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

• EUR/USD: long (a stop-loss order at 1.1057; the initial upside target at 1.1157)
• GBP/USD: long (a stop-loss order at 1.2720; the initial upside target at 1.2976)
• USD/JPY: none
• USD/CAD: none
• USD/CHF: none
• AUD/USD: none

EUR/USD

These were our yesterday's observations:

(...) slipped to the orange support zone, which encouraged the bulls to fight for higher values earlier today.

The pair rebounded and came back into the purple channel, which suggests that we could see an invalidation of Friday's breakdown in the following hours. If it happens, we could also see an attempt to move above the green line or even higher.

Regardless of the many bearish omens, it is therefore not justified from the risk/reward perspective to open short positions at the moment of writing these words.

The situation developed in tune with the above, and EUR/USD moved higher once again after today's retest of the orange support zone. It looks like further improvement is just around the corner - especially if the exchange rate closes today's session above the peak of Friday's candlestick. This area can be considered as the upper border of the very short-term consolidation.

What could happen if the bulls show more strength?

In our opinion, EUR/USD will likely test the upper border of the declining purple trend channel or even the recent peaks. Taking this fact into account, we think that opening long positions is justified from the risk/reward perspective. All details below.

Trading position (short-term; our opinion): Long positions with a stop-loss order at 1.1057 and the initial upside target at 1.1157 are justified from the risk/reward perspective.

GBP/USD

Let's recall our Friday's commentary:

(...) slipped to the upper border of the channel for the second time in a row. Additionally, the CCI and the Stochastic Oscillator generated sell signals increasing the probability of further deterioration.

But will we see such price action? In our opinion, as long as there is no daily close back inside the channel (in other words, as long as the pair doesn't invalidate last week's breakout above the channel), another rebound from here can't be ruled out and opening short positions is not yet justified from the risk/reward point of view.

The above chart shows that although the sellers tried to go lower during previous sessions, they failed. A rebound followed earlier today, and GBP/USD came back above the previously broken upper border of the rising green trend channel, invalidating the earlier tiny breakdown.

Taking this fact into account, we think that opening long positions is justified from the risk/reward perspective. All details below.

Trading position (short-term; our opinion): Long positions with a stop-loss order at 1.2720 and the initial upside target at 1.2976 are justified from the risk/reward perspective.

AUD/USD

The most important event that we noticed in our last commentary on this pair, was the breakdown below the lower border of the very short-term purple consolidation. How did the fate of AUD/USD unfold in the days following this bearish development?

Let's examine the daily chart to find out.

From today's point of view, we see that although the sellers were strong enough to push the pair below the above-mentioned consolidation, they didn't succeed in taking the exchange rate to the 38.2% Fibonacci retracement in the following days.

This is certainly a sign of their weakness. Combined with the black horizontal line based on the mid-October peak, it encouraged the buyers to take over. AUD/USD reversed and moved quite sharply higher earlier today, invalidating the earlier breakdown below the above-mentioned consolidation. Additionally, the Stochastic Oscillator invalidated its sell signal, giving the bulls another reason to act.

What does it mean for AUD/USD?

The bulls will likely test not only the previous peaks and the upper line of the formation, but also the mid-September highs or even the 38.2% Fibonacci retracement based on the entire 2019 decline in the very near future.

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective. Nevertheless, should we see the reliable signs of the buyers' weakness around the above-mentioned resistances, we'll consider opening short positions.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist