After several days inside consolidation, currency bears attacked and invalidated the earlier breakout above the short-term support line. What could be the consequences of this event?

• EUR/USD: short (a stop-loss order at 1.1878; the initial downside target at 1.1343)
• GBP/USD: short (a stop-loss order at 1.3256; the initial downside target at 1.2923)
• USD/JPY: half of the long positions (a stop-loss order at 112.47; the next upside target at 114.03)
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

From today’s point of view, we see that EUR/USD extended losses and closed yesterday’s session under the previously-broken upper border of the red declining trend channel, which opened the way to lower levels.

Taking all the above into account, we believe that what we wrote on Friday remains up-to-date also today:

(…) the exchange rate will test the previously-broken upper border of the red declining trend channel later in the day.

If it is broken (which is very likely, taking into account the medium-term picture (a verification of he earlier breakdown under the brown rising line) and the sell signals generated by the daily indicators), the way to September lows will be open.

Finishing today’s commentary on this currency pair, we would like to add that the upcoming downward move could reach even to around 1.1372, where the size of the move would correspond to the height of the green triangle. Therefore, we believe that short positions continue to be justified from the risk/reward perspective.

Trading position (short-term; our opinion): Short positions with a stop-loss order at 1.1878 and the initial downside target at 1.1343 are justified from the risk/reward perspective.

AUD/USD

Looking at the daily chart, we see that after several days in a consolidation between the pink support line and the green and brown resistance lines currency bears attacked, which took AUD/USD under the pink support line earlier today.

Taking into account this negative development, we think that the way to lower values of the exchange rate is open and we’ll see a test of September lows in the coming days.

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective.

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