Although currency bears pushed USD/CAD lower on Friday, their opponents stopped decline, which resulted in a consolidation. Does it mean that another upswing is just around the corner?

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

• EUR/USD: short (a stop-loss order at 1.0735; the initial downside target at 1.0388)
• GBP/USD: short (a stop-loss order at 1.2590; the next downside target at 1.2160)
• USD/JPY: long (a stop-loss order at 111; the initial upside target at 115.43)
• USD/CAD: long (a stop-loss order at 1.2949; the next upside target at 1.3454)
• USD/CHF: long (a stop-loss order at 0.9891; the initial upside target at 1.0180)
• AUD/USD: none

EUR/USD

Earlier today, EUR/USD moved a bit lower, extending yesterday’s losses. Additionally, the Stochastic Oscillator is very close to generating a sell signal, which suggests that further deterioration is just around the corner. If this is the case, and the exchange rate declines from here, the first downside target will be the previously-broken upper border of the blue declining trend channel (currently around 1.0497) and the recent lows. If they are broken, we’ll likely see a drop to around 1.0460, where the 76.4% and 78.6% Fibonacci retracements are.

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 with a stop-loss order at 1.0735 and the initial downside target at 1.0388 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/CAD

On the weekly chart, we see that an invalidation of the breakdown under the lower border of the purple rising wedge and its positive impact on the rice is still in effect. Additionally, the buy signals generated by the indicators are still in play, supporting currency bulls.

Having said the above, let’s examine the very short-term chart.

Looking at the daily chart, we see that although USD/CAD moved a bit lower on Friday, currency bears didn’t manage to push the pair lower, which resulted in a consolidation around the January 20 high. Taking this fact into account and the current situation in the medium-term chart, we think that currency bulls will push USD/CAD to around 1.3454, where the next resistance zone (created by the 76.4% and 78.6% Fibonacci retracements) is.

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

Trading position (short-term; our opinion): Long positions (with a stop-loss order at 1.2949 and the next upside target at 1.354) 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 a bit lower in recent days, the lower border of the blue rising trend channel stopped currency bears, triggering a rebound. Taking this fact into account, we think that further improvement is just around the corner. If this is the case, and the pair increase from here, we’ll see a test of the upper line of the formation in the following days.

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

Trading position (short-term; our opinion): Long positions with a stop-loss order at 0.9891 and the initial upside target at 1.0180 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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