Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Sheffield "Mi Amigo" Memorial Fly Past at 8.45am on 22nd Feb 2019 - 20th Feb 19
Here’s The Real Reason You Stress About Money - 20th Feb 19
Five Online Marketing Predictions that will Matter in 2019 - 20th Feb 19
Has Gold Price Reached Upside Resistance Near $1340-1360? - 20th Feb 19
So Many Things are Not Confirming Stock Market Rally - 20th Feb 19
Forex Trading Management: The Importance of Being Prepared - 19th Feb 19
Gold Stocks are Following This Historical Template - 19th Feb 19
Here’s Why The Left’s New Economic Policies Are Just Stupid - 19th Feb 19
Should We Declare Emergency for Gold? - 19th Feb 19
Why Stock Traders Must Stay Optimistically Cautious Going Forward - 19th Feb 19
The Corporate Debt Bubble Is Strikingly Similar to the Subprime Mortgage Bubble - 18th Feb 19
Stacking The Next QE On Top Of A $4 Trillion Fed Floor - 18th Feb 19
Get ready for the Stock Market Breakout Pattern Setup II - 18th Feb 19
It's Blue Skies For The Stock Market As Far As The Eye Can See - 18th Feb 19
Stock Market Correction is Due - 18th Feb 19
Iran's Death Spiral -- 40 Years And Counting - 17 Feb 19
Venezuela's Opposition Is Playing With Fire - 17 Feb 19
Fed Chairman Deceives; Precious Metals Mine Supply Threatened - 17 Feb 19
After 8 Terrific Weeks for Stocks, What’s Next? - 16th Feb 19
My Favorite Real Estate Strategies: Rent to Live, Buy to Rent - 16th Feb 19
Schumer & Sanders Want One Thing: Your Money - 16th Feb 19
What Could Happen When the Stock Markets Correct Next - 16th Feb 19
Bitcoin Your Best Opportunity Outside of Stocks - 16th Feb 19
Olympus TG-5 Tough Camera Under SEA Water Test - 16th Feb 19
"Mi Amigo" Sheffield Bomber Crash Memorial Site Fly-past on 22nd February 2019 VR360 - 16th Feb 19
Plunging Inventories have Zinc Bulls Ready to Run - 15th Feb 19
Gold Stocks Mega Mergers Are Bad for Shareholders - 15th Feb 19
Retail Sales Crash! It’s 2008 All Over Again for Stock Market and Economy! - 15th Feb 19
Is Gold Market 2019 Like 2016? - 15th Feb 19
Virgin Media's Increasingly Unreliable Broadband Service - 15th Feb 19
2019 Starting to Shine But is it a Long Con for Stock Investors? - 15th Feb 19
Gold is on the Verge of a Bull-run and Here's Why - 15th Feb 19

Market Oracle FREE Newsletter

The Real Secret for Successful Trading

Forex Trading EUR, GBP, USD/JPY - Double Bottom or New Lows?

Currencies / Forex Trading Jul 08, 2016 - 10:25 AM GMT

By: Nadia_Simmons

Currencies

In recent days, the yen moved higher against the greenback as safe-haven buying supported the Japanese currency. In this environment, USD/JPY declined to important support and approached the Jun low.  Double bottom or new lows?

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

EUR/USD: short (a stop-loss at 1.1236; initial downside target at 1.0708)
GBP/USD: short (a stop-loss at 1.3579; initial downside target at 1.2519)
USD/JPY: none
USD/CAD: none
USD/CHF: none
AUD/USD: none


EUR/USD

Looking at the daily chart, we see that although EUR/USD moved higher yesterday, the pair closed yesterday’s session under the previously-broken lower border of the green rising trend channel, which looks like a verification of earlier breakdown. If this is the case and the exchange rate extends declines, the initial downside target would be around 1.0953, where the lower border of the red declining trend channel currently is.

Additionally, the risk of a bearish flag formation remains in play, which means that what we wrote yesterday is up-to-date:

(…) the risk of a bearish flag formation increased significantly after the exchange rate verified the breakdown under the long-term brown line and the Stochastic Oscillator generated a sell signal. Taking these facts into account, (…) we may see not only test of the recent low and the 61.8% Fibonacci retracement, but also decline even to around 1.0670, where the size of the move will correspond to the length of the first downward move (please note that slightly below this level (at 1.0660) is also the 88.6% Fibonacci retracement based on the entire Dec-May upward move, which serves as an additional support that may pause declines).

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 1.1236 and initial downside target at 1.0708 are justified from the risk/reward perspective.

GBP/USD

On the above charts, we see that GBP/USD is still trading under the neck line of the head and shoulders formation and the lower border of the red declining trend channel, which means that what we wrote in our previous commentary on this currency pair is up-to date also today:

(…) GBP/USD dropped under the lower border of the red declining trend channel and hit a fresh multi-year low. This is a strong bearish signal, which suggests further deterioration and a drop even to around 1.2161, where the size of the downward move will correspond to the height of the formation.

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

Trading position (short-term; our opinion): Short positions with a stop-loss at 1.3579 and the initial downside target at 1.2519 are justified from the risk/reward perspective at the moment.

USD/JPY

Quoting our Forex Trading Alert posted on Jun 24:

The first thing that catches the eye on the above charts is breakdown under the green support zone (…) around 100.74-102 (…). Despite this drop, currency bulls came back to the market, which resulted in invalidation of earlier breakdown. Although this is a positive signal, which suggests further improvement, we think that (…) high volatility may result in a re-test of the green zone and the Feb 2014 lows.

From today’s point of view, we see that the situation developed in line with the above scenario and USD/JPY reversed and declined once again. With this week’s move, the pair reached the green zone, which will likely result in a re-test of the green zone and the Feb 2014 low. However, if this support level is broken, we may see further deterioration and a drop to the 112.8% Fibonacci extension (around 97.60) or even to the next green support zone (created by the 127.2% Fibonacci extension, the 61.8% retracement based on the entire 2011-2015 upward move and the Jun 2013 lows) around 94.06-94.81 in the coming days.

Very short-term outlook: mixed with bearish bias
Short-term outlook: mixed with bearish bias
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
Forex & Oil Trading Strategist
Przemyslaw Radomski
Founder, Editor-in-chief

Sunshine Profits: Gold & Silver, Forex, Bitcoin, Crude Oil & Stocks
Stay updated: sign up for our free mailing list today

* * * * *

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