It’s often like this prior to market-moving events. Prices keep trading in a narrow consolidation, dropping subtle clues here and there. The context remains though, and coupled with the preceding price action, it allows to us to see the market tipping its hand. So, how have we prepared for what’s to come?
EUR/USD – Consolidation About to End Soon?
Although EUR/USD moved a bit higher yesterday, the overall short term situation hasn’t changed much. The exchange rate is still
trading sideways inside the blue consolidation between the green horizontal support line and the green zone based on the April and May lows, which together serve as the nearest resistance.
Meanwhile, the CCI generated its buy signal, while the Stochastic Oscillator is very close to doing the same. These suggest that an upside move may be just around the corner. Nevertheless, as long as there is no breakout above the upper border of the consolidation, or a breakdown below its lower border, higher, or respectively lower values of EUR/USD are not likely to be seen. Short-lived moves in either direction should not surprise us.
USD/JPY – Where Are the Bulls?
The overall situation in USD/JPY also remains almost unchanged as the exchange rate continues to trade inside the blue consolidation, slightly below the declining red
resistance line and the orange resistance zone. Let’s quote our Monday’s words – they are up-to-date also today:
(…) Earlier today, we saw another upswing. It suggests that we’ll see a test of the red declining resistance line based on the previous peaks soon. This resistance could be a neckline of a potential reverse head and shoulder formation – successful breakout both above the neckline and the above-mentioned orange resistance zone could open the way to the north.
Additionally, the current position of the daily indicators suggests that the bulls are likely to see them flash buy signals in the very near future. This increases the probability of an upward move in the coming days.
But as long as there is no breakout above the orange resistance zone, a bigger move to the upside is not likely to be seen.
USD/CHF – Bulls, Please Step Forward
Neither in the case of USD/CHF have we seen any important development that would change its short-term picture. Let’s turn to our Monday’s observations once again:
(…) The exchange rate is still trading inside the blue consolidation between the green support zone and the orange resistance area reinforced by the 50% Fibonacci retracement.
As long as there is no breakout above these nearest resistances, another bigger move is questionable.
Summing up the Alert, no euro upswing has materialized so far, and the common currency is trading inside its recent consolidation. There have been no signs of the USD/JPY and USD/CHF bulls’ strength and a break above their respective resistances that would justify possible long positions. GBP/USD hasn’t made a decisive move either that would justify opening new positions. Apart from these, there're no other opportunities worth acting upon in the currencies.
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Nadia Simmons
Forex & Oil Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care
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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA 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, Przemyslaw Radomski, CFA 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. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA 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. Przemyslaw Radomski, CFA, 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.