The Euro Bulls Appear Really Short Of Breath

May 15, 2019

We’re seeing some nice moves in the currencies today. After a couple of days hesitating, the euro has made a profitable move lower. The loonie bulls aren’t making much headway either. Today is simply a risk-off day. In days like this, it’s important to be positioned correctly just as the preceding move is running out of steam. The market is full of clues for those willing to listen. For those ready to profit.

EUR/USD – The Pair Is Rolling Over

The euro bulls’ breakout attempts have clearly failed. Taking a cue from Monday, EUR/USD has reversed lower also yesterday. And it’s the same story earlier today, too. Needless to say that this has made our short position even more profitable. The pair trades currently close to its daily lows, at around 1.1185.

The exchange rate trades well below the upper border of the declining blue trend channel as seen on the daily chart. It’s currently attacking the early- and late-March lows as marked by the orange support line. It’s the same line the pair has already broken below in late April.

Additionally, the daily indicators continue to support the sellers. See for yourself the sell signals generated by the CCI and Stochastics.

USD/JPY – Digesting the Recent Downswing

On Monday, USD/JPY broke below the blue support zone only to retrace much of the downside move the day after. This price action is marked as the green consolidation on the above daily chart. Neither earlier today have the bulls managed to invalidate the breakdown.

To the contrary, the rate changes hands at around 109.20 currently. This fits the picture of what usually happens after a breakdown invalidation attempt fails. How far could the current downswing carry the bears?

The current position of the daily indicators and the proximity to the green support zone (the late-Jan lows) suggest that the space for declines may be limited. A reversal in the coming days should not surprise us.

USD/CHF – Downside Target Reached

On Monday, the USD/CHF downward price momentum of recent days has culminated. The size of the downside move corresponded exactly to the height of the previous blue consolidation aka sideways trend. After the lower border of the blue formation on the right has been reached and temporarily breached, an upward reversal followed on Tuesday.

The upswing has hasn’t been accompanied by any buy signals from the daily indicators, however. It increases the probability of one more downswing and a test of the 38.2% Fibonacci retracement in the coming days.

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Nadia Simmons
Forex & Oil Trading Strategist

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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.

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Nadia 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.

The term “carat” comes from “carob seed,” which was standard for weighing small quantities in the Middle East.