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After Yellen Statement, US Dollar Remains Mixed Against Major Currencies
Global currencies react to the Fed's announcement of continued tapering.
Nadia Simmons    

The US dollar remains mixed against major currencies after Federal Reserve Chair Janet Yellen signaled that recent soft economic data haven't swayed the central bank from a strategy of trimming its monthly bond purchases by $10 billion at each of its policy meetings this year. What impact did this event have on major currency pairs?

EUR/USD


Click to enlarge

I quote the following from my firm's last trading alert:

...the pair extended gains and almost touched the upper line of the declining trend channel (and also its upside target at 1.3660)...if this resistance line is broken, we may see further improvement and the initial upside target would be around 1.3676-1.3682, where the 76.4% and 78.6% Fibonacci retracement levels are.

As you see on the above chart, EUR/USD extended gains and reached its next upside target earlier today. However, a strong resistance zone created by the January 28 high and the 76.4% and 78.6% Fibonacci retracement levels encouraged sellers to act, and we saw a pullback. With this downswing, the pair declined below the line of the declining trend channel. Despite this drop, the buyers did not give up and managed to push the exchange rate above this resistance line once again. This is a positive signal, and it seems that if EUR/USD breaks above today's intraday high, we may see further improvement (to around the level of 1.3700). Nevertheless, we should keep in mind that the position of the CCI and Stochastic Oscillator suggests that we may see another attempt to move lower in the near future. Please note that the nearest support is still the 50-day moving average.

Before I summarize this currency pair, I would like to quote my firm's Forex Trading Alert posted on February 6, 2014:

...EUR/USD broke above the upper border of the consolidation range...[A]ccording to theory, the upside target for this pattern will be around 1.3660 (slightly below the upper line of the declining trend channel...This move seems too small for us to open a long position (however, it is something that day traders might want to consider taking advantage of).

Taking into account the fact that the pair reached this upside target earlier today, in my firm's opinion, it is justified to close these positions and take profits off the table -- that is, if you had opened them.

Very short-term outlook: bullish
Short-term outlook: mixed with bullish bias
Medium-term outlook: mixed
Long-term outlook: bearish

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

GBP/USD


Click to enlarge

I am quoting the following from my firm's last Forex Trading Alert:

...GBP/USD remains around Friday's high (slightly above the 38.2% Fibonacci retracement level based on the recent decline)...Buy signals generated by the CCI and Stochastic Oscillator remain in place and suggest that further improvement is likely to be seen. The nearest resistance level is created by February 3 at the moment. If it is broken, the next upside target will be the 50% Fibonacci retracement (slightly below the January 27 low).

Looking at the above chart, we see that the pair extended gains and reached both upside targets. Additionally, GBP/USD broke above the upper line of a consolidation range, which suggests that if the buyers do not give up, we may see an upswing to at least the 61.8% Fibonacci retracement level (the price target for this pattern is around 1.6531). Nevertheless, if the 50% Fibonacci retracement encourages sellers to act, we may see a pullback even to around 1.6347, where the previously broken upper line of the consolidation range is.

Very short-term outlook: bullish
Short-term outlook: mixed with bullish bias
Medium-term outlook: mixed
Long-term outlook: mixed

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

USD/JPY


Click to enlarge

On the above chart, we see that the situation hasn't changed much. Although USD/JPY moved higher and hit a fresh one-week high, the pair quickly reversed and came back to the consolidation range. This is not a positive signal -- especially when we factor in a resistance level (created by the 38.2% Fibonacci retracement level based on the recent decline) and the current position of the Stochastic Oscillator (which is close to generating a sell signal). If these circumstances encourage the sellers to act, we may see another attempt to move lower. If this is the case, the first downside target will be around 101.43, where Friday's low is. On the other hand, if the buyers do not give up and push the exchange rate higher, we may see an upswing to the next Fibonacci retracement level (around 103.08).

Very short-term outlook: mixed
Short-term outlook: mixed with bearish bias
Medium-term outlook: bullish
Long-term outlook: bearish

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

USD/CAD


Click to enlarge

Looking at the above chart, we see that the situation hasn't changed much as USD/CAD still remains in the consolidation range. Therefore, what my firm wrote in its previous Forex Trading Alert remains up to date:

...If the buyers do not give up, we may see further improvement -- especially when we take into account buy signals generated by the CCI and Stochastic Oscillator. If this is the case, the first upside target will be the previously broken upper line of the rising trend channel. Nevertheless, if they fail (and the pair doesn't come back above this resistance line), we may see another attempt to move lower. Please note that if the exchange rate drops below the January 22 low, it will likely trigger a decline to 1.0904 (the January 16 low) or even to a strong support zone created by the 38.2% Fibonacci retracement level (based on the entire September-January rally), the lower border of the trend channel, the January 13 low, and the 2010 high.

Very short-term outlook: mixed
Short-term outlook: mixed
Medium-term outlook: bullish
Long-term outlook: bearish

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

USD/CHF


Click to enlarge

I am quoting the following from my firm's last Forex Trading Alert:

...the pair declined once again and reached Friday's low. If the buyers manage to hold this support level and the exchange rate climbs above today's intraday high, we may see a post double bottom rally...If USD/CHF declines below Friday's low, we will likely see further deterioration and the downside target will be the short-term declining support line (marked with blue).

As you see on the above chart, we noticed such price action earlier today. The exchange rate broke below a support level created by Friday's low and almost touched the short-term declining support line (marked with blue). On the above chart, we see that the proximity to this strong support encouraged buyers to act and resulted in an upswing that took the pair to a consolidation range (marked with blue). This is a positive signal -- especially when we factor in the position of the CCI and Stochastic Oscillator. Please note that both indicators are oversold, which suggests that a pause or corrective upswing is just around the corner.

Very short-term outlook: mixed with bearish bias
Short-term outlook: mixed
Medium-term outlook: bearish
Long-term outlook: bearish

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

AUD/USD


Click to enlarge

Looking at the above chart, we see that AUD/USD extended gains, broke above Friday's high, and climbed to 0.9046. With this upswing, the pair also approached its upside target around 0.9069. When we take a closer look, we see that there are negative divergences between the CCI, Stochastic Oscillator, and the exchange rate, which is a bearish signal. Additionally, they both are overbought (on top of that, the latter generated a sell signal), which suggests that a pullback is just around the corner.

Nevertheless, as long as the exchange rate remains above the short-term blue rising line, the space for declines seems limited.

Very short-term outlook: bullish
Short-term outlook: mixed with bullish bias
Medium-term outlook: bearish
Long-term outlook: bearish

Trading position (short-term): Taking into account negative divergences between the indicators and the exchange rate (and also the fact that they are overbought), we might see a pullback in the near future. Therefore, in my firm's opinion, it is justified to close long positions and to take profits off the table.

For the full version of this essay and more, visit Sunshine Profits' website.

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 from them. Nadia is the person behind Sunshine Profits' three premium trading services: Forex Trading Alerts, Oil Trading Alerts, and Oil Investment Updates.

Twitter: @SunshineProfits
No positions in stocks mentioned.
After Yellen Statement, US Dollar Remains Mixed Against Major Currencies
Global currencies react to the Fed's announcement of continued tapering.
Nadia Simmons    

The US dollar remains mixed against major currencies after Federal Reserve Chair Janet Yellen signaled that recent soft economic data haven't swayed the central bank from a strategy of trimming its monthly bond purchases by $10 billion at each of its policy meetings this year. What impact did this event have on major currency pairs?

EUR/USD


Click to enlarge

I quote the following from my firm's last trading alert:

...the pair extended gains and almost touched the upper line of the declining trend channel (and also its upside target at 1.3660)...if this resistance line is broken, we may see further improvement and the initial upside target would be around 1.3676-1.3682, where the 76.4% and 78.6% Fibonacci retracement levels are.

As you see on the above chart, EUR/USD extended gains and reached its next upside target earlier today. However, a strong resistance zone created by the January 28 high and the 76.4% and 78.6% Fibonacci retracement levels encouraged sellers to act, and we saw a pullback. With this downswing, the pair declined below the line of the declining trend channel. Despite this drop, the buyers did not give up and managed to push the exchange rate above this resistance line once again. This is a positive signal, and it seems that if EUR/USD breaks above today's intraday high, we may see further improvement (to around the level of 1.3700). Nevertheless, we should keep in mind that the position of the CCI and Stochastic Oscillator suggests that we may see another attempt to move lower in the near future. Please note that the nearest support is still the 50-day moving average.

Before I summarize this currency pair, I would like to quote my firm's Forex Trading Alert posted on February 6, 2014:

...EUR/USD broke above the upper border of the consolidation range...[A]ccording to theory, the upside target for this pattern will be around 1.3660 (slightly below the upper line of the declining trend channel...This move seems too small for us to open a long position (however, it is something that day traders might want to consider taking advantage of).

Taking into account the fact that the pair reached this upside target earlier today, in my firm's opinion, it is justified to close these positions and take profits off the table -- that is, if you had opened them.

Very short-term outlook: bullish
Short-term outlook: mixed with bullish bias
Medium-term outlook: mixed
Long-term outlook: bearish

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

GBP/USD


Click to enlarge

I am quoting the following from my firm's last Forex Trading Alert:

...GBP/USD remains around Friday's high (slightly above the 38.2% Fibonacci retracement level based on the recent decline)...Buy signals generated by the CCI and Stochastic Oscillator remain in place and suggest that further improvement is likely to be seen. The nearest resistance level is created by February 3 at the moment. If it is broken, the next upside target will be the 50% Fibonacci retracement (slightly below the January 27 low).

Looking at the above chart, we see that the pair extended gains and reached both upside targets. Additionally, GBP/USD broke above the upper line of a consolidation range, which suggests that if the buyers do not give up, we may see an upswing to at least the 61.8% Fibonacci retracement level (the price target for this pattern is around 1.6531). Nevertheless, if the 50% Fibonacci retracement encourages sellers to act, we may see a pullback even to around 1.6347, where the previously broken upper line of the consolidation range is.

Very short-term outlook: bullish
Short-term outlook: mixed with bullish bias
Medium-term outlook: mixed
Long-term outlook: mixed

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

USD/JPY


Click to enlarge

On the above chart, we see that the situation hasn't changed much. Although USD/JPY moved higher and hit a fresh one-week high, the pair quickly reversed and came back to the consolidation range. This is not a positive signal -- especially when we factor in a resistance level (created by the 38.2% Fibonacci retracement level based on the recent decline) and the current position of the Stochastic Oscillator (which is close to generating a sell signal). If these circumstances encourage the sellers to act, we may see another attempt to move lower. If this is the case, the first downside target will be around 101.43, where Friday's low is. On the other hand, if the buyers do not give up and push the exchange rate higher, we may see an upswing to the next Fibonacci retracement level (around 103.08).

Very short-term outlook: mixed
Short-term outlook: mixed with bearish bias
Medium-term outlook: bullish
Long-term outlook: bearish

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

USD/CAD


Click to enlarge

Looking at the above chart, we see that the situation hasn't changed much as USD/CAD still remains in the consolidation range. Therefore, what my firm wrote in its previous Forex Trading Alert remains up to date:

...If the buyers do not give up, we may see further improvement -- especially when we take into account buy signals generated by the CCI and Stochastic Oscillator. If this is the case, the first upside target will be the previously broken upper line of the rising trend channel. Nevertheless, if they fail (and the pair doesn't come back above this resistance line), we may see another attempt to move lower. Please note that if the exchange rate drops below the January 22 low, it will likely trigger a decline to 1.0904 (the January 16 low) or even to a strong support zone created by the 38.2% Fibonacci retracement level (based on the entire September-January rally), the lower border of the trend channel, the January 13 low, and the 2010 high.

Very short-term outlook: mixed
Short-term outlook: mixed
Medium-term outlook: bullish
Long-term outlook: bearish

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

USD/CHF


Click to enlarge

I am quoting the following from my firm's last Forex Trading Alert:

...the pair declined once again and reached Friday's low. If the buyers manage to hold this support level and the exchange rate climbs above today's intraday high, we may see a post double bottom rally...If USD/CHF declines below Friday's low, we will likely see further deterioration and the downside target will be the short-term declining support line (marked with blue).

As you see on the above chart, we noticed such price action earlier today. The exchange rate broke below a support level created by Friday's low and almost touched the short-term declining support line (marked with blue). On the above chart, we see that the proximity to this strong support encouraged buyers to act and resulted in an upswing that took the pair to a consolidation range (marked with blue). This is a positive signal -- especially when we factor in the position of the CCI and Stochastic Oscillator. Please note that both indicators are oversold, which suggests that a pause or corrective upswing is just around the corner.

Very short-term outlook: mixed with bearish bias
Short-term outlook: mixed
Medium-term outlook: bearish
Long-term outlook: bearish

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

AUD/USD


Click to enlarge

Looking at the above chart, we see that AUD/USD extended gains, broke above Friday's high, and climbed to 0.9046. With this upswing, the pair also approached its upside target around 0.9069. When we take a closer look, we see that there are negative divergences between the CCI, Stochastic Oscillator, and the exchange rate, which is a bearish signal. Additionally, they both are overbought (on top of that, the latter generated a sell signal), which suggests that a pullback is just around the corner.

Nevertheless, as long as the exchange rate remains above the short-term blue rising line, the space for declines seems limited.

Very short-term outlook: bullish
Short-term outlook: mixed with bullish bias
Medium-term outlook: bearish
Long-term outlook: bearish

Trading position (short-term): Taking into account negative divergences between the indicators and the exchange rate (and also the fact that they are overbought), we might see a pullback in the near future. Therefore, in my firm's opinion, it is justified to close long positions and to take profits off the table.

For the full version of this essay and more, visit Sunshine Profits' website.

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 from them. Nadia is the person behind Sunshine Profits' three premium trading services: Forex Trading Alerts, Oil Trading Alerts, and Oil Investment Updates.

Twitter: @SunshineProfits
No positions in stocks mentioned.
More From Nadia Simmons
Daily Recap
After Yellen Statement, US Dollar Remains Mixed Against Major Currencies
Global currencies react to the Fed's announcement of continued tapering.
Nadia Simmons    

The US dollar remains mixed against major currencies after Federal Reserve Chair Janet Yellen signaled that recent soft economic data haven't swayed the central bank from a strategy of trimming its monthly bond purchases by $10 billion at each of its policy meetings this year. What impact did this event have on major currency pairs?

EUR/USD


Click to enlarge

I quote the following from my firm's last trading alert:

...the pair extended gains and almost touched the upper line of the declining trend channel (and also its upside target at 1.3660)...if this resistance line is broken, we may see further improvement and the initial upside target would be around 1.3676-1.3682, where the 76.4% and 78.6% Fibonacci retracement levels are.

As you see on the above chart, EUR/USD extended gains and reached its next upside target earlier today. However, a strong resistance zone created by the January 28 high and the 76.4% and 78.6% Fibonacci retracement levels encouraged sellers to act, and we saw a pullback. With this downswing, the pair declined below the line of the declining trend channel. Despite this drop, the buyers did not give up and managed to push the exchange rate above this resistance line once again. This is a positive signal, and it seems that if EUR/USD breaks above today's intraday high, we may see further improvement (to around the level of 1.3700). Nevertheless, we should keep in mind that the position of the CCI and Stochastic Oscillator suggests that we may see another attempt to move lower in the near future. Please note that the nearest support is still the 50-day moving average.

Before I summarize this currency pair, I would like to quote my firm's Forex Trading Alert posted on February 6, 2014:

...EUR/USD broke above the upper border of the consolidation range...[A]ccording to theory, the upside target for this pattern will be around 1.3660 (slightly below the upper line of the declining trend channel...This move seems too small for us to open a long position (however, it is something that day traders might want to consider taking advantage of).

Taking into account the fact that the pair reached this upside target earlier today, in my firm's opinion, it is justified to close these positions and take profits off the table -- that is, if you had opened them.

Very short-term outlook: bullish
Short-term outlook: mixed with bullish bias
Medium-term outlook: mixed
Long-term outlook: bearish

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

GBP/USD


Click to enlarge

I am quoting the following from my firm's last Forex Trading Alert:

...GBP/USD remains around Friday's high (slightly above the 38.2% Fibonacci retracement level based on the recent decline)...Buy signals generated by the CCI and Stochastic Oscillator remain in place and suggest that further improvement is likely to be seen. The nearest resistance level is created by February 3 at the moment. If it is broken, the next upside target will be the 50% Fibonacci retracement (slightly below the January 27 low).

Looking at the above chart, we see that the pair extended gains and reached both upside targets. Additionally, GBP/USD broke above the upper line of a consolidation range, which suggests that if the buyers do not give up, we may see an upswing to at least the 61.8% Fibonacci retracement level (the price target for this pattern is around 1.6531). Nevertheless, if the 50% Fibonacci retracement encourages sellers to act, we may see a pullback even to around 1.6347, where the previously broken upper line of the consolidation range is.

Very short-term outlook: bullish
Short-term outlook: mixed with bullish bias
Medium-term outlook: mixed
Long-term outlook: mixed

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

USD/JPY


Click to enlarge

On the above chart, we see that the situation hasn't changed much. Although USD/JPY moved higher and hit a fresh one-week high, the pair quickly reversed and came back to the consolidation range. This is not a positive signal -- especially when we factor in a resistance level (created by the 38.2% Fibonacci retracement level based on the recent decline) and the current position of the Stochastic Oscillator (which is close to generating a sell signal). If these circumstances encourage the sellers to act, we may see another attempt to move lower. If this is the case, the first downside target will be around 101.43, where Friday's low is. On the other hand, if the buyers do not give up and push the exchange rate higher, we may see an upswing to the next Fibonacci retracement level (around 103.08).

Very short-term outlook: mixed
Short-term outlook: mixed with bearish bias
Medium-term outlook: bullish
Long-term outlook: bearish

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

USD/CAD


Click to enlarge

Looking at the above chart, we see that the situation hasn't changed much as USD/CAD still remains in the consolidation range. Therefore, what my firm wrote in its previous Forex Trading Alert remains up to date:

...If the buyers do not give up, we may see further improvement -- especially when we take into account buy signals generated by the CCI and Stochastic Oscillator. If this is the case, the first upside target will be the previously broken upper line of the rising trend channel. Nevertheless, if they fail (and the pair doesn't come back above this resistance line), we may see another attempt to move lower. Please note that if the exchange rate drops below the January 22 low, it will likely trigger a decline to 1.0904 (the January 16 low) or even to a strong support zone created by the 38.2% Fibonacci retracement level (based on the entire September-January rally), the lower border of the trend channel, the January 13 low, and the 2010 high.

Very short-term outlook: mixed
Short-term outlook: mixed
Medium-term outlook: bullish
Long-term outlook: bearish

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

USD/CHF


Click to enlarge

I am quoting the following from my firm's last Forex Trading Alert:

...the pair declined once again and reached Friday's low. If the buyers manage to hold this support level and the exchange rate climbs above today's intraday high, we may see a post double bottom rally...If USD/CHF declines below Friday's low, we will likely see further deterioration and the downside target will be the short-term declining support line (marked with blue).

As you see on the above chart, we noticed such price action earlier today. The exchange rate broke below a support level created by Friday's low and almost touched the short-term declining support line (marked with blue). On the above chart, we see that the proximity to this strong support encouraged buyers to act and resulted in an upswing that took the pair to a consolidation range (marked with blue). This is a positive signal -- especially when we factor in the position of the CCI and Stochastic Oscillator. Please note that both indicators are oversold, which suggests that a pause or corrective upswing is just around the corner.

Very short-term outlook: mixed with bearish bias
Short-term outlook: mixed
Medium-term outlook: bearish
Long-term outlook: bearish

Trading position (short-term): In my firm's opinion, no positions are justified from the risk/reward perspective.

AUD/USD


Click to enlarge

Looking at the above chart, we see that AUD/USD extended gains, broke above Friday's high, and climbed to 0.9046. With this upswing, the pair also approached its upside target around 0.9069. When we take a closer look, we see that there are negative divergences between the CCI, Stochastic Oscillator, and the exchange rate, which is a bearish signal. Additionally, they both are overbought (on top of that, the latter generated a sell signal), which suggests that a pullback is just around the corner.

Nevertheless, as long as the exchange rate remains above the short-term blue rising line, the space for declines seems limited.

Very short-term outlook: bullish
Short-term outlook: mixed with bullish bias
Medium-term outlook: bearish
Long-term outlook: bearish

Trading position (short-term): Taking into account negative divergences between the indicators and the exchange rate (and also the fact that they are overbought), we might see a pullback in the near future. Therefore, in my firm's opinion, it is justified to close long positions and to take profits off the table.

For the full version of this essay and more, visit Sunshine Profits' website.

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 from them. Nadia is the person behind Sunshine Profits' three premium trading services: Forex Trading Alerts, Oil Trading Alerts, and Oil Investment Updates.

Twitter: @SunshineProfits
No positions in stocks mentioned.
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