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

• EUR/USD: short (a stop-loss order at 1.1402; the initial downside target at 1.1009)
• GBP/USD: short (a stop-loss order at 1.3232; the initial downside target at 1.2375)
• USD/JPY: long (a stop-loss order at 107.62; the initial upside target at 113.08)
• USD/CAD: long (a stop-loss order at 1.2931; the initial upside target at 1.3436)
• USD/CHF: none
• AUD/USD: none

EUR/USD

From today’s point of view we see that although EUR/USD hit a fresh multi-month high, this improvement was very temporary and the pair erased most gains quite quickly. Additionally, the exchange rate invalidated the earlier breakout above the previous highs and the upper border of the blue consolidation, which gave currency bears more reasons to act. As a result, EUR/USD extended losses earlier today and slipped under the last week’s low and the lower line of the consolidation. Taking these negative events into account, we think that further deterioration is just around the corner. Therefore, if the pair extends declines from current levels, the initial downside target will be around 1.1017, where the 38.2% Fibonacci retracement and the green support zone (marked on the daily chart) 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 1.1402 and the initial downside target at 1.1009) 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

Looking at the weekly chart we see that the overall situation hasn’t changed much as GBP/USD is still trading under the previously-broken long-term red declining resistance line. Additionally, the sell signals generated by the medium-term indicators remain in place, which doesn’t bode well for currency bulls.

From this perspective, we see that GBP/USD moved a bit higher in previous days and came back above the previously-broken 38.2% Fibonacci retracement. Despite this improvement, currency bulls didn’t manage to pushed the exchange rate higher and the upper border of the blue consolidation triggered a pullback earlier today. Taking this fact into account and combining it with the medium-term picture, we believe that another downswing is very likely. If this is the case and GBP/USD declines from current levels, we’ll likely see a drop to the 61.8% Fibonacci retracement (at 1.2466) in the coming days.

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

Trading position (short-term; our opinion): Short positions (with a stop-loss order at 1.3232 and the initial downside target at 1.2375) 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 USD/CAD extended losses and slipped to the lower border of the purple rising trend channel earlier this week. Additionally, in this area is also the support area created by the 76.4% and 78.6% Fibonacci retracement, which together triggered a rebound yesterday. On top of that, the CCI and the Stochastic Oscillator generated the buy signals, which suggests further improvement and an increase to (at least) 1.3436, where (at the moment of writing these words) the previously-broken lower border of the brown rising trend channel is. Connecting the dots, we think that opening long positions is justified from the risk/reward perspective.

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 1.2931 and the initial upside target at 1.3436 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, Gold & Silver Fund Manager

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