Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Johnson Vs Gove Tory Leadership Contest Grudge Match Betfair Betting - 17th June 19
Nasdaq Stock Index Prediction System Is Telling Us A Very Different Story - 17th June 19
King Dollar Rides Higher Creating Pressures On Foreign Economies - 17th June 19
Land Rover Discovery Sport Tailgate Not Working Problems Fix (70) - 17th June 19
Stock Market Outlook: is the S&P today just like 2007 or 2016? - 17th June 19
US China War - Thucydides Trap and gold - 16th June 19
Gold Stocks Bull Upleg Mounting - 16th June 19
Gold Price Seasonal Trend Analysis - Video - 16th June 19
Fethiye Market Fruit, Veg, Spices and Turkish Delight Tourist Shopping - 16th June 19
US Dollar Gold Trend Analysis - 15th June 19
Gold Stocks “Launch” is in Line With Fundamentals - 15th June 19
The Rise of Silver and Major Economic Decline - 15th June 19
Fire Insurance Claims: What Are the Things a Fire Claim Adjuster Does? - 15th June 19
How To Find A Trustworthy Casino? - 15th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match - Video - 14th June 19
Gold and Silver, Precious Metals: T-Minus 3 Seconds To Liftoff! - 14th June 19
Silver Investing Trend Analysis - Video - 14th June 19
The American Dream Is Alive and Well - in China - 14th June 19
Keeping the Online Gaming Industry in Line - 14th June 19
How Acquisitions Affect Global Stocks - 14th June 19
Please Don’t Buy the Dip in Nvidia or Other Chip Stocks - 14th June 19
A Big Thing in Investor Education is Explainer Videos - 14th June 19
IRAN - The Next American War - 13th June 19
Boris Johnson Vs Michael Gove Tory Leadership Grudge Match Contest - 13th June 19
Top Best VPN Services You Can Choose For Your iPhone - 13th June 19
Tory Leadership Contest Betting Markets Forecast - Betfair - 13th June 19
US Stock Market Setting Up A Pennant Formation - 13th June 19
Which Stocks Will Lead The Cannabis Rebound? - 13th June 19
The Privatization of US Indo-Pacific Vision - Project 2049, Armitage, Budget Ploys and Taiwan Nexus - 12th June 19
Gold Price Breaks to the Upside - 12th June 19
Top Publicly Traded Casino Company Stocks for 2019 - 12th June 19
Silver Investing Trend Analysis - 12th June 19
Why Blue-Chip Dividend Stocks Aren’t as Safe as You Think - 12th June 19
Technical Analysis Shows Aug/Sept Stock Market Top Pattern Should Form - 12th June 19
FTSE 100: A Top European Index - 12th June 19
Gold Surprise! - 11th June 19
How Forex Indicators are Getting Even More Attention in the Market? - 11th June 19
Stock Market Storm Clouds on the Horizon - 11th June 19
Is Your Financial Security Based On A Double Aberration? - 11th June 19
What If Stocks Are Wrong About Interest Rate Cuts? - 11th June 19
US House Prices Yield Curve, Debt, QE4EVER! - 11th June 19
Natural Gas Moves Into Basing Zone - 11th June 19
U.S. Dollar Stall is Good for Commodities - 11th June 19
Fed Running Out of Time and Conventional Weapons - 11th June 19
Trade Wars Propelling Stock Markets to New Highs - 11th June 19
Best Travel Bags for Summer Holidays 2019, Back Sling packs, water proof, money belt, tactical - 11th June 19
Betting on Next British Prime Minister Tory Leadership Betfair Markets Forecast - 10th June 19
How Can Stock Market Go Up When We’re Headed Towards a Recession? - 10th June 19
If You Invest in Dividend Stocks, Do This to Double Your Returns - 10th June 19
Reasons for the Success of the Dating Market - 10th June 19
Gold Price Trend Analysis - Video - 10th June 19
US Stock Markets Rally Hard – Could Another Big Upside Leg Begin? - 10th June 19
Stock Market Huge Cosmic Cluster Ahead: Buckle Up! - 10th June 19
Stock Market Higher To Go? - 10th June 19
The Gold Price Golden Neckline… - 10th June 19
Gold Price Seasonal Trend Analysis - 9th June 19
The Fed Stops Pretending - 9th June 19
Fed Rate Cuts Soon; Bitcoin Enthusiasts Join Wall Street in Bashing Gold - 9th June 19
1990s vs. 2010s - Which Expansion Will be Better for Gold? - 9th June 19
Gold Price Trend Analysis, MACD, Trend Channels, Support / Resistance - 8th June 19
Gold Surges Near Breakout - 8th June 19
Could Gold Rally Above $3750 Before December 2019? - 8th June 19
5 Big Lies About Precious Metals Investing Exposed - 8th June 19

Market Oracle FREE Newsletter

Gold Price Trend Forecast Summer 2019

EUR/USD - Time for Rebound?

Currencies / Euro Aug 05, 2014 - 06:14 AM GMT

By: Nadia_Simmons

Currencies

On Friday, the common currency rebounded sharply after disappointing U.S. employment data, which showed that the U.S. economy added 209,000 jobs in July, missing expectations for an increase of 233,000. As a result, EUR/USD erased over 20% of recent declines and came back above 1.3400. Will currency bulls manage to push the pair higher?


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

EUR/USD: none
GBP/USD: none
USD/JPY: none
USD/CAD: none
USD/CHF: none
AUD/USD: none

EUR/USD

In our Forex Trading Alert posted on July 23, we wrote the following:

(...) 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.

Looking at the above chart, we see that the situation in the medium term has deteriorated in the previous week as EUR/USD extended losses and reached our initial downside target. As you see, this support level triggered a corrective upswing, but the size of the move is too small at the moment to say that the medium-term outlook has improved. Therefore, as long as the exchange rate remains below the last week's high another test of the strength of the 50% Fibonacci retracement and attempt to reach the next downside target can't be ruled out.

Having say that, let's check where the very short-term changes.

Quoting our Forex Trading Alert posted on Tuesday:

(...) the pair will drop to around 1.3335-1.3368, where the very strong support zone (created by the 50% Fibonacci retracement, the 200% Fibonacci extension based on the Apr-May increase, the 127.2% Fibonacci extension based on the entire Feb-Ma rally and the medium-term green support line) is. (...) we should keep an eye on the current EUR/USD moves as the position of the indicators suggests that a pause or corrective upswing is just around the corner (on the short-term basis).

It turned out that our projections were correct. On the above chart, we see that although the green support zone encouraged forex traders to push the buy button and triggered a sharp corrective upswing on Friday, this move erased only 23,6% of the entire decline that we saw in July. Therefore, we think that it's too early to say that the very short-term outlook has improvement. As you see on the above chart, recent days have formed a consolidation. If the pair breaks above the upper border of the formation, we'll see further improvement and an increase to at least February lows (around 1.3476-1.3483). On the other hand, if the exchange rate moves below Friday's low, EUR/USD will test the strength of the green support zone.

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

Trading position (short-term): So far, we noticed only one-day rally and a small consolidation, which didn't change the short-term picture. Nevertheless, it's quite likely that a local bottom is materializing right now as EUR/USD reached an important support zone (and also our downside price target), which may translate to a bigger corrective upswing. Therefore, we think that cashing out of the short positions (opened on July 16 at 1.3523) and taking profits off the table seems to be appropriate.

GBP/USD

In our Forex Trading Alert, posted on July 24, we wrote:

(...) the exchange rate also dropped below the key support line created by the 2009 high, which is a bearish signal that suggests further deterioration. If the pair doesn't invalidate the breakdown, we'll see a drop to at least 1.6875, where the next horizontal support line (based on the Nov 2009 high) is.

As you see on the above chart, the situation developed in line with the above-mentioned scenario as GBP/USD declined below its initial target in the previous week. With this downswing, the exchange rate also dropped under the lower border of the rising wedge, which is an additional bearish signal that suggests further deterioration. If this is the case, the next downside target will be the support zone created by the May and June lows (around 1.6692-1.6766).

Are there any short-term support levels that could stop currency bears? Let's check.

In our commentary posted on July 18, we wrote:

(...) So, where the pair head next? In our opinion, (...) the next move will be to the downside. As you see on the above chart, if the pair breaks below the lower border of the consolidation, the nearest downside target will be the 2009 high, and the next - the medium-term orange line. Please note that only if the pair breaks below these lines, we'll see a correction to around June 18 low, where the size of a pullback will correspond to the height of the formation.

As you can see on the above chart, our projections were correct. The currency bears not only realized the above-mentioned scenario, but also managed to push the pair lower - to the support zone created by the 76.4% and 78.6% Fibonacci retracement levels based on the May-July rally. Based on our experience, we believe that this is very important area, because in many cases in the past (and not only on the currency market) this zone managed to pause or even stop further deterioration. Therefore, if history repeats itself, we'll see a corrective upswing to around 1.6917 (the June 18 low) in the coming day (or days). Nevertheless, if it is broken, the exchange rate, will extend declines and drop to 1.6753 or even to the May low of 1.6691.

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

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

USD/CHF

Quoting our Forex Trading Alert posted on July 25:

(...) taking into account the current position of the indicators (which still have space for further growths), it seems that the exchange rate will move higher and reach its next upside target (around 0.9091), which corresponds to the height of the trend channel.

As you see on the above chart, the situation in the medium term has improved in the previous week as we expected. On the weekly chart, we see that USD/CHF extended rally and reached its upside target, but then gave up some gains. Despite this small drop, the pair is still trading near last week's high, which suggests that currency bulls may try to push the exchange rate higher - to the 38.2% Fibonacci retracement based on the entire May 2013-March 2014 decline (this area is also reinforced by the long-term declining resistance line, which will likely stop further improvement). Nevertheless, we should keep an eye on the current USD/CHF moves because the position of the indicators suggests that correction in the coming week (or weeks) is quite likely.

Are there any short-term factors that could stop further improvement? Let's check.

On July 25, we wrote:

(...) it seems that there is nothing that could stop currency bulls before a test of the strength of the resistance zone created by the 112.8% Fibonacci extension and the declining resistance line (marked with orange and based on the May and July 2013 highs).

In our last commentary on this currency pair we added:

(...) USD/CHF reached our upside target. (...) if currency bulls manage to push the pair higher, the next upside target will be at 0.9083 (the 127.2% Fibonacci extension) or even around 0.9109, where the upper line of the rising trend channel (marked with purple) intersects the 141.4% Fibonacci extension.

From this perspective, we see that currency bulls realized the above-mentioned scenario, just as we expected - the exchange rate broke above the 127.2% Fibonacci extension and approach the upper line of the rising trend channel last week. The proximity to this strong resistance encouraged forex traders to push the sell button, which resulted in a pullback to the previously-broken orange support/resistance line. So far, it holds, which means that we may see another attempt to break above the upper border of the trend channel in the near future. However, taking into account sell signals generated by the indicators, we should also consider a bearish scenario, which suggests a drop below the nearest support and correction to at least Friday's low of 0.9039.

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.

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

6 Critical Money Making Rules