Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Forex Multi-week Consolidation in EUR/USD Ended

Currencies / Forex Trading Jul 22, 2014 - 05:10 PM GMT

By: Nadia_Simmons

Currencies

Earlier today, official data showed that the annual rate of U.S. inflation was at 1.2% in the previous month, while core inflation (without food and energy costs) increased by just 0.1% month-on-month and U.S. consumer prices were up 0.3%. On top of that, U.S. existing home sales increased 2.6%, while analysts had expected an increase of 2%. Thanks to these bullish numbers, the common currency declined against the U.S dollar to a 8-month low. What are the implications of this event?


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

EUR/USD: short (stop-loss order: 1.3670)
GBP/USD: none
USD/JPY: none
USD/CAD: none
USD/CHF: none
AUD/USD: none

EUR/USD

The medium-term picture has deteriorated significantly as EUR/USD declined not only below the lower border of the consolidation, but also under the February lows. Taking these bearish circumstances into account, we are convinced that our bearish scenario from the Friday’s Forex Trading Alert is up-to-date:

(…) if currency bulls fail and the pair moves lower, we may see a drop even to around 1.3320, where the size of the downswing will correspond to the height of the consolidation.

Please keep in mind that before currency bears will be able to realize the above-mentioned scenario, they will have to break below the 50% Fibonacci retracement level (around 1.3367), which serves as the nearest medium-term support at the moment.

Having discussed the medium-term outlook, let’s check the daily chart.

Yesterday, we wrote the following:

(…) EUR/USD is still trading in a narrow range, slightly above the June lows. (…) If this area (…) is broken, the next target for currency bears will be around 1.3476, where the February low is.

Looking at the above chart, we see that the situation in the very short-term developed in tune with the above-mentioned scenario as the exchange not only reached our downside target, but also slipped below it. What’s next? From this perspective, we see that the RSI dropped to its lowest level since mid-June, while the CCI and Stochastic Oscillator are oversold (additionally, there are positive divergences between these two indicators and the pair), which suggests that a pause or corrective upswing is just around the corner (on the short-term basis). Nevertheless, as long as there are no buy signals and EUR/USD remains below the recent lows, another move lower is more likely than not. If this is the case, the nearest support will be around 1.3436 (the 1.732% Fibonacci extension based on the April-May rally), and if it is broken, the pair will likely drop to 1.3411, where the 112.8% Fibonacci extension (based on the entire Feb-May rally) is.

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

Trading position (short-term): Small short positions (using half of the capital that one would normally use). Stop-loss order: 1.3670. The probability for the continuation of the decline is not extremely high, which is why we are not doubling the short position at the moment. We’ll do it, when the breakdown is confirmed.

USD/CHF

On Friday, we wrote:

(…) USD/CHF came back above the April high and the 23.6% Fibonacci retracement. With this upswing, the pair also broke above the upper line of the declining trend channel, which suggests further improvement and an increase to at least recent highs.

As you see on the above chart, although currency bulls didn’t realize the above-mentioned scenario yet, it seems that this week rally will take the pair to (at least) its upside target. Please note that if, it is broken, the exchange rate will likely test the strength of the next resistance zone (marked with orange) around 0.9080. Are there any
short-term factors that could stop further improvement? Let’s check.

Quoting our last commentary on this currency pair:

(…) USD/CHF paused after a breakout above the upper line of the declining trend channel and remains in a consolidation. If the pair moves higher, we’ll see a test of the strength of the resistance zone created by mid-June highs and the 76.4% and 78.6% Fibonacci retracement levels (marked with orange). In our opinion, only if this area is broken, we’ll see an increase to around the 2014 high.

Looking at the daily chart, we see that the above-mentioned resistance was broken, and it seems that there is nothing that could stop currency bulls before a test of the strength of the annual high. Will the pair move above it? Based only on the recent candlesticks, further improvement is more likely than not. However, when we factor in the current position of the indicators (the RSI reached its highest level since the beginning of June, while the CCI is overbought and the Stochastic Oscillator generated a sell signal), the very short-term picture is not so bullish and suggests that a pause or correction is just around the corner.

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

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

AUD/USD

The medium-term outlook remains mixed as AUD/USD is still trading in a consolidation slightly below the 2014 high. Will the very short-term picture give us more learly clues where the pair head next? Let’s check.

From this perspective, we see that AUD/USD moved higher, but the green support/resistance line stopped further improvement once again. Taking this event into account, we believe that what we wrote yesterday is still valid:

(…) AUD/USD has been trading between the green support zone and the support/resistance line recently. Although both, the bulls and the bears, have tried to push the exchange rate above/below these key levels, none of them managed to hold gained levels and the pair has fluctuated in a quite narrow range. So, what’s next? (…) as long as there is no breakout above the major resistance (or breakdown under the key support), another sizable move is not likely to be seen.

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

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

Thank you.

Nadia Simmons

Sunshine Profits‘ Contributing Author

Oil Investment Updates
Oil Trading Alerts

* * * * *

Disclaimer

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’ 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.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in