Earlier this week, the greenback extended losses against the Swiss franc, which pushed USD/CHF under two support lines. As a result, the exchange rate dropped to the long-term support line. Will it withstand the selling pressure?

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

• EUR/USD: none
• GBP/USD: none
• USD/JPY: long (a stop-loss order at 107.62; the initial upside target at 111.16)
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

On the daily chart, we see that EUR/USD declined slightly earlier today, but despite this move the exchange rate remains in the blue consolidation under the 200% Fibonacci extension and the 70.7% Fibonacci retracement (marked on the weekly chart). This means that as long as there is no breakout above the upper line of the formation or a breakdown below the lower line another bigger move is not likely to be seen. Nevertheless, all daily indicators generated the sell signals, increasing the probability of a reversal in the very near future.

Very short-term outlook: mixed
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/JPY

On Tuesday, we wrote the following:

(…) the exchange rate came back above 111, which together with the current position of the indicators (…) suggests further improvement in the coming week. If this is the case and the pair extends rebound, we’ll likely see a test of the yellow resistance zone in the coming week.

Looking at the daily chart, we see that currency bulls pushed USD/JPY higher as we had expected. As a result, the exchange rate increased to the upper border of the consolidation, which suggests that another move to the upside is just around the corner – especially when we factor in the buy signals generated by the indicators. If we see such price action, our upside target will be in play in the following days.

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

Trading position (short-term; our opinion): Long positions (with a stop-loss order at 107.62 and the initial upside target at 111.16) 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

Looking at the daily chart, we see that USD/CHF broke below the orange support line based on the previous lows and the blue support line. Despite this deterioration, the exchange rate stuck in the blue consolidation slightly above the 70.7% Fibonacci retracement, which could stop further deterioration – especially when we factor in the current position of the daily indicators (they all generated the buy signals) and the red long-term support line seen on the weekly chart below.

If this is the case and USD/CHF rebounds, invalidating the breakdown under the orange and blue support/resistance lines, we’ll consider opening long positions.

Very short-term outlook: mixed
Short-term outlook: mixed with bullish 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.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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