Although the euro moved higher against the greenback yesterday, currency bulls didn’t manage to push EUR/USD higher, which resulted in another downswing. Will we finally see a bigger move to the downside?

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: short (a stop-loss order at 0.7683; the initial downside target at 0.7444)

EUR/USD

From today’s point of view, we see that although EUR/USD moved a bit higher yesterday, the pair reversed and declined earlier today, which resulted in a comeback under the lower border of the blue consolidation. Taking this fact into account, we believe that what we wrote on Monday remains up-to-date also today:

(…) the yellow resistance zone marked on the weekly chart continues to keep gains in check, which suggests that another downswing may be just around the corner. If this is the case and 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

On the weekly chart we see that GBP/USD remains under the long-term red declining resistance line, which together with the sell signals generated by the medium-term indicators suggests further deterioration.

How low could the pair go in the coming days? Let’s examine the very short-term chart.

On the daily chart, we see that although GBP/USD rebounded yesterday, the 38.2% Fibonacci retracement stopped further improvement, triggering a pullback earlier today. Additionally, the sell signal generated by the Stochastic Oscillator is still in cards, which suggests further deterioration in the coming days. If this is the case and GBP/USD declines from current levels, we’ll likely see a test of the 50% or even 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/CHF

From the medium-term perspective, we see that USD/CHF moved slightly lower, but despite this small deterioration, the exchange rate is still trading above the previously-broken red declining line, which serves as the nearest support.

Having said that, let’s examine the daily chart.

From today’s point of view, we see that USD/CHF closed yesterday’s session under the red line, which suggests a test of the lower border of the blue consolidation. Nevertheless, please keep in mind that the indicators generated the sell signals, which could result in a test of the red support line (marked on the weekly chart) or even the lower border of the purple rising trend channel (marked on the daily chart) in the coming days.

Very short-term outlook: mixed with bearish bias
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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