Although the Westpac Banking Corporation reported earlier today that consumer sentiment in Australia dropped 6.9% this month, AUD/USD moved higher and re-approached its major resistance zone. Will we see further improvement in the coming days?

In our opinion the following forex trading positions are justified - summary:

• EUR/USD: Short positions (stop-loss order at 1.1667)
• GBP/USD: Short positions (stop-loss order at 1.5913)
• USD/JPY: none
• USD/CAD: Long positions (stop-loss order at 1.1706)
• USD/CHF: none
• AUD/USD: Short positions (stop-loss order at 0.8194)

EUR/USD

The situation in the medium term hasn’t changed much as EUR/USD is still trading around the 23.6% Fibonacci retracement. Today, we’ll focus on the very short-term changes and find out what can we infer from the daily chart.

Yesterday, EUR/USD slipped below the orange resistance zone (created by the 76.4% and 78.6% Fibonacci retracement levels and the short-term red resistance line) and closed the day below, which was a negative signal. Despite this move, currency bulls didn’t give up and pushed the pair higher earlier today. With this upswing, the exchange rate climbed above the orange resistance area once again, but then reversed and declined – similarly to what we saw yesterday and also on June 4. Taking this fact into account, and combining with the current position of the CCI (and negative divergences between the indicator, the Stochastic Oscillator and the exchange rate) it seems that the pair will move lower in the coming days. Nevertheless, this scenario will be more likely if we see another daily close under the resistance area.

Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): Short positions (which are profitable) with a stop-loss order at 1.1667 are justified from the risk/reward perspective at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

GBP/USD

On the daily chart, we see that GBP/USD broke above the resistance line, which triggered a sharp rebound. With today’s upswing the exchange rate broke above the 50% Fibonacci retracement, which suggests an increase to around 1.5567, where the next retracement is.

Will this area stop further improvement? Let’s examine the weekly chart and look more clues about future moves.

From this perspective we see that although GBP/USD moved sharply higher, the pair remains under the red resistance line based on the previous highs. Additionally, sell signals generated by the indicators are still in play, suggesting that reversal is just around the corner.

Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): Short positions (which are profitable) with a stop-loss order at 1.5913 are justified from the risk/reward perspective at the moment. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.

AUD/USD

Looking at the weekly chart, we see that AUD/USD invalidated earlier breakdown under the green support line based on the Mar and Apr lows, which triggered a sharp rebound. This is a positive signal that suggests a test of the last weeks high in the coming day(s).

How did this rally affect the very short-term picture? Let’s examine the daily chart and find out.

From today’s point of view we see that the green support zone created by the recent lows triggered another upswing, which approached the exchange rate to the orange resistance zone once again. We saw similar sharp upswing in the previous week, but despite that move currency bulls didn’t manage to hold gained levels, which translated to a sharp pullback. Taking this fact into account, we think that as long as there is no successful breakout above this area another move to the downside is likely.

Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
MT outlook: mixed
LT outlook: mixed

Trading position (short-term; our opinion): Short positions (which are profitable) with a stop-loss order at 0.8194 are justified from the risk/reward perspective at the moment. 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

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