Although the Fibonacci retracement triggered a rebound in AUD/USD currency bulls failed and the pair erased almost 70% of the recent rebound. Does it mean that we’ll see fresh lows in the coming days?
EUR/USD
From today’s point of view, we see that the overall situation hasn’t changed much as EUR/USD is trading at yesterday levels, which means that what we wrote yesterday is up-to-date also today:
(…) EUR/USD moved a bit higher earlier today, but did it change anything? In our opinion, it didn’t, because the exchange rate is still trading not only well below the lower border of the brown rising trend channel, but also under the blue resistance line, which means that the head and shoulders formation is underway (and it will be as long as we do not see an invalidation of the breakdown under blue line). Additionally, the sell signals generated by the weekly and daily indicators (except the CCI, which generated the buy signal) remain in cards, supporting currency bears and lower values of EUR/USD.
Taking these facts, we believe that (…) we’ll see a downward move to around 1.1596, where the size of the move will correspond to the height of the formation [the head and shoulders pattern].
However, when we take into account a drop under the lower border of the brown rising trend channel and the broader picture of EUR/USD, we think that currency bears push the exchange rate even lower – to around 1.1508, where the size of declines will be equal to the height of trend channel. Taking all the above into account, we believe that our (already profitable) short positions are justified from the risk/reward perspective.
Very short-term outlook: mixed with bearish bias
Short-term outlook: bearish
MT outlook: mixed
LT outlook: mixed
GBP/USD
On Tuesday, we wrote the following:
