Forex Trading Alert: EUR/USD - Time for Correction?

By: Nadia Simmons & Przemyslaw Radomski | Wed, Apr 6, 2016
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Forex Trading Alert originally published on Apr 5, 2016, 4:25 AM


 

Earlier today, official data showed that German factory orders dropped by 1.2% in Feb, which weighed negatively on investors' sentiment and pushed the euro lower against the greenback. As a result, EUR/USD slipped under the Feb high. What does it mean for the exchange rate?

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

EUR/USD: short (stop-loss order at 1.1512; initial downside target at 1.0572)
GBP/USD: none
USD/JPY: none
USD/CAD: none
USD/CHF: none
AUD/USD: none


EUR/USD

EUR/USD Weekly Chart
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EUR/USD Daily Chart
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Looking at the above charts, we see that although EUR/USD moved little higher yesterday, currency bulls didn't manage to push the pair higher, which resulted in another drop under the previously-broken Feb high earlier today. Therefore, what we wrote in our previous commentary is up-to-date:

(...) Although this is a negative signal (an invalidation of the breakout), we think that it would be more reliable if we see a daily closure below the orange area. Finishing today's commentary on this currency pair, it is worth noting that all indicators are overbought and very close to generating sell signals ,which suggests that further deterioration is just around the corner.

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

Trading position (short-term; our opinion): Short positions (with a stop-loss order at 1.1512 and the initial downside target at 1.0572) are justified from the risk/reward perspective.


USD/JPY

USD/JPY Daily Chart
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On Thursday, we wrote the following:

(...) if the pair extends losses, we may see a drop even to around 111.34-111.41, where the support area created by the 76.4% and 78.6% Fibonacci retracement levels is.

Yesterday, we added:

From today's point of view, we see that the situation developed in line with the above scenario and USD/JPY reached our downside target earlier today. Although the pair could rebound from here, it seems to us that the exchange rate will re-test the strength of the green support zone in the coming week.

Looking at the above charts, we see that currency bears pushed USD/JPY lower as we had expected. With today's downswing, the pair not reached our next downside target, but also declined below it. This is a negative signal which suggests further deterioration and a drop to around 109.81, where the 127.2% Fibonacci extension is.

Are there any factors that could encourage currency bulls to act? Let's examine the weekly chart and find out.

USD/JPY Weekly Chart
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From this perspective, we see that USD/JPY dropped to the 61.8% Fibonacci retracement, which could trigger a rebound (especially when we factor in the proximity to the green support line based on the Sept high of 110.07). However, if this support area is broken, the exchange rate could extend declines even to around 108.14, where the 70.7% Fibonacci retracement is.

Very short-term outlook: mixed with bearish bias
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 at the moment.


USD/CAD

USD/CAD Weekly Chart
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USD/CAD Daily Chart
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From today's point of view we see that USD/CAD extended gains, which means that what we wrote yesterday is up-to-date:

(...) currency bears pushed the pair lower in the previous week, which resulted in a drop to the medium-term green support line (as we had expected). As you see, this support triggered a rebound, which took USD/CAD above the lower border of the blue declining trend channel. Additionally, all indicators generated buy signals, which suggest further improvement. Nevertheless, in our opinion, such price action would be more reliable if we see a daily closure above this line. If this is the case and currency bulls manage to push the pair higher from here, the initial upside target would be around 1.3281, where the 23.6% Fibonacci retracement (based on the entire downward move) and late-March highs are.

Very short-term outlook: mixed with bullish bias
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 at the moment.

Thank you.

 


 

Nadia Simmons

Author: Nadia Simmons

Nadia Simmons
Sunshine Profits.com
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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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Przemyslaw Radomski

Author: Przemyslaw Radomski

Przemyslaw Radomski, CFA
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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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