Earlier today, the euro extended yesterday’s gains against the greenback, but will we see further improvement in the coming days?
In our opinion the following forex trading positions are justified - summary:
EUR/USD
Looking at the daily chart, we see that although EUR/USD extended yesterday’s gains earlier today, the pair remains under Monday’s high, which means that what we wrote in our previous commentary is up-to-date:
(…) EUR/USD rebounded earlier today, which in combination with buy signals generated by the indicators suggests further improvement. However, in our opinion, as long as there won’t be an invalidation of the breakdown under the green support zone marked on the weekly chart (created by the Apr and Nov 2015 lows) another bigger move to the upside is not likely to be seen and another attempt to move lower can’t be ruled out.
If we see a decline, downside targets from our previous alert would be in play:
(…) a verification of a breakdown under the previously-broken Nov and early-Dec lows (…) suggests further deterioration to the 112.8%, 127.2% Fibonacci extension (both marked on the weekly chart) or even a test of the lower border of the long-term brown declining trend channel and the barrier of 1.0000 seen on the long-term chart below.
Very short-term outlook: mixed
Short-term outlook: mixed
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
Form today’s point of view, we see GBP/USD is consolidating in the green support zone, which suggests that what we wrote on Tuesday is still valid:
(…) GBP/USD moved lower and invalidated earlier breakout above the lower border of the red declining trend channel – similarly to what we saw at the beginning of Oct. Such price action doesn’t bode well for currency bulls and suggests further deterioration. This scenario is also reinforced by a sell signal generated by the Stochastic Oscillator.
How low could the exchange rate go?
(…) we should keep in mind that the last week’s decline pushed the pair below the lower border of the blue rising trend channel, which is a negative signal that suggests a drop to around 1.2090, where the size of the move would correspond to the height of the channel. In this area is also the Oct low and the barrier of 1.2000, which together could stop further deterioration once again.
Very short-term outlook: mixed with bearish bias
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.
USD/CHF
On the daily chart, we see that although USD/CHF moved higher on Tuesday, the pair erased gains, which means that our Monday’s alert is up-to-date also today:
(…) the pair invalidated earlier breakout above the Nov peak, which in combination with the current position of the weekly and daily indicators suggests further deterioration in the coming week. If this is the case, the exchange rate will drop to the previously-broken upper border of the blue and the purple rising trend channels (currently around 1.0132-1.0141).
Very short-term outlook: mixed with bearish bias
Short-term outlook: mixed
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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