Earlier today, the British pound extended gains against the greenback, which resulted in a climb to the previously-broken lower line of the trend channel. Is this just a verification of the breakdown or something more?
EUR/USD: short (a stop-loss order at 1.1833; the initial downside target at 1.1588)
GBP/USD: none
USD/JPY: long (a stop-loss order at 111.15; the initial upside target at 113.50)
USD/CAD: none
USD/CHF: none
AUD/USD: short (a stop-loss order at 0.7510; the initial downside target at 0.7315)
EUR/USD
Looking at the daily chart we see that, we see that although EUR/USD extended losses on Friday, the proximity to the previously-broken upper border of the brown triangle encouraged currency bulls to act.
Thanks to their action the exchange rate rebounded and continued its climb to the north earlier today. Despite this improvement, the pair is still trading inside the brown rising trend channel, which suggests that as long as there is no breakout above the upper line of the formation higher values of EUR/USD are not likely to be seen and another attempt to move lower should not surprise us in the coming week.
Trading position (short-term; our opinion): short positions with a stop-loss order at 1.1833 and the initial downside target at 1.1588 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
The first thing that catches the eye on the daily chart is a comeback to the previously-broken lower border of the very short-term green rising trend channel, which looks like a verification of the earlier breakdown.
Additionally, this area is reinforced by the yellow resistance zone and the orange declining resistance line, which together managed to stop increases in the previous week.
Taking all the above into account, we believe that as long as the nearest resistances remain in the cards lower values of GBP/USD are more likely than further improvement. Therefore, if the exchange rate reverses and declines from here, we’ll see a re-test of the blue support line in the very near future.
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/CHF
In our Forex Trading Alert posted on July 11, we wrote the following:
(…) another attempt to move higher from current levels should not surprise us. Nevertheless, in our opinion, opening any positions now is not justified from the risk/reward perspective.
Why? Because as long as there is no breakout above the orange resistance zone or a confirmed breakdown below the (…) supports a bigger move is not likely to be seen – especially when we factor in the medium-term picture below, which clearly shows that the pair still remains in a bigger blue consolidation that makes the broader perspective too unclear to risk money.
From today’s point of view, we see that currency bulls pushed the pair higher as we had expected. Nevertheless, although they managed to hit a fresh 2018 peak, the yellow resistance zone (seen on the weekly chart) in combination with the upper border of the brown rising trend channel (marked on the daily chart) stopped them, triggering a pullback on Friday.
As a result, the pair came back to the orange resistance zone, invalidating the earlier breakout above May high. This show of weakness was enough to attract the sellers. Thanks to their comeback, USD/CHF extended losses earlier today, which suggests a test of the lower border of the brown rising trend channel (or even the medium-term green support line) in the coming week.
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
Gold & Silver Trading Alerts
Forex Trading Alerts
Oil Investment Updates
Oil Trading Alerts
