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EUR/USD - Will Resistances Stop Currency Bulls?

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Earlier today, EUR/USD increased sharply, increasing to the resistance area created by two important resistances. Will they stop currency bulls and trigger one more move to the downside in the following days?

The overall situation in the long- and medium-term hasnt changed much and well focus on the very short-term changes today.

EUR/USD - the daily chart

The first thing that catches the eye on the daily chart is invalidation of the breakdown under the green line based on the August and October lows. This positive development encouraged currency bulls to act, which suggests a test of the upper border of the purple declining trend channel and the 38.2% Fibonacci retracement later in the day.

Whats next? Taking into account the above-mentioned resistances and the current position of the CCI and Stochastic Oscillator (they are overbought and very close to generating sell signals), it seems that EUR/USD will reverse and decline in the following day(s). Nevertheless, if we see a breakout above these resistance levels, well consider closing our short positions and taking profits off the table.

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

USD/CAD - the weekly chart

On the weekly chart, we see that USD/CAD remains in the blue consolidation, which suggests that as long as there is no breakout above the upper border of the formation or a breakdown under the lower line, the situation will remain a bit unclear and short-lived moves in both directions should not surprise us.

Will the very short-term chart give us more clues about future moves? Lets check

USD/CAD - the daily chart

USD/CAD - the daily chart

Although USD/CAD bounced off the lower border of the purple rising trend channel yesterday, currency bears triggered a reversal and decline earlier today. Will we see further deterioration in the coming days? In our opinion, such price action will be more likely and reliable only if the exchange rate closes todays session (or one of the following sessions) under the lower border of the purple rising trend channel. Additionally, looking at the buy signals generated by the indicators, another rebound from this area should not surprise us.

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

USD/CHF - the daily chart

Last Tuesday , we wrote the following:

(...) Where will the exchange rate head next? Taking into account the sell signals generated by the daily indicators and two invalidations of the breakout above the upper border of the blue rising wedge, it seems that the pair will test the lower border of the formation in the coming week. (...)

From todays point of view, we see that the situation developed in line with the above scenario and currency bears not only realized the above-mentioned scenario, but also pushed the exchange rate lower earlier today. As a result, the pair dropped under the lower border of the blue rising wedge, which doesnt bode well for higher values of the exchange rate in the coming days. Why? Because if the pair closes todays session under this line, we could see a drop to around 0.9861 (in this area the size of the move will correspond to the height of the green consolidation) or even to the 38.3% Fibonacci retracement around 0.9800 in the following days.

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

Naturally, the above could change in the coming days and well keep our subscribers informed, but thats what appears likely based on the data that we have right now. If you enjoyed reading our analysis, we encourage you tosubscribe to our daily Forex Trading Alerts .

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager

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About the author

Nadia Simmons is a private investor and trader, dealing in currencies, commodities (mainly crude oil), and stocks. Using her background in technical analysis, she spends countless hours identifying market trends, major support and resistance zones, breakouts and failures. In her writing, she presents complex ideas with clarity that enables you to easily understand market changes, and profit on them. Nadia is the person behind Sunshine Profits' 3 premium trading services: Forex Trading Alerts, Oil Trading Alerts, and Oil Investment Updates.

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