In our opinion, the following forex trading positions are justified - summary:
- EUR/USD: long (a stop-loss order at 1.0954; the initial upside target at 1.1165)
- GBP/USD: none
- USD/JPY: short (a stop-loss order at 110.04; the exit target at 108.04)
- USD/CAD: none
- USD/CHF: short (a stop-loss order at 1.0035; the exit target at 0.9849)
- AUD/USD: none
EUR/USD
Although EUR/USD moved higher yesterday, the bulls didn't manage to break above Wednesday's peak. As a result, the pair pulled back a bit earlier today - but it still keeps trading inside the blue consolidation.
As there are no sell signals by the daily indicators, one more attempt to move higher may be just around the corner.
Trading position (short-term; our opinion): long positions with a stop-loss order at 1.0954 and the initial upside target at 1.1165 are justified from the risk/reward perspective.
GBP/USD
For many weeks running, GBP/USD has been trading sideways in the pink consolidation. After moving higher recently, just what are the chances of the breakout sticking?
GBP/USD recently broke above the pink multi-week consolidation, and the bulls didn't really look back. The pair extended gains and reached the orange resistance area created by the May peaks, and the 50% Fibonacci retracement.
This move took the exchange rate also slightly above the upper border of the rising green trend channel. Before jumping to conclusions, let's take a look also at the position of the daily indicators. Both the CCI and the Stochastic Oscillator are very close to generating their sell signals.
Coupled with the above-mentioned resistance zone and the current position of the daily indicators, it seems that a reversal and lower values of GBP/USD may be just around the corner.
Should we see an invalidation of the breakout, we'll consider opening short positions.
Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective.
USD/JPY
Earlier today, USD/JPY has once again extended losses today. It means that our yesterday's observations are up to date also today:
(...) While USD/JPY moved a bit higher yesterday, the rebound doesn't really compare to the recent declines. Coupled with the sell signals generated by the daily indicators, it suggests further deterioration in the coming days.
A bigger move to the downside will be more likely and reliable only if the pair closes the green gap created on November 25, however.
Should we see such price action, the first downside target for the bears would be around 107.93-108.04. This is where the nearest support area (created by the lows at the turn of Oct and Nov) is.
Trading position (short-term; our opinion): Short positions with a stop-loss order at 110.03 and the exit target at 108.04 are justified from the risk/reward perspective.
USD/CAD
The first thing immediately apparent on the above chart, is the successful breakdown below the lower border of the blue consolidation. It has triggered quite a sharp move to the downside on Wednesday.
This decline brought the exchange rate to its mid-November lows. Egged on by the sell signals of the daily indicators and the sheer size of Wednesday's candle, the sellers brought the pair even lower later on. This can be seen in Thursday's red gap which has triggered further deterioration.
Earlier today, we saw a tiny move to the upside, but taking into account the sell signals generated by the daily indicators, it seems that another attempt to move lower could come as early as next week.
Should it be the case, the first downside target for the bears would be the green support zone based on the lows at the turn of October and November.
Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective.
USD/CHF
Overall, the USD/CHF situation hasn't changed much, as the the pair keeps trading inside the blue consolidation and around the lower border of the rising green trend channel.
Let's quote our yesterday's commentary as it's up-to-date also today:
(...) The sell signals of the daily indicators remain on the cards though, hinting at the high likelihood of another downswing ahead.
Should the pair moves lower from here, we'll likely see a re-test of the green zone or even a move to the Oct 21 low in the very near future.
Trading position (short-term; our opinion): Short positions with a stop-loss order at 1.0035 and the exit target at 0.9849 are justified from the risk/reward perspective.
AUD/USD
Earlier today, AUD/USD broke above the upper border of the blue consolidation once again. Despite this improvement though, the pair entered the pink consolidation just as it had left the blue one, and remains stuck there.
It suggests that as long as there is no breakout above the upper border of this formation, further improvement is questionable. This is especially so when we factor in the current position of the daily indicators and the proximity to the 61.8% Fibonacci retracement.
Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective.
Please note that due to attending additional professional training so beneficial to trading, there won't be any Alert from Mon 9th till Wed 11th December. The Service will resume on Thursday, 12th December.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
