterpart, which approached AUD/USD to the recent peak. Will we see a fresh multi-month peak in the coming days?
In our opinion the following forex trading positions are justified - summary:
- EUR/USD: none
- GBP/USD: short (a stop-loss order at 1.3232; the initial downside target at 1.2375)
- USD/JPY: none
- USD/CAD: none
- USD/CHF: none
- AUD/USD: none
EUR/USD
From the medium-term perspective, we see that the proximity to the August 2015 high encouraged currency bears to act earlier this week, which resulted in a small pullback.
Did this drop have any impact on the very short-term picture? Let’s examine the daily chart and find out.
Looking at the daily chart, we see that today’s pullback took EUR/USD under the upper border of the brown rising trend channel. Although this move looks like an invalidation of the earlier breakout, in our opinion, it will be more reliable only if the exchange rate closes today’s session (or one of the following sessions) below this resistance line. Will we see such price action? It’s hard to estimate it with a hundred percent confidence, but the current position of the weekly and daily indicators suggests that reversal and lower values of EUR/USD in the coming days are more likely than not. As always, we’ll keep you - our subscribers - informed should anything change.
Very short-term outlook: mixed
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: mixed
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.
GBP/USD
From today’s point of view, we see that although GBP/USD rebounded slightly in recent days, the exchange rate is still trading below the upper border of the brown rising trend channel and the yellow resistance zone (created by the 76.4% and 78.6% Fibonacci retracements and the last week high). Therefore, in our opinion, as long as there is no breakout above this major resistance area another attempt to move lower is very likely. If this is the case and we’ll see a decline from current levels, the next downside target for currency bears will be the mid-July or even late June low.
Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
MT outlook: mixed with bearish bias
LT outlook: mixed
Trading position (short-term; our opinion): Short (already profitable) positions (with a stop-loss order at 1.3232 and the initial downside target at 1.2375) 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
Quoting our previous commentaryon this currency pair:
(…) currency bulls pushed AUD/USD higher (as we had expected) and the exchange rate increases slightly above our upside target. Despite this improvement, currency bulls didn’t manage to hold gained levels, which resulted in a reversal and a decline earlier today. Thanks to today’s drop the pair slipped under the 127.2% Fibonacci extension, invalidating the earlier breakout, which is a negative event. Nevertheless, AUD/USD still remains above the previously-broken upper border of the purple rising trend channel and the November high, which suggests that as long as there is no invalidation of the breakout above these levels another attempt to move higher can’t be ruled out – especially when we factor in the fact that there are no sell signals generated by the indicators, which could encourage currency bears to act.
From today’s point of view, we see that the situation developed in tune with the above scenario and AUD/USD rebounded earlier today, invalidating the earlier breakdown below 127.2% Fibonacci extension. What’s next? The sell signals generated by the daily indicators suggest anther reversal and declines in the coming week. Nevertheless, before we see such price action, it seems to us that the exchange rate will test the last week peak or even hit a fresh July high first.
Very short-term outlook: mixed
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: mixed
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.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager
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