Forex Trading Alert: Time For Recovery

By: Przemyslaw Radomski & Nadia Simmons | Tue, Feb 3, 2015
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Forex Trading Alert originally published on Feb 3, 2015, 2:12 PM


 

Earlier today, the U.S. Census Bureau showed that factory orders dropped by 3.4% in December, missing expectations for a decline of 2.2%. Thanks to these numbers, EUR/USD moved sharply higher, breaking above important resistance levels. Will we see a comeback above 1.1600 in the coming days?

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

EUR/USD: Long (stop loss order at 1.1310)
GBP/USD: none
USD/JPY: none
USD/CAD: Short (stop loss order at 1.2645)
USD/CHF: none
AUD/USD: none


EUR/USD

The medium-term picture hasn't changed much as and invalidation of the breakdown below the 61.8% Fibonacci retracement and its positive impact on the exchange rate are still in effect. Having said that, let's focus on the daily chart.

EUR/USD
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The first (and the most important) thing that caches the eye on the above chart is a breakout above the red declining resistance line, the 23.6% Fibonacci retracement and the upper line of the consolidation (marked with blue). These are bullish signals that suggest further improvement and an increase to at least the next resistance zone created by the Jan 22 high and the previously-broken Nov 2005 low.

Very short-term outlook: bullish
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed

Trading position (short-term): Long positions with a stop loss order at 1.1310 are justified from the risk/reward perspective at the moment. However, taking into account the proximity to the resistance area, we'll likely take profits in the coming days.


USD/CAD

USD/CAD
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From today's point of view, we see that USD/CAD dropped below the lower border of the consolidation (marked with green on the daily hart) and the long-term blue support line, invalidating earlier breakout. On top of that, all indicators generated sell signals, supporting the bearish case. These are negative signals, which suggest further deterioration. How low could the exchange rate go? The initial downside target will be around 1.2379, where the bottom of the previous correction is. What if this level is broken? Let's take a closer look at the weekly hart and find out.

USD/CAD Weekly
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Looking at the above chart, we see that the recent downswing took the pair below the 88.6% Fibonacci retracement, invalidating earlier breakout above this level. This is an additional bearish signal that suggests a drop to the 23.6% (around 1.2275) or even 38.2% (at 1.1973) Fibonacci retracement based on the entire Jun-Jan rally in the coming week.

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

Trading position (short-term; our opinion): Short positions with a stop loss order at 1.2645 are justified from the risk/reward perspective at the moment. However, taking into account the proximity to the support area, we'll likely take profits in the coming days.


USD/CHF

The situation in the medium-term has't changed much as the exchange rate still remains above the Mar 2014 lows.

What can we infer from the daily chart? Let's find out.

USD/CHF
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Quoting our Forex Trading Alert posted on Friday:

(...) the pair is still trading around yesterday's high and above the previously-broken 38.2% Fibonacci retracement, which suggests that another attempt to move higher is likely.

As you see on the daily chart, the situation developed in line with the above-mentioned scenario and the exchange rate climbed to the orange resistance zone (created by the 50% Fibonacci retracement and the Oct 2014 low). Earlier today, this area triggered a pullback, but USD/CHF is still trading between yesterday's high and low. What's next? In our opinion, as long as there is no breakout above these levels, higher values of the exchange rate are questionable and further deterioration can't be ruled out - especially when we factor in sell signals generated b the indicators.

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

Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective at the moment.

Thank you.

 


 

Przemyslaw Radomski

Author: Przemyslaw Radomski

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Gold & Silver Investment & Trading Website - SunshineProfits.com

Przemyslaw Radomski

Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who takes advantage of the emotionality on the markets, and invites you to do the same.

His company, Sunshine Profits, publishes analytical software that anyone can use in order to get an accurate and unbiased view on the current situation.

Recognizing that predicting market behavior with 100% accuracy is a problem that may never be solved, PR has changed the world of trading and investing by enabling individuals to get easy access to the level of analysis that was once available only to institutions.

High quality and profitability of analytical tools available at www.SunshineProfits.com are results of time, thorough research and testing on PR's own capital.

PR believes that the greatest potential is currently in the precious metals sector. For that reason it is his main point of interest to help you make the most of that potential.

As a CFA charterholder, Przemyslaw Radomski shares the highest standards for professional excellence and ethics for the ultimate benefit of society.

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer: All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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Nadia Simmons

Author: Nadia Simmons

Nadia Simmons
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Forex & Oil Trading Strategist
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Nadia Simmons

Nadia is a private investor and trader, dealing in currencies, commodities (mainly crude oil), and stocks. Using her background in technical analysis, she spends countless hours identifying market trends, major support and resistance zones, breakouts and failures. In her writing, she presents complex ideas with clarity that enables you to easily understand market changes, and profit on them. Nadia is the person behind Sunshine Profits' 3 premium trading services: Forex Trading Alerts, Oil Trading Alerts Alerts, and Oil Investment Updates.

All essays, research and information found above represent analyses and opinions of Nadia Simmons and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Nadia Simmons and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Nadia Simmons is not a Registered Securities Advisor. By reading Nadia Simmons's reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Nadia Simmons, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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