Forex Trading Alert originally sent to subscribers on September 8, 2016, 5:02 AM.
Earlier today, the Australian Bureau of Statistics reported that the trade deficit narrowed to A$2.410 billion in July, beating analysts’ forecasts. Thanks to these solid numbers, the Australian dollar extended gains against its U.S. counterpart, which pushed AUD/USD above short-term resistance zone. How high could the exchange rate go in the coming days?
In our opinion the following forex trading positions are justified - summary:
- EUR/USD: long (stop-loss at 1.1056; initial upside target at 1.1304)
- GBP/USD: short (a stop-loss at 1.3579; initial downside target at 1.2519)
- USD/JPY: short (stop-loss at 106.04; initial downside target at 100.47)
- USD/CAD: short (stop-loss at 1.3237; next downside target at 1.2782)
- USD/CHF: short (stop-loss at 0.9935; initial downside target at 0.9630)
- AUD/USD: none
EUR/USD
On the daily chart, we see that EUR/USD moved higher once again earlier today, which means that our previous commentaries remain valid:
(…) EUR/USD broke above the upper line of the blue consolidation and closed the day at the highest level since Aug 25. Additionally, buy signals generated by the indicators remain in play, supporting currency bulls. Taking all the above into account, we believe (…) the exchange rate will extend gains and increase to around 1.1335, where the previously-broken lower border of the blue rising trend channel currently is. If it is broken, we’ll see a test of the brown resistance line in the following days (…).
Very short-term outlook: bullish
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed
Trading position (short-term; our opinion): Long (already profitable) 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/CAD
From today’s point of view, we see that although USD/CAD rebounded yesterday, the exchange rate gave up some of this gain earlier today, which resulted in a comeback under the Aug 22 low and the 70.7% Fibonacci retracement based on the Aug upward move. Taking this fact into account, we think that further deterioration is very likely and our next downside target from Tuesday’s alert will be in play in very near future:
(…) as long as there won’t be buy signals generated by the indicators, another attempt to move lower is very likely. Therefore, if the exchange rate extends declines (…) the next downside target would be the blue support line based on the previous lows (…).
Very short-term outlook: bearish
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed
Trading position (short-term; our opinion): Short positions (which are already profitable as we opened them around 1.3100) 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.
AUD/USD
Quoting our Tuesday’s alert:
The first thing that catches the eye on the weekly chart is invalidation of the breakdown under the medium-term green line, which is a positive signal (it will turn into bullish if the exchange rate closes the week above this important support line) that suggests further improvement in the coming week.
Looking at the charts, we see that the situation developed in line with the above scenario and AUD/USD extended gains. As you see on the daily chart, the exchange rate broke above the orange resistance zone earlier today, which suggests that our next upside target from Tuesday’s commentary will be in play in the coming day(s):
(…) we think that as long as there won’t be sell signals generated by the indicators another attempt to move higher is likely. If this is the case and AUD/USD breaks above the orange zone, the next upside target would be (…) the upper border of the navy blue rising wedge (…)
Very short-term outlook: bullish
Short-term outlook: mixed
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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