Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
Where’s my self-driving car? - 16th Aug 22
Real Reason why Pakistan and India Gained Independence in 1947 at 75th Anniversary - 16th Aug 22
Electronic Payments Can Benefit Your Business - Here’s How - 16th Aug 22
Qualcom Stock Market Harbinger - 12th Aug 22
Apple Exec Gets World's 1st iPhone 14 for Daughters 14th Birthday Surprise Present Unboxing! - 12th Aug 22
Steps to remember while playing live roulette online - 12th Aug 22
China Bank Run Protests - Another Potential Tiananmen Square Massacre? - 11th Aug 22
Silver Coin Premiums – Another Collapse? - 11th Aug 22
Gold-to-Silver Ratio Heading Lower – Setup Like 1989-03 - 11th Aug 22
Severe Stocks Bear Market: Will You Be Among the Prepared 1.5%? - 11th Aug 22
There's a Hole in My Bucket Dear Liza, UK Summer Heatwave Plants Watering Problem Song - 11th Aug 22
Why PEAK INFLATION is a RED HERRING! Prepare for a Decade Long Cost of Living Crisis - 9th Aug 22
FREETRADE Want to LEND My Shares to Short Sellers! - 8th Aug 22
Stock Market Unclosed Gap - 8th Aug 22
The End Game for Silver Shenanigans... - 8th Aug 22er
WARNING Corsair MP600 NVME2 M2 SSD Are Prone to Failure Can Prevent Systems From Booting - 8th Aug 22
Elliott Waves: Your "Rhyme & Reason" to Mainstream Stock Market Opinions - 6th Aug 22
COST OF LIVING CRISIS NIGHTMARE - Expect High INFLATION for whole of this DECADE! - 6th Aug 22
WHY PEAK INFLATION RED HERRING - 5th Aug 22
Recession Is Good for Gold, but a Crisis Would Be Even Better - 5th Aug 22
Stock Market Rallying On Slowly Thinning Air - 5th Aug 22
SILVER’S BAD BREAK - 5th Aug 22
Stock Market Trend Pattren 2022 Forecast Current State - 4th Aug 22
Should We Be Prepared For An Aggressive U.S. Fed In The Future? - 4th Aug 22
Will the S&P 500 Stock Market Index Go the Way of Meme Stocks? - 4th Aug 22
Stock Market Another Upswing Attempt - 4th Aug 22
What is our Real Economic and Financial Prognosis? - 4th Aug 22
The REAL Stocks Bear Market of 2022 - 3rd Aug 22
The ‘Wishful Thinking’ Fed Is Anything But ‘Neutral’ - 3rd Aug 22
Don’t Be Misled by Gold’s Recent Upswing - 3rd Aug 22
Aluminum, Copper, Zinc: The 3 Horsemen of the Upcoming "Econocalypse" - 31st July 22
Gold Stocks’ Rally Autumn 2022 - 31st July 22
US Fed Is Battling Excess Global Capital – Which Is Creating Inflation - 31st July 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Forex Trading - Will USD/CHF Rally Above 0.9200?

Currencies / Forex Trading Aug 27, 2014 - 11:40 AM GMT

By: Nadia_Simmons

Currencies

Earlier today, the U.S. Commerce Department showed that total durable goods orders (with transportation items) rose by 22.6% last month, well above expectations for an increase of 7.5%. Despie this bullish data, core durable goods orders (wihout volatile transportation items) declined by 0.8% in July, missing forecasts for a 0.5% gain. As a result, the U.S. dollar moved lower against major currency pairs. Did this drop change the USD/CHF outlook?


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

                                     
The medium-term picture hasn’t changed as EUR/USD is still trading slightly below the strong support zone created by the 38.2% and 61.8% Fibonacci retracement levels. Therefore, what we wrote yesterday is up-to-date:

(…) This is a strong bearish signal, which suggests further deterioration and a drop to around 1.3104-1.3109, were the 70.7% Fibonacci retracement meets the September low. (…) although the RSI declined to its lowest level since July 2012 (while the CCI and Stochastic Oscillator are oversold) suggesting a pause or corrective upswing, we should keep in mind that as long as there is no invalidation of the breakdown below the green area, another attempt to move lower can’t be ruled out.

Did the very short-term picture change? Let’s check.

From this perspective, we see that EUR/USD moved lower and hit a fresh multi-month low. Although the pair rebounded in the following ours, the exchange rate still remains well below the previously-broken lower border of the declining wedge and also under the orange gap (reinforced by the 61.8% Fibonacci retracement and the 100% Fibonacci price projections). All the above provides us with bearish implications and means that as long as there is no invalidation of the breakdown below these levels, another downswing is quite likely. If this is the case, the initial downside target for currency bears will be 112.8% Fibonacci price projections (based on the May and July highs and the June low) around 1.3146. Nevertheless, we should keep in mind that all indicators are oversold and very close to generate buy signals, which suggests that the space for further might be limited and a corrective upswing is just around the corner.

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.

USD/CHF

The medium-term outlook hasn’t changed much as USD/CHF still remains above the reviously-broken 38.2% Fibonacci retracement (based on the entire May 2013-March 2014 decline) and the recent highs. Today, we’ll focus on the very short-term changes.

The first thing that catches the eye on the daily chart is a breakout above the upper line of the purple trend channel. This is a strong bullish signal, which suggests further improvement and an increase to the next Fibonacci extension around 0.9216. Nevertheless, we should keep in mind that the RSI approached the level of 70, while the CCI and Stochastic Oscillator are overbought and very close to generate sell signals. Additionally, the recent upswing took the pair to the 173.2% Fibonacci extension (which serves as a strong resistance) and the size of the move corresponds to the height of the blue declining trend channel, which may reduce a buying pressure. What does it mean for USD/CHF? If the pair closes the day above its major support line, we’ll read today’s earlier decline as a verification of the breakout. In this case, the exchange rate will move higher and currency bulls will likely realize their pro-growth scenario. On the other hand, if the pair invalidates the breakout, it will be a strong bearish signal, which will trigger further deterioration and a drop to at least 0.9081, where the previously-broken upper line of the declining blue trend channel is.

Very short-term outlook: mixed with bearish bias
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

Although the medium-term picture has deteriorated in the previous week as AUD/USD declined below the long-term green line, currency bulls are trying to invalidate the breakdown and come back above the key support/resistance line. Will they succeed? Let’s move on to the daily chart and look for clues about the next move.

On Friday, we wrote the following:

(…) the exchange rate rebounded sharply and came back to slightly below the orange resistance zone (…) If this area holds, we’ll see another downswing and a test of the strength of the green support line (or even the recent low).

Looking at the daily chart, we see that the situation developed in line with the above-mentioned scenario and AUD/USD slipped to our downside target. Despite this move, the green support line withstood the selling pressure and the pair rebounded. As you see on the above chart, the exchange rate is trading in the short-term triangle. In our opinion, as long as there is no breakout above the upper line of the formation (or a successful breakdown below the lower border) another sizable move is not likely to be seen. What could happen if currency bulls win? If the exchange rate breaks above the orange resistance line, we may see an increase to at least the brown declining resistance line (which is currently reinforced by the 76.4% and 78.6% Fibonacci retracements). On the other hand, if currency bears show their claws and push the pair below the green support line, we’ll see a test of the strength of the red support line (currently around 0.9220).

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