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

• EUR/USD: short (a stop-loss order at 1.0967; the initial downside target at 1.0521)
• GBP/USD: short (a stop-loss order at 1.2738; the downside target at 1.2157)
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

Looking at the daily chart, we see that the overall situation hasn’t changed much as EUR/USD is trading in the blue consolidation under the previously-broken long-term red resistance line based on the March and November 2015 lows, which makes the very short-term picture a bit unclear.

Nevertheless, we should keep in mind what we wrote about the medium-term perspective on Friday:

(…) EUR/USD moved higher and climbed to the previously-broken long-term red resistance line based on the March and November 2015 lows and then reversed. Such price action looks like another verification of the earlier breakdown and suggests further deterioration in the coming week(s) – especially when we factor in the sell signals generated by the weekly indicators.

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 1.0967 and the initial downside target at 1.0521) 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

Quoting our last commentary on this currency pair:

(…) the exchange rate pulled back, invalidating the earlier tiny breakout, which together with the sell signals generated by the indicators suggests that we may see further deterioration and a drop to around 1.0000, where the previously-broken 38.2% Fibonacci retracement and the April 5 low are.

From today’s point of view, we see that currency bears pushed USD/CHF lower (as we had expected), which resulted in a decline to our downside target. As you see, the barrier of 1.0000 triggered a rebound, but despite this move, the exchange rate remains in the blue consolidation under the previously-broken orange resistance line. What does it mean for USD/CHF? In our opinion, as long as there is no invalidation of the breakdown under the orange line further improvement is not likely to be seen and another attempt to move lower should not surprise us.

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.

AUD/USD

On Thursday, we wrote the following:

(…) although AUD/USD moved slightly below the green support zone in the previous days, currency bears didn’t manage to close the day below it, which is a positive sign. (…) the pair is consolidating around the March low, which in combination with the buy signals generated by the indicators suggest that reversal and higher values of the exchange rate are just around the corner.

As you see on the daily chart, the situation developed in line with the above scenario and AUD/USD rebounded at the end of the previous week. As a result, the exchange rate invalidated the earlier breakdown under the green support zone, which triggered further improvement. What’s next? Taking into account the fact that the pair is trading in the blue consolidation, we think that if AUD/USD breaks above the upper line of the formation, we’ll see an increase to (at least) 0.7630-0.7643 in the following days.

Very short-term outlook: mixed with bullish 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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