Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

EUR/USD – Something Old, Something New and… Something Blue

Currencies / Euro Mar 16, 2018 - 10:35 AM GMT

By: Nadia_Simmons

Currencies

Since the beginning of the month all battles between bulls and bears run in a fairly narrow area, which unfortunately doesn’t create good investment opportunities. In today's alert, we looked at the broader perspective of EUR/USD and the USD Index itself, and we already have our own types where we will likely open next positions. If you do not want to miss the levels that we think about, take a look at our analysis today.


Where Will EUR/USD Head Next?

From today’s point of view, we see that the situation in the very short term hasn’t changed much as EUR/USD is currently trading inside yesterday’s black candle under the black declining resistance line.

On one hand, the buy signal generated by the Stochastic Oscillator is still active, supporting currency bulls and higher values of the exchange rate.

On the other hand, the probability of the head and shoulders formation remains in the cards – especially when we factor in the fact that EUR/USD reversed and decline after a climb to the black declining resistance line based on the previous highs.

Such price action suggests that despite the support from the site of the Stochastic, the pair could move lower and test the blue support line (the neck line of the above-mentioned pattern) in the coming day(s).

If we see a breakdown under this line, we’ll consider opening short positions.

Nevertheless, when we zoom out our picture, we’ll find the answer to the major question: why the hell the euro is not falling yet?

As you see on the weekly chart, the exchange rate is still trading inside the blue consolidation, which suggests that as long as there is no confirmed breakout above the upper border of the formation (or a breakdown under the lower line) another significant move is not likely to be seen.

Nevertheless, when we zoom out the chart once again, we’ll see what the long-term picture suggests.

On the monthly chart, we see that EUR/USD is still trading under the 38.2% Fibonacci retracement and the long-term brown declining resistance line (the upper border of the long-term declining wedge), which together with the current position of the indicators (the CCI and the Stochastic Oscillator generated the sell signals) indicate that the space for gains is limited.

In other words, the likelihood that the next bigger move will be to the downside is more likely than the pro-bullish scenario at the moment of writing these words. Nevertheless, it seems that we will have to wait a little longer for the decreases below 1.2000.

Focus on the USD Index

Why? Because the USD Index stuck between the support zone and the resistance line.

Since the beginning of the month, the index is trading in a narrow range between the lower border of the black declining trend channel and the blue support zone based on the late January highs, late February lows and two Fibonacci retracements (the 50% and 61.8%). This means that as long as there is no breakout above the March peak or a breakdown under the blue zone another bigger move is not likely to be seen and short-lived moves in both directions should not surprise us.

However, what could happen if we see a breakout or a breakdown?

Let’s consider both scenarios.

If currency bulls win, and the index climbs above the March peak, we’ll see an upward move to the upper border of the black declining trend channel (currently around 92) in the following days. Such price action would likely translate into a test of the early January highs in EUR/USD.

On the other hand, if currency bears push the index under the blue support zone, we’ll see a re-test of the green support zone created not only by the January and February lows, but also by the 50% and 61.8% Fibonacci retracements (we wrote about this area in our article posted on February 23, 2018).

We will monitor the forex market and the situation in the greenback in the coming days and if we see reliable signals, we’ll likely open positions.

USD/CHF – Short-term Support vs. Medium-term Resistance

In the previous alerts, we wrote that USD/CHF climbed to the resistance area created by the 38.2% Fibonacci retracement, the upper line of the orange declining trend channel and the previously-broken lower line of the blue declining trend channel (we marked this resistance area with the green ellipse), which could pause or even stop further improvement.

As you see on the medium-term chart, the situation developed in tune with our assumptions and the exchange rate moved away from the above-mentioned resistance zone earlier this week. If you're wondering how this drop affected the very short-term picture of USD/CHF take a look at the daily chart below.

On Tuesday, we were wondering how low could USD/CHF go? Back then, we wrote that in our opinion, the first downside target will be around 0.9413, where the lower border of the blue rising trend channel currently is. If this support is broken, the next target for the bears will be around 0.9336-0.9370, where the early March lows are.

Yesterday, the exchange rate slipped to our downside target and re-tested it earlier today, but there was no breakdown under the lower border of the blue rising trend channel, which is a positive event.

Nevertheless, the sell signals generated by the daily indicators remain in the cars, suggesting another attempt to move lower. Can we trust them? Well, in our opinion, today’s initial jobless claims data will likely have more influence on the fate of both currency pairs than just the reading of the indicators. Therefore, waiting at the sidelines for a clear and indisputable sign from the USD index (as we mentioned earlier, the breakout or the breakdown) seems to be the best investment decision at the moment.

AUD/USD and Bulls’ Weakness

The medium-term picture od AUD/USD remains quite stable as the exchange rate came back to the green consolidation. Will we see further improvement or rather another downswing? Let’s examine the daily chart and try to find the answer to this question.

In our last commentary on this currency pair, we wrote that although AUD/USD broke above the upper border of the purple declining trend channel on Friday, we didn’t see a sharp or significant upward move, which raises doubts about currency bulls’ strength.

Additionally, the exchange rate climbed to the yellow resistance area, which together with the current position of the daily indicators suggests that reversal may be just around the corner.

From today’s point of view, we see that currency bulls tried to push the pair higher yesterday, but their efforts failed, and their opponents created a candle with an elongated upper shadow, which shows an increased activity of sellers in this area.

Earlier today, the pair extended losses which in combination with the sell signals generated by the indicators (they look more reliable in the case of this exchange rate) suggests that we’ll see a realization of the pro-bearish scenario from our previous alert. This means that if this is the case and the pair declines from here, the first downside target for currency bears will be around 0.7793, where the previously-broken upper purple line currently is.

If you enjoyed the above analysis and would like to receive free follow-ups, we encourage you to sign up for our daily newsletter – it’s free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to our premium daily Oil Trading Alerts as well as Gold & Silver Trading Alerts. Sign up now.

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